 On August 26, 2003, the US Attorney for the Southern District of New York, announced that Balkany had been detained on charges that he misappropriated approximately $700,000 in federal grant money.Balkany as the President and Director of Bais Yaakov, a Jewish day school in Brooklyn, applied for, in November 1999, and later received a $700,000 Congressional "Economic Development Initiative" grant administered through the auspices of the United States Department of Housing and Urban Development.According to the Complaint, he said that the entire grant amount would be used to pay off a mortgage on a building located on the Bais Yaakov property for an entity called "the Children's Center of Brooklyn" to house educational and therapeutic programs for disabled preschool children.