Milton Balkany, Brooklyn Rabbi, Busted Again

Here's Balkany, 63, telling representatives of a Connecticut hedge fund why they should pay him $4 million in exchange for using his influence to keep a federal inmate from spilling the beans in an insider trading probe:

"I think it's a very minor price for the package over here. I think if this ever got into what [the government] wants to bring, it would cost [the Hedge Fund Manager] ten million [dollars] in lawyers...It's a very inexpensive way out. You know what I mean? ...I'm not holding up anybody here."

He also offered his own experiential notion of what happens when the feds launch one of their probes:

"The government is like this. They throw a bucket of mud, that even if the guy gets out, when he gets done going through the whole publicity and the whole everything else, the guy's destroyed."

And: "If the FBI should be running after the [Hedge Fund Manager], they could destroy the man. You know what I mean? I don't care how many billions he has, these guys come and they -- they're merciless."

His own motives, however, were pure: "I'm not a hold-up man. I'm not here to threaten some -- God forbid, I, I'm on the other side of the fence."

He also sounded like a man badly in need of a glass of water as he told the hedge fund reps how badly the feds wanted to get the inmate to talk: The government was "very thirsty," he said on December 24. "They're very thirsty to get his cooperation," he said on January 4. "I'm gonna tell you some information about how thirsty they are to get this man," he added.

Allegedly, there was no such insider trading probe, and allegedly, Rabbi Balkany made the whole thing up on one of his many visits to Otisville federal prison, a place where white collar criminals are often sent.

The criminal complaint filed by federal investigator Robert Manchak seems to present a pretty good case for the fraud, extortion, and blackmail charges filed yesterday against Balkany. But he's been here before, and don't count him out.

A few years ago, Balkany walked away from another federal arrest for stealing $700,000 in federal grants intended to help disabled students at his Brooklyn girls school. The feds cut a rare deal, allowing Balkany to pay back $400,000 and pledge not to seek any more federal grants. They also demanded, somewhat mysteriously, that the rabbi never lobby federal prison officials again, something that has never been officially explained, despite efforts by the Voice and others to figure out.

But Balkany has long worked successfully behind the scenes, such as the Great Day Care Voucher Deal he cut with his old pal Rudy Giuliani back in the day,