This past summer, Morris Talansky, the hustling Long Island rabbi and in-and-out-of-court businessman, told Israeli justice officials that he’d given Prime Minister Ehud Olmert political contributions, sometimes in the form of envelopes of cash. Olmert hasn’t been charged with a crime, but his enemies leveraged Talansky’s accusations into a national scandal. Olmert announced that he would resign once a new P.M. is elected. Now sources say the U.S. Attorney’s Office for the Eastern District and the Justice Department could indict Talansky for … bribing a foreign official with envelopes of cash, a violation of the Foreign Corrupt Practices Act. (Both Olmert and Talansky deny that the cash was a bribe, and Olmert says the amount was negligible.) A U.S. Attorney spokesman declined to comment, but sources say that a federal grand jury is investigating whether Talansky may have evaded taxes and laundered money. Israeli officials weren’t interested in those allegations when they surfaced, but, says a source, “FBI agents are flying all over the place.” And U.S. investigators are now using the testimony he gave in Israel as a road map to a possible prosecution. “Morris voluntarily assists Israel and discusses at length his involvement with Olmert, and next thing you know he finds himself subject of a grand-jury investigation in the U.S. based almost exclusively on words coming out of his own mouth,” complains his criminal lawyer, Bradley D. Simon, who began representing Talansky after his testimony. “Taking his own words and trying to use that as a basis of federal prosecution in the U.S. is patently unfair.” Simon wouldn’t comment on whether he’s had discussions with the U.S. Attorney, but a source reports that Talansky turned down a plea deal. If Talansky is indicted, his attorney said Olmert would be a critical witness, entangling him yet again with the would-be macher.