US Senator Won't Keep Money From Arrested Son-In-Law Of Aaron Rubashkin

Rabbi Milton Balkany, who heads a Brooklyn religious school, was arrested in February, two months after he wrote two checks totaling $3,000 to Vitter's campaign committee.

Sen. David Vitter decides not to keep money from arrested rabbi
By Bruce Alpert • New Orleans Times-Picayune

Sen. David Vitter's campaign is donating to charity $3,000 it received from a New York rabbi who is accused of extortion, blackmail, fraud and making false statements.

Rabbi Milton Balkany, who heads a Brooklyn religious school, was arrested in February, two months after he wrote two checks totaling $3,000 to Vitter's campaign committee.

"As a leader in the Senate on Israel's right to defend themselves in the Middle East against bad actors like Iran, Sen. Vitter understands how important their sovereignty is for our own national security," Vitter spokesman Luke Bolar said. "Unfortunately there was a bad apple amongst the large group of supporters who chose to make a donation, and after the issue was brought to our attention it has been resolved by donating his money to a charity."

Vitter's campaign noted that the Republican senator is not the only elected official to get contributions from the rabbi, pointing to such past recipients as Democrats Vice President Joe Biden and Sen. John Kerry of Massachusetts. Most of Balkany's donations, however, have gone to Republicans, including former President George W. Bush and former Senate Majority Leader Bob Dole.

Balkany has been controversial in New York even before his February arrest.

In 2003, the rabbi was arrested on charges of misappropriating $700,000 in federal housing grants. Some of the money, according to prosecutors, ended up payable to companies in which his relative had interest and some went directly to Balkany. Charges were dropped when the rabbi apologized and made restitution.

President Bush's re-election campaign returned $6,000 in contributions from Balkany and his family in 2003.

But in 2004, Balkany and his family resumed campaign giving, joining his wife, Sarah, and son, Menachim, for a combined $5,000 donation to Vitter's first campaign for the Senate. That year, he and his family also donated $7,500 to the campaign of Florida Republican Sen. Mel Martinez, while his family members donated to such GOP Senate campaigns as Katherine Harris' in Florida and James DeMint's in South Carolina.

In the Justice Department's current case against Balkany, prosecutors released transcripts of phone conversations between the rabbi and a person he believed was president of a hedge fund. The person was actually a federal agent.

In one conversation, Balkany says he has been in contact with a federal prisoner who informed him he had knowledge of illegal insider trading by the hedge fund. He said he had influence over the prisoner, and wanted $4 million in contributions to his religious school and another school to convince the prisoner not to discuss the matter with government prosecutors.

During the conversation, Balkany says he is "not here to threaten." But he mentions how costly it would be for the firm if the prisoner talked to prosecutors, perhaps $20 million to $30 million just to mount a defense.

About the $4 million he was requesting, the rabbi said, "I don't consider it a lot of money."

Balkany remains free on bond. Neither, he nor his attorney Kelley Sharkey returned phone calls seeking a comment.

In addition to the $3,000 given Vitter in 2009, Balkany also contributed $4,000 last year to Sen. Patrick Leahy, D-Vt., and $2,000 to Sen. Sheldon Whitehouse, D-R.I.