An orthodox rabbi in Brooklyn was charged yesterday with stealing about $700,000 in federal grant money that was supposed to go toward building a school for disabled children.

The rabbi, Milton Balkany, 57, was accused by federal prosecutors in Manhattan of diverting thousands of dollars of grant money to a personal bank account, as well as using grant money to pay for life insurance premiums, income taxes, electronics, cosmetics and restaurant bills.

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He also paid money to companies in Israel and New York with which his family members had connections, prosecutors charged.

"When Congress appropriated this grant," the United States attorney, James B. Comey, said in a statement, "it did so with the intent that the funds be used to build a school and help New York's disabled children. The complaint alleges the defendant ignored those requirements in order to line his own pockets and reward others who clearly were not entitled to the taxpayers' money."

The rabbi, who was released on a $750,000 personal recognizance bond in Federal District Court in Manhattan, will vigorously fight the charges, his lawyer, Benjamin Brafman, said later.

"He has violated no law," Mr. Brafman said. "He has no done nothing wrong." Mr. Brafman said he was confident the rabbi would "be able to demonstrate that not one penny was misappropriated, and that every dollar was indeed used for the benefit of learning-disabled children." Mr. Brafman called his client a scholar "with an impeccable reputation" who was involved in "many philanthropic and educational institutions."

Rabbi Balkany, who runs a Jewish day school in Brooklyn called Bais Yaakov, voluntarily surrendered to the authorities yesterday at 8 a.m., a federal prosecutor, Evan T. Barr, said in court.

The rabbi, who was charged with theft of government property, false claims, wire fraud and obstruction, sat quietly during the brief hearing, wearing a black skullcap.

Rabbi Balkany came into public light a few years ago after The Daily News reported that he had helped get day-care vouchers for parents by giving their names to officials in the Giuliani administration. No illegality was found, city officials have said.

The rabbi has also long been an aggressive political fund-raiser, often for Republican causes, according to news reports and records. He was once nicknamed the Brooklyn Bundler for his ability to round up contributions, one news report said. A 2000 report by The Associated Press said the rabbi and his family had given $23,000 to Rudolph W. Giuliani's mayoral and Senate campaigns. A spokeswoman for Mr. Giuliani declined to comment yesterday.

The charges yesterday had nothing to do with any of those activities.

A criminal complaint filed by Mr. Comey's office said that in 1999 Rabbi Balkany received a $700,000 Congressional "Economic Development Initiative" grant, administered through the federal Department of Housing and Urban Development.

The grant was issued to "the Children's Center of Brooklyn, New York," the complaint said, "for the construction of a facility to house educational and therapeutic programs for disabled preschool children." The money was to be used to refinance a mortgage for the Children's Center, the complaint said.

In November 2001, investigators with the federal housing agency's inspector general began a review after finding that the funds were withdrawn from the account in a single lump sum instead of gradual disbursements, and that the center had not filed required progress reports.

In an interview with an auditor in December 2001, the rabbi refused to show books and records, "stating that he did not have to explain how he used the HUD money," the complaint said.

The grant money went to various uses, prosecutors said. One check for $300,000 was paid to a corporation in Israel, one of whose officers is the rabbi's son-in-law, the complaint said. Money was also paid to other rabbis or Jewish institutions, or used for personal items, the complaint charged.

Mr. Brafman said one difficulty his client faced in dealing with the government was "that the regulations for these programs are extraordinarily complicated, and there are times when mistakes can be made."

"But a mistake that is made in good faith is a far cry from intentional criminal conduct," Mr. Brafman said, "and in this case there was no intentional criminal violations of the law."