 In a deal with prosecutors in 2004, Balkany agreed to restrictions on his movement, six months probation, full restitution of the monies and admitted that he was wrong in not complying with specific terms of the grant's use.In return the State Prosecutor's Office promised not to pursue the case.On February 18, 2010, Balkany was arrested and charged with extortion, blackmail, wire fraud and making false statements in a Federal Court in Manhattan.