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Bizarre Extortion Plot Alleged in NY

MANHATTAN (CN) - The dean of a day school was arrested Thursday and charged with wire fraud, blackmail and extortion, federal prosecutors said. Milton Balkany aka Yehoshua Balkany, dean of the Bais Yaakov school in Brooklyn, is charged with trying to extort a Connecticut-based hedge fund for $4 million.

Balkany, 63, allegedly extorted money from the hedge fund by claiming to be "the spiritual adviser to, in communication with, and in control of, an individual who is incarcerated at a federal prison in Otisville, N.Y.," the U.S. Attorney's Office said in a statement.

Balkany extorted the hedge fund by telling it the inmate had evidence that it had profited from inside trading, prosecutors said. He told it that the U.S. Attorney and FBI wanted to talk to the inmate, though Balkany himself was the one who tried to persuade the U.S. Attorney to talk to the inmate, and "made false statements and concealed material information from the government" as he did so, prosecutors said.

Balkany received two checks from the hedge fund, for $3.25 million on Thursday, the U.S. Attorney's Office said. Then he was arrested and charged with wire fraud, extortion, blackmail and making false statements.

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