MANHATTAN (CN) - The dean of a Hebrew school in Brooklyn faces federal charges of wire fraud, extortion and blackmail. Milton Balkany is charged with threatening a Connecticut hedge fund manager that he would inform authorities about alleged illegal activities involving the hedge fund unless they paid $4 million to the Bais Yaakov religious day school, which he ran in Borough Park, N.Y.
"Balkany, who purports to be a spiritual adviser to certain incarcerated individuals, claimed to be in communication with, and in control of, an individual who was incarcerated at a federal prison in Otisville, N.Y.," according to the complaint. "According to Balkany, the Otisville inmate advised Balkany that the hedge fund obtained material, nonpublic information in approximately 2004 and 2005 ... to profit from trading in at least six stocks."
Balkany called the hedge fund's attorneys to warn them that the U.S. Attorney's Office was interested in questioning the inmate about the insider trading, according to the complaint. He claimed the inmate sought his advice "because it is a tenet of the Jewish religion that one cannot help oneself by harming another," the complaint states.
Prosecutors say they had no previous knowledge of the allegations, and that Balkany "made false statements and concealed material information from the government" to induce them to interview the inmate.
Balkany told the hedge fund's lawyers that the inmate would not reveal anything to investigators if they paid $2 million to Bais Yaakov and $2 million to another school as a loan that would be repaid in monthly installments, according to the complaint.
Prosecutors say Balkany tried to deposit two postdated checks issued by the hedge fund and to open a bank account for a wire transfer.
Balkany also is known as Yehoshua Balkany.
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.