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Brooklyn School Dean Accused of Extorting Hedge Fund


Date: Friday, February 19, 2010
Author: Edvard Pettersson, Bloomberg

A Brooklyn school dean was accused of trying to extort a hedge fund out of $4 million by claiming he could prevent a federal inmate from telling investigators about alleged insider trades by the unidentified fund.

Milton Balkany, 63, was arrested today after he accepted two checks from the fund totaling $3.25 million, U.S. Attorney Preet Bharara in Manhattan said in a statement. Balkany is charged with wire fraud, extortion, blackmail and making false statements, and he faces as long as 20 years in prison if convicted on the wire fraud charge, according to the statement.

Balkany told the Connecticut-based hedge fund that he was the spiritual adviser of an unidentified individual incarcerated in the federal prison in Otisville, New York, prosecutors said. He told lawyers for the hedge fund that the inmate would keep quiet about alleged illegal trading by the fund in 2004 and 2005 if they paid his school, Bais Yaakov, and another school $2 million each, prosecutors said.

Kelly Sharkey, a lawyer representing Balkany, didnít immediately return a call seeking comment after regular business hours.

The case is U.S. v. Balkany, U.S. District Court, Southern District of New York (Manhattan.)

To contact the reporter on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net.