Rabbi Facing Fraud Charges Plans Return to Fundraising

By E.J. Kessler

Published September 19, 2003, issue of September 19, 2003.
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A Brooklyn rabbi charged with defrauding the federal government of almost $700,000 is proclaiming his innocence and vowing that his legal troubles have only temporarily halted his prodigious political fundraising.

Milton Balkany, the dean of an Orthodox girls’ school in Boro Park, surrendered to authorities on August 26 to face charges that he used a grant from the U.S. Department of Housing and Urban Development — money intended to pay school mortgages — for personal purposes. The rabbi, who is out on $750,000 bail, faces a total of 25 years in prison if he is convicted on the charges detailed in the government’s complaint.

Those charges are: “theft of government property, filing a false claim, wire fraud and obstruction of justice,” according to a press release issued by the office of the United States attorney for the Southern District of New York, James Comey. A court hearing is scheduled for September 25.

But the charges against Balkany, who was once dubbed “the Brooklyn bundler” by a magazine describing his fundraising prowess, haven’t dampened his enthusiasm for raising money.

“I am a Republican and do my part in the process,” Balkany told the Forward in a telephone interview, claiming that he had raised $200,000 in this cycle for President Bush, although he said he has not asked to be counted as a “ranger,” the campaign’s designation for its top fundraisers. Asked to name some of the contributors he had brought into the Bush effort, he said, “I never discuss that with anyone, ever.”

Balkany said he had raised money for the Bush re-election effort in April, May and June but had “temporarily suspended” his efforts given his troubles. The rabbi served as guest chaplain of Congress on June 26, giving an invocation at the request of New York Rep. Sue Kelly, a Westchester Republican.

Federal records show that Balkany and his wife have given thousands of dollars to both Republicans and Democrats over the years, including $4,000 to Bush and $2,000 to Senator Joseph Lieberman in the 2004 cycle. Other recipients of their largess have included former presidential candidate Robert Dole, former mayor of New York Rudolph Giuliani, and Senators Trent Lott, Peter Fitzgerald, John Sununu, Jim Talent and Charles Schumer.

Balkany said he did not know whether there was any political motivation to the charges against him, but said, “I know my higher profile and my involvement in Washington makes me a little more seen.”

Balkany chalked up the charges to a misunderstanding and said he could provide documentation accounting for all the money the government alleges he misappropriated. “Not one penny of government money was touched,” he said. “I wish they had come to me to ask questions… I could have backed up [everything] with the proper documentation, but they didn’t ask me. For someone who has never been in trouble, I had hoped they would… give us the opportunity to respond.”

Asked to confirm Balkany’s claims that he had raised $200,000 for the Bush-Cheney campaign, campaign spokeswoman Sharon Castillo said, “The rabbi’s $4,000 check was returned to him last week.” She added that Balkany is “not on the list of pioneers or rangers,” its top fundraiser designations.

Several New York Republican fundraisers declined to discuss Balkany on the record.

New York Republican fundraiser Mallory Factor said Balkany had come to some of his events. “He’s always been a gentleman in every one of our interactions,” Factor said. “I’ve seen no checks from him or his people,” he added, but that does not mean such checks did not exist, he said.

Observers in Brooklyn said that community organizations have kept their distance from Balkany because they prefer to approach officials based on relationships and for communal-issues advocacy and not to tie that advocacy to political fundraising.

Michael Kulstad, a spokesman for Comey, the U.S. attorney, said he could not comment on any aspect of the government’s complaint against Balkany.

According to the government’s complaint, the HUD grant was awarded to pay down mortgages on properties at Balkany’s school, Bais Yaakov, at 1362 49th Street in Brooklyn. HUD auditors determined that only one check, for approximately $6,000, was used to pay down any mortgages, the government says. The complaint alleges that the money was diverted for other purposes, including $300,000 that went to an Israeli corporation in which Balkany’s son-in-law was an officer and other funds that were used to pay personal expenses including life insurance premiums, credit card bills and federal income taxes.

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