Tribal Allegiance

As an undergraduate at the Wharton School of the University of Pennsylvania, Cohen was a brother in the Jewish fraternity Zeta Beta Tau and in 2007 gave the fraternity a $2 million gift. Now 54, Cohen evinces little outward connection to the Jewish Establishment—though he has been a generous political contributor to both parties and last summer reportedly hosted a dinner at his Greenwich estate for Republican strategists that included the Israel advocate Dan Senor, author of Start-Up Nation, who has been bruited as a possible Senate candidate in 2012. But in a city full of high-profile Jewish spenders, Cohen doesn’t engage in the antics of, say, his fellow hedge-funder Stephen Schwarzman, the New York Public Library donor who threw himself a $5 million birthday party that made the front page of the Wall Street Journal, or of David Brooks, the Long Island defense contractor who threw a $10 million bat mitzvah—complete with performances from Aerosmith and Tom Petty—for his daughter Elizabeth in 2005, before being charged in 2007 with insider trading and securities fraud. (Brooks was found guilty at trial in September.)

Yet, from the start, Balkany attempted to establish a Jewish rapport with his interlocutors—even where there wasn’t any to be made. A few days after his first phone call, Balkany met with Klotz, SAC’s outside counsel, at his gracious red-brick home in Brooklyn. The first thing Balkany asked Klotz, as they sat down over some snacks, was whether he was a Jew. “He said, ‘Are you Jewish, or Polish, or’—and it was sort of like, ‘What?’ ” Klotz, a graying, square-faced man whose family is German but not Jewish, testified with a bemused grin. A concealed camera captured a similar conversation between Nussbaum, SAC’s in-house lawyer, and the rabbi when they met in Stamford, in early January of this year. “What is your Hebrew name, Peter?” Balkany asked. Nussbaum, whose decidedly un-Hebraic middle name is Addison, told the rabbi that his German-born Jewish grandparents in Queens had been religious, but his father had insisted on a completely secular home. “So, we have to have you have a bar mitzvah!” Balkany responded, delighted. In court, months later, when one of the prosecutors asked Nussbaum—a tall, thin-faced, WASPy-looking man with a receding cap of sandy, straight hair—whether he considered himself ethnically Jewish, he answered with a curt “Yes.”

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Balkany’s case was the kind that usually doesn’t make it to trial. From the start, it was obvious that the government would be hard-pressed to lose. Everything, except for the first few phone calls Balkany made to SAC, was on tape. Over the course of the first four days of the trial, the jury heard hours of Balkany, in his distinctive lilt, wheedling and cajoling SAC representatives and undercover FBI agents he was told were SAC executives in more than 50 phone calls. The ask was simple: If Cohen gave him $4 million in checks for Bais Yaakov and Torah Vodaath, he would magically transmute it into “good will” with Regensberg, the inmate, who Balkany said he would instruct to keep quiet about “Connecticut.” “I want to tell you, this is a heavy lift,” Balkany told Klotz on the phone last January. The next day, when he met Klotz and Nussbaum in Stamford, he elaborated. “I don’t consider it a lot of money, and I’ll tell you why—not because he’s so rich,” Balkany explained. “I think, even if he was able to maintain the business, but if he had to go into this thing, you’re talking $20 million, $30 million.”

It’s impossible to know what the rabbi was thinking as he sat at the defense table listening to his own charade. He did not take the stand, and his lawyer, Brafman, declined interviews on the rabbi’s behalf. (“Talking too much and using poor judgment got him into this mess,” Brafman told me.) At 64, Balkany looks a little like a bearded Donald Sutherland, with the same bright white hair and bulbous features, always in a black or gray suit and a crisp white shirt with a black tie and a black velvet yarmulke, sometimes clutching a simple white ceramic mezuzah. As the trial progressed, he sometimes followed along with transcripts that were stacked in a three-ring binder. Other times, he stared off into space, or read from a bound copy of the Torah.

