New York's insular ultra-Orthodox Jewish community collided with the area's secretive and ultra-wealthy hedge fund industry, leading to the arrest of a politically well-connected rabbi on blackmail and fraud charges. The rabbi, Milton Balkany, has been arrested and accused of trying to extort $4 million from a Connecticut hedge fund by threatening to expose purported illegal insider trading by the fund. Half the money was to go to a religious school for girls that Balkany runs in Brooklyn, according to a criminal complaint filed by the U.S. attorney's office in Manhattan. The other half was to be a "loan" to another school, the complaint says. The case is the latest in a string of legal problems to hit the region's ultra-Orthodox Jewish community, most notably a sting carried out against a group of New Jersey rabbis, who were charged with peddling political influence. Balkany is the brother-in-law of the owner of a kosher meat factory in Iowa who went to prison in 2009 after being convicted of financial fraud. Balkany himself avoided prison on 2003 federal charges, brought by the same U.S. attorney's office, that he had made personal use of a government grant. In the 1990s, Balkany was dubbed the "Brooklyn bundler" for his facility in pulling together political donations from the Jewish community, particularly for Republican candidates such as former New York Mayor Rudolph W. Giuliani. In 2003, Balkany was welcomed to the U.S. House of Representatives as a guest chaplain. But a few months later, the rabbi faced a criminal charge accusing him of making personal use of a $700,000 government grant for the Bais Yaakov school, which he runs as dean. The ultra-Orthodox community has come under scrutiny for its use of government funds to support its religious schools and institutions.
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Milton Balkany, Brooklyn Rabbi, Busted Again