Don`t Jump To Conclusions
By Editorial Board
As we report this week on page 3, federal
charges that Rabbi Yehoshua (Milton) Balkany,
one of the more prominent figures in the Orthodox
Jewish educational world, pocketed $700,000 from
an educational grant have been dismissed. And
there is an important lesson to be learned.
At the time of Rabbi Balkany`s arrest last
August, the press had a field day. The Village
Voice referred to the highly respected educator as
"Rabbi Bunco" in its report on the event. New York
Post headlines read "Thou Shall Not Steal: Feds
Charge Rabbi With Scamming 700G" and "Rogue
Rabbi Boosted Pols As Heat Was On." The Jewish
Week headline read: "Brooklyn Bundler" Arrested
on Fraud Charges," taking ill-concealed delight in
skewering Rabbi Balkany`s political fund-raising.
Not to be outdone , the Forward headlined its
report with "Rabbi Facing Fraud Charges Plans
Return to Fund-raising" and began with "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 fund-raising."
What was plainly afoot was the
delegitimization of a prominent Orthodox figure
who had the temerity to involve himself in the
And, we daresay, many others were ready to
credit the unproven charges, as levelled,
instinctively ready to believe the worst of the
Providentially, the US Attorney took the
matter very seriously and was not interested in
just another scalp. When he saw that the financial
discrepancies were explainable in non-criminal
terms, he readily agreed to a disposition providing
for reimbursement of the $700,000 in disputed
funds, with no prosecution. Indeed, the $700,000
turned out to have been used for educational
services for handicapped children, albeit in
apparent violation of the terms of the grant.
Skeptics should keep in mind that the grant
involved was for $3.5 million. Thus, by any
reckoning, the use of 80 percent of the funds was
not even put into question and Rabbi Balkany`s
enterprise in the matter was never thought to be
In some circles, Orthodox personalities will
always be especially suspect simply because of who
they are. We hope against hope that the outcome of
the Balkany affair will change things in this
Thanks for the post. Here's more.
The Department of Housing and Urban Development approved a 1999 tax grant to fund the building of a supposedly sectarian facility adjacent to Bais Yaakov, the religious day school in Brooklyn that Rabbi Balkany directs, the federal complaint said. Rabbi Balkany spent the $700,000 tax grant on his own life insurance, his credit-card bills, and his federal income taxes., according to a criminal complaint unsealed by Manhattan federal prosecutors. Rabbi Balkany had diverted $300,000 of federal tax grants to an Israeli company where Balkanys son-in-law is an officer, and another $5,000 in tax monies to a New York import company where another son-in-law is president. Rabbi Balkany escaped punishment when a lien was placed on his property.
No stranger to getting tax grants, Rabbi Balkany devised a unique lobbying technique with an aide to then-US Senator Daniel Moynihan because Rabbi Balkany believed he was not cooperating in Balkany's quest for a $25 million federal tax grant, and that the aide, David Luchins, was blocking the rabbi's requests for Moynihan's help in securing aid for Balkanys projects. Rabbi Balkany, a leading figure in the Union of Orthodox Rabbis of the U.S. and Canada issued a summons to Sen Moynihans senior aide, David Luchins, a devout member of the Orthodox congregation, to appear before a rabbinic court to answer unspecified charges. Rabbi Balkany hoped to secure an order from the Orthodox rabbinical court to coerce Luchins into behaving more sympathetically to Balkanys requests for US government money.
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August 2003 newpaper reports say Rabbi Milton Balkany was dubbed the "Brooklyn Bundler" by Common Cause for his underhandedness in acting as an intermediary to extort illegal political contributions from Hasidic friends, family and associates which Rabbi Balkany later traded on to gouge taxpayer money for his so-called sectarian projects.
Rabbi Balkany made thousands of dollars in campaign contributions including $23,000 to former New York City Mayor Rudolph Giuliani's mayoral and U.S. Senate campaigns, and to Sen Charles Schumer. Also mentioned were contributions to Dov Hikind from Yehoshua Rabbi Balkany of Borough Park, characterized as "dean of the politically connected Hasidic yeshiva Bais Yaakov, whose director is Rabbi Milton Balkany."
According to a criminal complaint unsealed by Manhattan federal prosecutors, Rabbi Balkany applied for a $700,000 taxpayer-funded congressional grant to build a sectarian facility for educational and therapeutic programs for Hasidic disabled preschool children.
The money was approved in 1999 by the US Department of Housing and Urban Development. The tax-funded sectarian facility was to be "adjacent" to Bais Yaakov, a Hasidic Jewish day school in Brooklyn that Rabbi Balkany directs, the federal complaint said.
Investigators later discovered Rabbi Balkany had diverted $300,000 of the grant money to an Israeli company where his son-in-law is an officer, and $5,000 to a New York import company where another son-in-law is president.
Rabbi Balkany used the remaining thousands of taxpayer dollars to profit himself, his relatives, and to pay his taxes. Rabbi Balkany gave thousands of taxpayer dollars to other Hasidic Jewish groups and Hasidic rabbis. Rabbi Balkany was released on $750,000 bail.
Rabbi Balkany was later let off scot-free from these charges, and never served a day in jail.
In 1993, Rabbi Balkany applied for a $25 million taxpayer dollars from the federal government for his pet project called "Helping Hand", a scheme for his Hasidic Yeshiva religious school to use US tax dollars to train sectarian Russian Jews in Moscow on computers.
Rabbi Balkany requested $25 million in federal monies from the Agency for International Development (AID) but was turned down because his plan was "a mile wide and a millimeter deep."
Instead of improving the proposal, Rabbi Balkany called then-Sen Bob Dole. Rabbi Balkany was cashing in his chips having pumped over $100,000 into Dole's coffers over the previous few years, and worked as a Dole fund-raiser. Balkany had also hired Al Lehn, a former Dole staffer, as a lobbyist.
In November 1993, Sen Dole summoned the administrator of AID, Brian Atwood, to his office for a meeting with Rabbi Balkany and lobbyist Lehn to discuss the proposal. When AID still hadn't approved the plan by February 1994, Dole sent a letter to Atwood arguing that "an effective use of scarce US assistance would be to fund Helping Hand projects at or near their requested level."
Rabbi Balkany was able to get $2.8 million of AID tax dollars to what AID called the "Rabbi Milton Balkany -- Senator Robert Dole Request."
But Rabbi Balkany wanted a lot more. He called AID in April, 1994 to say he was upset and proceeded to intimidate and scare AID officials by mentioning that he "would be meeting with Dole the next day and would tell the Republican leader about his reaction", an internal AID memo reported at the time.
Dole's foreign affairs aide called AID the next day, pressing AID on what the terms of the grant were, and why.
Rabbi Balkany called back AID with more harassment tactics, noting that AID was pushing for a bill to reform it's structure.
Rabbi Balkany continued the intimidation tactics and offered a straight up deal, saying "Dole can make the restructuring plan happen if we can get the additional $3 million," suggesting that Rabbi Balkany would illegally influence Sen Dole's vote in return for more tax dollars from AID.
No additional money was given, and Helping Hand completed the program, though their costs were unusually high -- $3,200 per sectarian Russian student.
In April 1995, Rabbi Balkany went back to harass and intimidate AID officials trying to get more tax dollars, which drove AID workers nearly hysterical. The AID field worker in Moscow said she saw "absolutely no rationale for additional funds" and "It sounds like another political battle."
Then an AID worker in Washington pressed for an assessment of how this "sensitive grantee" was doing. The response from Moscow was "NO, NO, NO! We do not want to give them a cent more!"