A New York fundraiser and a Las Vegas gambling czar have become major headaches for Israeli Prime Minister Ehud Olmert, raising new questions about the relationship between Jewish Americans and the Jewish state.

While Israel has had close ties with the U.S. Jewish community throughout its history, some wealthy American donors have extended their influence to Israel's halls of power, crossing what many Israelis see as a red line. The cases of fundraiser Morris Talansky and casino mogul Sheldon Adelson have drawn new attention to this sometimes blurry relationship.

Talansky's testimony that he handed Olmert cash-stuffed envelopes in the years before he became prime minister is at the center of a scandal that may topple the Israeli leader. Olmert's lawyers are set to cross-examine Talansky on Thursday.

Adelson, meanwhile, has launched a newspaper that makes no bones about its disgust with Olmert.

Neither man is suspected of anything illicit. But there is an important similarity. Both have chosen to move beyond philanthropy to political activism, using their money to influence decision-making in a country they love but which is not their home.

"It's simple: Whoever doesn't pay the price does not have the right to get involved," said Matti Golan, an Israeli author who has written about the ties between U.S. Jews and Israel.

The relationship benefits both wealthy U.S. Jews, who get to feel important by hobnobbing with powerful politicians, and Israeli politicians, who can expand their limited pool of donors in Israel and who enjoy getting the royal treatment on trips abroad, he said.

"Who gave American Jews the right to decide what is good or bad for Israel?" said Abe Foxman, head of the Anti-Defamation League, an American Jewish advocacy group. "What are the consequences of their opinion if they are wrong in their assessments? They will sit in Beverly Hills or the Hamptons and say, 'I was wrong,"' Foxman said.

"The fact that you support universities and charitable needs doesn't give you the right to determine issues of life and death," he said.

Israeli law forbids direct foreign donations to political parties and limits donations to individual politicians to a maximum of about $10,000, depending on whether the money is meant for a local election, a national race or an internal party primary.

But other activities aren't restricted. American donors can give money to political causes ranging from hardline groups that promote Jewish settlements in the West Bank to the dovish Peace Now.

In the case of Adelson, he launched a newspaper that harshly criticizes Olmert and is distributed free to hundreds of thousands of Israelis. The newspaper is part of what is widely seen by Adelson as a concerted attempt to replace Olmert with his hardline rival, Likud leader Benjamin Netanyahu.

Israeli political insiders see the paper, Yisrael Hayom — Israel Today — as a mouthpiece for Netanyahu. Olmert's media adviser, Jacob Galanti, refuses to refer to it as a newspaper, recently terming it a "printed product."

Adelson, a casino multibillionaire listed by Forbes last year as the third-richest man in America, has long had pull in Israel's corridors of power. In May, when he helped fund a conference convened by President Shimon Peres for Israel's 60th anniversary, he and his wife were seated alongside Olmert and other Israeli leaders.

Nahum Barnea, one of Israel's most respected journalists, later referred in his column to the "gambling mogul from Las Vegas who bought my country's birthday for $3 million."

"Is the country worth so little?" Barnea asked.

Through a representative in Las Vegas, Adelson declined an interview request.

Adelson's paper, a tabloid heavy on sports and celebrity gossip, has extended Adelson's reach to everyday Israelis. It is delivered free of charge to people's doorsteps and distributed at busy intersections.

The newspaper typically carries a front-page editorial blasting Olmert and his government, with long investigative pieces inside on the misdeeds of Olmert and his cronies. Coverage of Netanyahu is generally benign.

Newspaper officials did not return messages seeking comment.

Olmert's spokesman, Mark Regev, would not comment on Adelson's activities, but noted that Olmert told The Atlantic Monthly in May that there were U.S. Jews "investing a lot of money trying to overthrow the government in Israel."

Until his recent troubles, Olmert welcomed involvement by American Jews. In the years before he became prime minister, he was happy to accept donations from Americans. One donor was Talansky, now the central figure in a corruption scandal that has ravaged what little popularity Olmert had and could force him out of office.

Talansky, who lives on New York's Long Island, made his donations to Olmert when he was mayor of Jerusalem, a Likud lawmaker and later a Cabinet minister. Testifying in May, Talansky spoke of his deep love for Israel and his conviction that Olmert was the right man to lead the country.

In 2006, Olmert broke away from Likud and led the centrist Kadima Party to victory in national elections. Today, Talansky appears to be bitterly disillusioned with Olmert, and says he believes some of his money went to fund a lavish lifestyle that included expensive cigars, luxury hotels and a vacation in Italy.

Police are investigating and Olmert has said he will resign if indicted. In the meantime, his political rivals have begun the process of replacing him as leader of the Kadima party, with primaries scheduled by the end of September.

Amnon Rubinstein, a prominent Israeli legal expert and a former justice minister, said American Jews "should give money to charity, to universities, to hospitals, but not to political parties."

But across the Israeli political spectrum, it has become a commonly accepted practice.

"Israel has been receiving donations from Diaspora Jews for 60 years," said Eliad Shraga, who founded the country's best-known good governance group, the Movement for Quality Government in Israel. "As long as it's legal, I don't see a problem."

Yossi Beilin of the dovish Meretz Party said the involvement of American Jews, even those with views different from his own, is preferable to apathy.

In the 1990s, Florida bingo magnate Irving Moskowitz set off a political storm by building a Jewish neighborhood in heavily Arab east Jerusalem with the enthusiastic cooperation of Jerusalem's mayor — Olmert. Beilin was an unlikely defender.

"I said I thought he was doing terrible damage, but I couldn't ignore the fact that he cares. I prefer someone who cares about Israel to someone who doesn't," Beilin said.