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Tribal Allegiance: The Strange Nexus of a Brooklyn Rabbi and Hedge-Fund King Steven Cohen

A Brooklyn rabbi thought he could swindle hedge-fund king Steven Cohen by playing on his Judaism. It was a bad bet.

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Milton Balkany, Steven Cohen, and Balkany’s former yeshiva, Mesivta Torah Vodaath. (Photoillustration: Tablet Magazine; Balkany photo: Ron Antonelli/New York Daily News Archive via Getty Images; Cohen photo: Anthony Behar/Getty Images; Mesivta Torah Vodaath photo: Allison Hoffman/Tablet Magazine)

Steven A. Cohen, the billionaire hedge-fund manager, doesn’t take cold calls. If you dial the headquarters of Cohen’s $12 billion fund, SAC Capital Advisors, in Stamford, Connecticut, a pleasant-voiced receptionist will kindly offer to take a message, which Cohen’s assistant will screen without disturbing her boss, who typically spends the hours of the trading day deeply engrossed in the numbers flashing across the eight screens mounted at his desk. He communicates with his fellow traders through desktop squawk boxes, and they watch him via an in-house video feed referred to as “the Steve Cam.”

A phone message deemed sufficiently mysterious might be passed to SAC’s general counsel, Peter Nussbaum, which is how Nussbaum wound up talking last winter to an ultra-Orthodox rabbi named Milton Balkany, who said he had information that was potentially damaging to SAC. The rabbi had, wittingly or not, called on a December day when everyone in Cohen’s orbit was on high alert. The morning’s New York Times featured a story about rumors linking SAC to the government’s investigation of a rival fund, the Galleon Group—which has since blossomed into one of the largest insider-trading probes in Wall Street history. The same afternoon, Cohen’s ex-wife, Patricia, filed a sensational civil suit alleging that he had traded on inside information in the 1980s, while they were still married. (Cohen has moved for dismissal.)

Balkany introduced himself as the dean of a Jewish girls’ school in Brooklyn. He may as well have been calling from another planet—one governed by shtetl values dictating that Jews should accord a high degree of loyalty to each other. The rabbi claimed that, in the course of his work counseling Jewish prisoners, he had learned that the government was pressuring an inmate to give up information about Cohen, and that, as a fellow Jew, he didn’t want to see harm befall the hedge-fund manager, even though they didn’t know each other. It quickly emerged that Balkany wanted something in return—$2 million in cash for his struggling school, Bais Yaakov of Midwood, and a $2 million loan for his former yeshiva, Mesivta Torah Vodaath, one of the oldest and largest of Brooklyn’s ultra-Orthodox high schools. And one more thing: He wanted a 20-minute meeting with Cohen for his son-in-law, an aspiring financier who dreamed of pitching his idol on an investment idea.

The conversation with Nussbaum set off a chain of events that ultimately led to Balkany, a onetime power broker known as “the Brooklyn Bundler,” being found guilty in federal court last month of extortion, blackmail, fraud, and making false statements to a government agent. His trial, in a wood-paneled courtroom in lower Manhattan, played out as a kind of Jewish commedia dell’arte. Balkany, the bearded rabbi, was dressed in customary dark suits accessorized with a black velvet yarmulke. He shared the defense table with a Brooklyn boy made good: the lawyer Benjamin Brafman, a Modern Orthodox Jew who is famous for representing high-profile celebrities like Jay-Z, Sean Combs, and Plaxico Burress. The government’s case was argued by Marc Berger and Jesse Furman, both Jewish and Ivy League-educated assistant U.S. attorneys. In the public gallery, Balkany’s wife and a rotating cast of his 13 sons and daughters made up a kind of Greek chorus, sighing and clucking as the damaging testimony added up.

In his various phone calls and meetings with SAC’s lawyers, Balkany had repeated one phrase as if it would insulate him from suspicion: “I’m not a hold-up man.” He would then invariably assert the value of the work his school was doing in the community, or his good character as a Jew. “I’m not here to threaten some—God forbid, I’m on the other side of the fence,” Balkany told Nussbaum in one taped conversation. “You know, my heart goes out, that a man like Cohen, who obviously has made it, he’s probably even a kohane because his name is Cohen.”

