Rabbi Milton Balkany, a Republican fund-raiser who reportedly raised $100,000 for President George W. Bush’s campaign, was arrested Tuesday on federal fraud charges for allegedly misusing a $700,000 grant intended for disabled preschoolers. The rabbi, it is charged, used some of the money to pay his federal income taxes and life insurance premiums.
Rabbi Balkany, president of Bais Yaakov, a Jewish day school in Brooklyn, received the grant in December 1999, according to a complaint filed by Manhattan U.S. Attorney James Comey. When the rabbi failed to file progress reports on his plan to build a facility for disabled preschoolers, federal investigators learned that he had withdrawn all of the money by early February 2000.
The complaint charges that Rabbi Balkany diverted the money to a host of individuals not entitled to it. For instance, $300,000 went to an Israeli firm in which his son-in-law was an officer, and another $5,000 to a New York import company headed by another son-in-law. And $80,000 is said to have gone to other rabbis and Jewish schools and groups in Brooklyn.
Rabbi Balkany (once dubbed the "Brooklyn Bundler" for his ability to raise political contributions for such state officials as Gov. George Pataki and former Mayor Rudolph Giuliani) pleaded not guilty at his arraignment and was released on $750,000 bond by Judge Gabriel Gorenstein. If convicted, he faces a maximum of 10 years in prison.
The rabbi’s attorney, Benjamin Brafman, said in a published report that Rabbi Balkany "has done nothing wrong." He added later that government regulations for these grant programs "are extraordinarily complicated, and there are times when mistakes can be made."
"But a mistake that is made in good faith is a far cry from intentional criminal conduct."
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