Balkany Gets Four Years
Rabbi Milton Yehoshua Balkany, Aaron Rubashkin's son-in-law and the brother-in-law of convicted Agriprocessors executive Sholom Rubashkin, was sentenced to four years in prison for trying to extort $4 million from Steven Cohen’s SAC Capital Advisors LP.
Brooklyn Rabbi in SAC Capital Extortion Plot Sentenced to Four-Year Term
By David Glovin and Patricia Hurtado • Bloomberg
Milton Balkany, a Brooklyn, New York, rabbi, was sentenced to four years in prison for trying to extort $4 million from Steven Cohen’s SAC Capital Advisors LP.
U.S. District Judge Denise Cote sentenced Balkany today in Manhattan. Balkany, 64, was convicted by a federal jury in November of extortion, blackmail and other charges. His defense attorney, Alan Kaufman, had asked for leniency.
“Just because you lead a charitable institution doesn’t give you a pass to commit extortion and fraud,” Cote told Balkany in court.
At the trial, prosecutors said the rabbi, who was dean of the Bais Yaakov day school in the Borough Park neighborhood of Brooklyn, told the Stamford, Connecticut-based hedge fund that he was the spiritual adviser to a federal prisoner in Otisville, New York, who could implicate the fund in wrongdoing. Balkany then called prosecutors in an attempt to put pressure upon SAC to further his scheme.
Kaufman said in court papers that Balkany deserves leniency because of a “lifetime of good deeds” and community service. Balkany has 13 children, including a handicapped daughter, and his family would suffer hardship if he were incarcerated, Kaufman said.
Witnesses testified at trial that Balkany told a lawyer for SAC that the inmate would keep quiet about alleged illegal trading by the hedge fund in 2004 and 2005 if it paid his school and another school $2 million each.
The lawyer instead recorded his phone calls and meetings with Balkany, who was arrested last February after taking two checks from SAC totaling $3.25 million. Balkany told an SAC official at the time that the inmate wouldn’t talk to federal authorities at a meeting scheduled for the following day. No such meeting was planned, according to the government.
The case is U.S. v. Balkany, 10cr441, U.S. District Court, Southern District of New York Manhattan).
[Hat Tip: Hadasah.]
Update 2 pm CST – The AP is reporting Balkany was sent immediately to prison:
NEW YORK (AP) — A prominent Brooklyn rabbi has been sentenced to four years in prison for scheming to extort a Connecticut-based hedge fund into paying millions of dollars to two schools.
Rabbi Milton Balkany was sent to prison immediately Friday by a federal judge in Manhattan. The 64-year-old Balkany had been convicted of extortion, blackmail, wire fraud and making false statements.
Prosecutors say Balkany threatened and lied to workers at the hedge fund to persuade them to send him checks totaling $3.25 million. They say he told them he was a spiritual adviser to an inmate who had knowledge of insider trading connected to the hedge fund.
Update 2:25 pn CST – The New York Post has a more complete report:
Crooked rabbi gets four years for hedge-fund exortion scheme
By BRUCE GOLDING • New York Post
He'll be saying his prayers behind bars.
A crooked rabbi was sentenced to four years in the slammer today for trying to shake down a hedge fund for $4 million by promising to cover up concocted claims of insider trading.
In an unusual move, the judge also ordered Rabbi Milton Balkany locked up immediately, saying she was "seriously concerned" he might try to run away if he remained free on bail.
Balkany -- who made an impassioned plea for no jail time -- stood stock still as his punishment was imposed, then smiled and blew kisses to about a dozen family members as he was led off by deputy U.S. marshals.
"Have a good shabbos," Balkany said.
Manhattan federal Judge Denise Cote told the 64-year-old Brooklyn resident that he had committed "very serious crimes" by trying to blackmail billionaire Steve Cohen's SAC Capital Advisors.
"The lack of contrition, remorse and acceptance of responsibility, in my mind, is profound," she said.
But Cote cut Balkany a break from sentencing guidelines that recommended at least seven-plus years behind bars, citing his "lifetime of good works" and the "generosity of spirit" attested to in 87 letters of support.
Although his lawyer said Balkany would remain silent due to a planned appeal, he launched into an impromptu, 20-minute speech when given the chance.
While he didn't address his extortion conviction, Balkany denied charges that he misused a $700,000 Housing and Urban Development grant, for which he struck a deferred prosecution deal in 2004.
He also vehemently denied uncharged allegations that he schemed to bribe federal officials for favorable treatment of Jewish inmates, saying a $240,000 payment went "to a consultant, and we can prove it to the penny."
"I never gave a toothpick to a public official in my life," said Balkany, who at several points got so excited that he had to adjust his yarmulke to keep it from falling off.
A spokesman for SAC Capital declined to comment.
Update 5:20 pm CST – Here is the New York Daily News report:
Brooklyn rabbi sentenced to four years for extorting $4 million from hedge fund
By Scott Shifrel • NEW YORK DAILY NEWS
A Brooklyn rabbi convicted of extorting $4 million from a hedge fund was sentenced Friday to four years in prison.
Milton Balkany, 64, who headed a religious day school for girls in Borough Park, faced up to nine years in prison, but Manhattan Federal Court Judge Denise Cote said she took into account the rabbi's good deeds.
A lower sentence "would be appropriate based on a lifetime of good works and generosity for those in need and people who are the forgotten of society, the most unfortunate among us," Cote said, citing 87 letters written on Balkany's behalf.
And yet, despite the rabbi's plea for a no-jail sentence, Cote said some prison must be imposed to teach him a lesson.
"You were subject to criminal charges because you engaged in criminal behavior," she said. "You picked up the phone and tried to extort $4 million from a hedge fund ... the lack of contrition, remorse and sense of responsibility here in my mind is very profound."
Balkany was a "spiritual adviser" to a federal inmate who he said told him about insider trading at billionaire Steve Cohen's SAC Capital, prosecutors said.
The rabbi then demanded money from the fund or he'd tell the inmate to tell the feds about the trades. He even went as far as to contact the U.S. Attorney's office in Manhattan to get prosecutors to talk to the inmate.
SAC Capital advisors is a controversial Connecticut hedge fund who has had several ex-workers either charged or investigated in a massive insider trading probe by the U.S. Attorney's office.
Neither Cohen nor the firm itself has been charged, and jurors at Balkany's trial did not hear about the issue.
Balkany, a politically connected rabbi who skirted a federal investigation into bribery, misuse of HUD funds and other charges a decade ago, did not address the November conviction but denied the old bribery charges.
"I never gave a toothpick to a public official in my life," the rabbi said.
He also cited a letter of support from former U.S. Attorney Alan Vinegrad and said that current U.S. Attorney General Eric Holder, a former member of Vinegrad's firm, would "be my first witness" to prove he never bribed anyone.
"I'm just hoping and praying that your honor will take the totality of (this) situation," Balkany said.
His lawyer asked that the judge postpone his imprisonment until after the Sabbath, which begins Friday night. But Cote denied the request.
Before being taken away by federal marshals, the white-bearded rabbi waved at his more than two dozen family members and supporters, called out "Good Shabbos" and blew his wife a kiss.