Cohen, the Long Island-raised son of a Seventh Avenue garmento, never met Balkany, and he never came anywhere near the courtroom during Balkany’s trial in November. The closest he got, at least publicly, was a modern art auction at Christie’s, 60 blocks uptown. But the rabbi was the least of Cohen’s problems that month: The government’s insider-trading investigation was reaching fever pitch. Two weeks after the trial wrapped up, government agents served SAC and two other hedge funds with subpoenas and began making arrests.

And yet, from the start, Cohen’s lawyers took the rabbi seriously. Within days of Balkany’s first call to Connecticut, SAC’s outside counsel, a former prosecutor named Martin Klotz, reported the rabbi to federal prosecutors in New York’s Southern District—the same office pursuing the insider-trading investigation against Galleon. The SAC attorneys agreed to take the step of going undercover, taping hours of conversations that were crucial to the government’s case against Balkany. The rabbi, it seems, provided an excellent opportunity for Cohen’s team to do the government “a solid,” as one lawyer who has represented clients in the insider-trading investigation into Galleon put it to me. Stephen Miller, a former federal prosecutor in Manhattan and Philadelphia, explained SAC’s decision to participate as a savvy legal move. “They could say they have a culture of compliance,” he said, “and Exhibit A is this case.”

Now Balkany, who assumed that by presenting himself as a concerned “co-religionist” he could establish a real connection to Cohen, is facing up to 20 years in prison. And it’s all because the rabbi made a simple mistake: believing that, just because he imagined they shared a special bond as Jews, Cohen would feel the same way.


On November 1, 2010, the first day of the trial, Brafman, Balkany’s lawyer, urged the jury—three men and nine women, all but two of them black or Latino—not to judge his client as a Jew. “I represent the man with the white beard and black yarmulke,” Brafman said, by way of introduction. “Look at yourselves,” he went on. “Nobody on the jury looks like Rabbi Balkany. That’s not a jury of one’s peers.” It was an effective rhetorical gesture, but it sounded almost absurd in the context of a case that turned on Balkany’s effort to trade on his and Cohen’s shared Jewish heritage. “Frankly, I, I really, I’m doing this as a Jew to a Jew,” Balkany had insisted in a taped conversation with Klotz, SAC’s outside counsel. “I’m just stepping in, really, to be of help to him.”

The plan to extort Steve Cohen appears to have originated at the federal prison camp in Otisville, N.Y., an hour or so north of Manhattan, which the Bureau of Prisons has tailored to suit the special dietary and other needs of Hasidic inmates. “It’s like a bungalow colony up there in the Catskills,” joked Gary Friedman, the executive director of Jewish Prisoner Services International, an organization that provides services to Jewish inmates. Balkany was a regular visitor to the camp and, in his recorded conversations with SAC’s lawyers, said it was an inmate named David Schick who provided the connection to Hayim Regensberg, the man Balkany claimed was being pressured to give information on SAC. Schick, the scion of a famous bakery dynasty in Brooklyn, is an Orthodox Jew who defrauded his investors of as much as $200 million in the late 1990s.

Regensberg is serving a 100-month sentence for running a Ponzi scheme, and his lawyer, Robert Baum, told me he believes his client has information that may be of interest to the government. Indeed, some of the details that Balkany dangled in his conversations with SAC have proven to connect to real investigations—particularly concerning a healthcare fund called FrontPoint, which is embroiled in its own insider-trading scandal. But prison officials testified during Balkany’s trial that the rabbi never visited Regensberg during the months he spent negotiating with SAC, and federal investigators testified that no one from the government ever spoke to him about the insider-trading investigations, let alone approached him with an offer to cut a deal in exchange for information. “They haven’t tried to follow up,” Baum told me, in late November.

In Jewish terms, Cohen made a strange target. He and his wife, Alexandra—who grew up in a Puerto Rican Catholic family in Washington Heights—do not, according to tax records filed by their family foundation, give to Jewish communal organizations or to synagogues, but choose instead to shower millions on hospitals, urban-youth programs, and the schools where their children are enrolled—including Brown University, from which Cohen’s son, Robert, graduated in 2009. Cohen also sits on the board of the Robin Hood Foundation, a group devoted to fighting poverty in New York. Of the millions his foundation has given away since it was set up in 2001, the only significant donation to a Jewish cause was $25,000 to a religious-outreach group called Gateways, which is based in the ultra-Orthodox enclave of Monsey, to buy a table at a gala fundraising dinner in 2004. (The group’s director, Mordechai Suchard, told me he couldn’t remember who was being honored.)