But a guy with the chutzpah to try and swindle Steve Cohen, a man legendary for his business acumen, is also the kind of person who would insist on going for broke with a jury trial rather than take a government plea offer. “Rabbi Balkany would not plead guilty because he insisted that he did not intentionally violate the law,” Brafman told me after the trial ended, when we met at his office in Midtown Manhattan—a comfortable room with cream-colored furniture, expansive views out over the East River, and walls cluttered with framed newspaper clippings and signed headshots from his celebrity clients. (Brafman reduced his normal fees for the rabbi.)

The rabbi was arrested once before, in 2003, on charges of misappropriating $700,000 in federal funds designated for paying down two school mortgages. (The New York Post dubbed him “Robbi.”) In that episode, Brafman convinced prosecutors to suspend their case in exchange for Balkany agreeing to return the money. This time around, Balkany clearly believed that he was tricked, over the course of two months of negotiations with Klotz, into going further than he’d ever intended at the outset. “Look, I told you from where I’m coming, you know, that I’d like him to participate in a couple of charities,” he told Klotz last December, shortly after their meeting in Brooklyn. “If, after you’ve shared the name and you’ve come back, well, it’s really of no consequence whatsoever, fine, you know, good luck and that’s it. Then I’m still happy we had our meeting.” Klotz said he understood. “You know, on the five percent chance that, you know, it could explode, there was somebody out there willing to take the time to sit down and to pass it on,” Balkany replied, “and give him the opportunity to divert, you know, this type of thing.”

As one person told me, Balkany is the kind of guy who will try to find a shortcut if you tell him to cross the street at the light. He was born in Detroit, where his father was a stock manager for General Motors and his mother worked as a typist. According to Balkany’s older brother, Louis, now a vascular surgeon in Toledo, Ohio, the family kept kosher but wasn’t Sabbath observant, until one day his brother—known to his family by his Hebrew name, Yehoshua—announced he wanted to leave his public school and go to a local yeshiva, Beth Yehuda.

Balkany won a scholarship to attend Torah Vodaath, a yeshiva in Brooklyn, and he stayed in New York after he was ordained as a rabbi in the late 1960s, eventually taking over as principal at Bais Yaakov. On a plane to Florida, he met Sarah Rubashkin, a daughter of Aaron Rubashkin, founder of Agriprocessors kosher meatpacking empire, who occupies a position of near-royalty in the Lubavitch community. They soon married, and their first child was born in 1969. (Agriprocessors was itself recently the target of a wide-ranging federal investigation; Balkany’s brother-in-law, Sholom Rubashkin, was sentenced last summer to 27 years in prison on charges of financial fraud.) “The Rubashkin family, they thought it was an intermarriage,” Louis Balkany recalled to me over the phone. Milton Balkany never became a Lubavitcher, maintaining his distinct version of Hasidic observance, and making his life in Borough Park, a few miles away from the Lubavitch enclave of Crown Heights.

By the late 1980s, he had established himself as a successful political fundraiser, mainly for Republicans; according to a May 1990 report in Common Cause, Balkany bragged that lobbyists called him “the million-dollar-a-year man.” He had a seat on the National Republican Senatorial Committee and once gave an invocation during a reception thrown by Dan Quayle, then vice president. “He was quirky, in the sense that he went to minyan first thing in the morning but he wore John Lobb shoes,” said a former Bush Administration staffer, referring to the bespoke brand popular with Republican heavyweights at the time.

Over the years, he developed a reputation as someone who had access not just to elected officials but to various government agencies, particularly the Bureau of Prisons, where attorneys found Balkany’s help invaluable in getting their clients’ requests addressed. “There was one case with a client who was in prison in the Midwest, and I was really at my wit’s end, and people said, ‘Call Rabbi Balkany,’ ” Brafman told me. “People who were not taking my calls took his calls, and he made inquiries and was able to convince the BOP to make the transfer.”

Continue reading: expensive clothes and jewelry, waiting for the Messiah, and a verdict. Or view as a single page.

Allison Hoffman is a senior writer for Tablet Magazine.