An orthodox rabbi in Brooklyn was charged
yesterday with stealing about $700,000 in federal grant money that
was supposed to go toward building a school for disabled
The rabbi, Milton Balkany, 57, was accused by federal prosecutors
in Manhattan of diverting thousands of dollars of grant money to a
personal bank account, as well as using grant money to pay for life
insurance premiums, income taxes, electronics, cosmetics and
He also paid money to companies in Israel and New York with which
his family members had connections, prosecutors charged.
"When Congress appropriated this grant," the United States
attorney, James B. Comey, said in a statement, "it did so with the
intent that the funds be used to build a school and help New York's
disabled children. The complaint alleges the defendant ignored those
requirements in order to line his own pockets and reward others who
clearly were not entitled to the taxpayers' money."
The rabbi, who was released on a $750,000 personal recognizance
bond in Federal District Court in Manhattan, will vigorously fight
the charges, his lawyer, Benjamin Brafman, said later.
"He has violated no law," Mr. Brafman said. "He has no done
nothing wrong." Mr. Brafman said he was confident the rabbi would
"be able to demonstrate that not one penny was misappropriated, and
that every dollar was indeed used for the benefit of
learning-disabled children." Mr. Brafman called his client a scholar
"with an impeccable reputation" who was involved in "many
philanthropic and educational institutions."
Rabbi Balkany, who runs a Jewish day school in Brooklyn called
Bais Yaakov, voluntarily surrendered to the authorities yesterday at
8 a.m., a federal prosecutor, Evan T. Barr, said in court.
The rabbi, who was charged with theft of government property,
false claims, wire fraud and obstruction, sat quietly during the
brief hearing, wearing a black skullcap.
Rabbi Balkany came into public light a few years ago after The
Daily News reported that he had helped get day-care vouchers for
parents by giving their names to officials in the Giuliani
administration. No illegality was found, city officials have
The rabbi has also long been an aggressive political fund-raiser,
often for Republican causes, according to news reports and records.
He was once nicknamed the Brooklyn Bundler for his ability to round
up contributions, one news report said. A 2000 report by The
Associated Press said the rabbi and his family had given $23,000 to
Rudolph W. Giuliani's mayoral and Senate campaigns. A spokeswoman
for Mr. Giuliani declined to comment yesterday.
The charges yesterday had nothing to do with any of those
A criminal complaint filed by Mr. Comey's office said that in
1999 Rabbi Balkany received a $700,000 Congressional "Economic
Development Initiative" grant, administered through the federal
Department of Housing and Urban Development.
The grant was issued to "the Children's Center of Brooklyn, New
York," the complaint said, "for the construction of a facility to
house educational and therapeutic programs for disabled preschool
children." The money was to be used to refinance a mortgage for the
Children's Center, the complaint said.
In November 2001, investigators with the federal housing agency's
inspector general began a review after finding that the funds were
withdrawn from the account in a single lump sum instead of gradual
disbursements, and that the center had not filed required progress
In an interview with an auditor in December 2001, the rabbi
refused to show books and records, "stating that he did not have to
explain how he used the HUD money," the complaint said.
The grant money went to various uses, prosecutors said. One check
for $300,000 was paid to a corporation in Israel, one of whose
officers is the rabbi's son-in-law, the complaint said. Money was
also paid to other rabbis or Jewish institutions, or used for
personal items, the complaint charged.
Mr. Brafman said one difficulty his client faced in dealing with
the government was "that the regulations for these programs are
extraordinarily complicated, and there are times when mistakes can
"But a mistake that is made in good faith is a far cry from
intentional criminal conduct," Mr. Brafman said, "and in this case
there was no intentional criminal violations of the