In the wake of Balkany’s arrest, and amid a wave of publicity surrounding Cohen’s ex-wife Patricia, Steve and Alex Cohen earlier this year announced a $50 million gift to an organization that is at least nominally Jewish: the North Shore-Long Island Jewish Health System, which will use the money to expand its children’s hospital in New Hyde Park, south of Great Neck, where Cohen grew up. “Stevie Cohen is one of the most charitable people I know, and he’s done extremely well,” said his former boss Howard Silverman, who gave Cohen his start on Wall Street 30 years ago, at the boutique investment firm Gruntal & Co. “He wasn’t into his religion—he was just Jewish, like anyone else.”

Continue reading: a Jewish bond, Republican heavyweights, and “This trial doesn’t need any more drama.” Or view as a single page.

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Gitta Zarum says:

Why do you keep on referring to Balkany and Schick as ‘orthodox Jews’?
If someone does not steal, but does not keep Shabbat and kashrut, you would not refer to that person as an ‘orthodox Jew’. Upholding Jewish laws between one person and another is just as important as upholding Jewish laws between man and God. Therefore Balkany and Schick are NOT ‘orthodox Jews’ and should be seen as a disgrace to orthodox Judaism.

MTV i believe, but Shick’s bakery?

can i still trust their parve?

is this why they ended the dairy case?

The Mishna (Yoma 8:9) teaches that for sins between man and God, Yom Kippur provides atonement; but for sins between man and fellow man, Yom Kippur does not provide atonement, until he appeases that man. Has Balkany apologized? Has his brother-in-law Rubashkin?

The irony is that all to many Orthodox Jews belittle non-Orthodox Jews for “picking and choosing” halacha to suit their convenience; but, this is precisely what Balkany, Rubashkin and others of their ilk do. Until the Orthodox community explicitly and unambiguously resets to value “mitzvot bein adam le’chavero” at the same level as “mitzvot bein adam la’makom” this chilul ha’shem will sadly be replayed time and again.

Why do you suggest that Cohen doesn’t feel a connection or obligation to other Jews? If he did, would he have agreed to be a victim of blackmail?

That makes no sense whatsoever. The problem is Balkany – this is an affinity crime.

What a brilliant piece. Bravo.

@Ittai, Rubashkin apologise?? are you hearing yourself?! did you read anything about the case? do you know that ten attorney generals came out against the judges ruling in Iowa claiming undue and malicious influence by the judge interfering in the case!
dont compare apples to oranges!!

btw all he did in simple words were “You’re in trouble, give me some money and ill make sure the guy doesn’t rat on you” Cohen could’ve taken it or left it! he chose to use the Rabbi to score some brownie points of his own and save his ass by putting the Rabbi in prison for ten years! Vile and disgusting behavior…. and the Gov is equally vile when it sets people up using these witnesses who are looking to cop a plea while setting up people who without the govs “help” would never accomplish their criminal goals!(Entrapment)??? so people get 10,20,30 years in prison for half baked conspiracy crimes!!

Gornisht aza Klotz!

Joel, whether Rubashkin got a fair sentence or not is debatable and that will be determined in the appeal process. The fact that he is a gonif is beyond doubt, though.

It is worth observing that in both cases, these were not stam Jews; but pillars of their community. This makes the Chilul ha’Shem even greater — and the need for an apology even greater.

Baltimore Yid says:

I’m so sick of the arrogant attitude that somehow the g’neiva will go unpunished. I’m glad to see that Balkany, the Spinka rebbe & Rubashkin got their just desserts. Let it serve as an example to others contemplating a crime.

Whoever wrote this article was great. Precise. Interesting.Intriguing.
Great writing. On the other hand where is the great morality of these Jews. I believe these ultra-Orthodx and Habbad leaders are deeply flawed. Did they learn nothing from the Holocaust? God didn’t save them but they could have saved themselves, their families and Jews by fighting.

100 months, 27 years, 150 years are the jail terms for Jews. Blacks and Hispanics can rape and murder and get out in 4 years. Is there an anti-Jew bias going on with the Jews usually being the prosecuting attorneys?

The Rosenbergs were sentenced to death by a Jew judge Kaufman. Alan Nunn in England did exactly the same as the Rosenbergs and he was sentence to 9 years in jail. 9 years not death. Jonathan Pollard is rotting in prison because he’s a Jew and we have the best Jews as lawyers and judges and they are afraid to do anything because we are GUESTS in America. Blacks and Hispanics and all other nationalities are never going to be thrown out but the Jew because in spite our our ridiculous 10 million dollar bar-mitzvas we have no strength. They did it in Germany and with the wrong conditions it will happen here because Jews won’t do anything to stop it. Steve Cohen doesn’t give to Jew organizations or Israel. Most of these Jews give millions to blacks but not one penny to help Jews. We have to stop hemoraging Jews and make Jews proud of who they are they’re fantastic heritage instead of being ashamed of it like Spielberg and Ralp Loren, nee Lipshitz.

Contact me Bill Levy

If Steve Cohen wanted to distance himself from **landsmen** like Balkany and Schick he should have earned his billion manufacturing exportable automobiles in the USA, or at least devising a computer operating system instead of by moving money in the time-dishonored Jewish fashion.

When a gentile commits a crime, he is harming only himself (and his community, if he is a minority). But when a Jewish person commits a crime, he is doing harm to all of us (Jews). I worry about the liberties taken by (fundamentalist)ultra-Orthodox Jews (especially in Israel, where there is some very hateful behavior by the ‘pious’ ones). Also, think of what happened when the traders and savings and loan brought disaster upon the country. I’ve seen the documentary “Inside Job,” and although the film doesn’t say a word about this, the majority of those criminals seemed to be Jewish. This puts ALL of us in real danger — not to mention it’s a very un-Jewish way to behave. What happened to living life according to the highest possible ethical standards??

Ilana H. says:

A well written, balanced portrayal.

Who cares about these two rats!!

I hope the goverment does a through investigation of him as well as other hedge funds.

Greg Solomon says:

Moliere came up with a pretty good name for someone who behaves like this: Tartuffe! I don’t doubt that SAC’s legal team were beside theselves with glee when they struck upon this way of earning “brownie points” by being cooperative, as one commenter pointed out, but the notion that two wrongs make a right is the law of the jungle, not Jewish law. If the money were really for two charities, i.e., schools, Balkany could have easily gotten chump change like four mil from the Rubashkins. I’m sure his wife would have been delighted to help him gain access to the right people within her family or their huge company. But apparently the Rubashkins were aready on to him many years before the government was, and no amount of schmoozing even by their own daughter could have changed that.

dani levi says:

The Ultra’s, when some of them are not signing letters a la Nurenberg laws are sodomizing young boys in the Mikveh in Williamsburg they steel money like schmutz. What up guys? too much incest? too little fresh air at night? maybe one should crack the bed room window for thigh hallowed brain to be oxygenated.
BIG disgrace mud on your face! and remember, what ever you do, do NOT pick up the soap in the shower.

Mickey Green says:

Good reporting. Thank you

robert kern says:

this isnt really a case about religion

chicago8 says:

just read this fantastic piece.. excellent writing, worthy of a Pulitzer
a friend forwarded the link

never read Tablet before

I came across your blog’s link put up by a friend on Facebook. Thanks for putting useful info on the internet. It’s tough to come by this stuff nowadays.

Thanks for the helpful words.

I’ve said that least 3130350 times. The problem this like that is they are just too compilcated for the average bird, if you know what I mean

Youre so cool! I dont suppose Ive read anything like this before. So nice to search out any individual with some original thoughts on this subject. realy thank you for beginning this up. this web site is one thing that is wanted on the net, someone with a bit originality. helpful job for bringing something new to the web!

Very good suggestions, you just gained a brand new reader. Do you have any feedback on your most recent post though?

altoM5 says:

The rabbi was wrong but that doesn’t mean he wasn’t right.
(In case anyone actually reads this: Since the poor-victim-of-medieval-religion-secular-intermarried-Jew was just nailed for cheating, after first accumulating wealth equal to some small nations, enough wealth to take a tiny piece and give 10 Jewish schools an endowment, I came across this old story.)


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Tribal Allegiance: The Strange Nexus of a Brooklyn Rabbi and Hedge-Fund King Steven Cohen

A Brooklyn rabbi thought he could swindle hedge-fund king Steven Cohen by playing on his Judaism. It was a bad bet.