ALBANY — A superseding indictment unsealed Tuesday charged several top members of the secretive NXIVM organization with running a criminal enterprise that engaged in crimes including money laundering, extortion and obstruction of justice.
The criminal case against NXIVM co-founder Keith Raniere and television actress Allison Mack now includes NXIVM's president, Nancy Salzman, and her daughter Lauren, along with Clare Bronfman, the organization's operations director and an heiress of the Seagram's liquor empire. Kathy Russell, a longtime bookkeeper for NXIVM, also was indicted.
Federal agents in Albany arrested Salzman and her daughter along with Russell early Tuesday. Bronfman was taken into custody by federal agents in New York City.
The seven-count superseding indictment charges the six defendants with crimes that also included identity theft, harboring of aliens for financial gain, forced labor, sex trafficking and wire fraud.
The charges allege the defendants took part in recruiting and grooming sexual partners for Raniere and of using "harassment, coercion and abusive litigation to intimidate and attack perceived enemies and critics of Raniere."
The indictment, which describes NXIVM as having been run as a type of pyramid scheme, alleges that they encouraged "associates and others to take expensive NXIVM courses, and incur debt to do so, as a means of exerting control over them and to obtain financial benefits for the members of the enterprise."
The indictment unsealed Tuesday is a crippling blow to an organization that took shape in the Capital Region in the late 1990s. Under the direction of Raniere and Salzman, who had touted NXIVM's training curriculums as a way for participants to improve their lives, the organization quietly built a following that included actors as well as the wealthy and politically powerful.
NXIVM, which has been described by some experts as a cult, also developed a reputation for aggressively pursuing critics and defectors who broke from its ranks. The organization has been accused of using litigation to punish defectors who have criticized Raniere, the organization, or its training methods. NXIVM required its employees and devotees to sign non-disclosure agreements that were often used as weapons in their litigation against defectors or critics.
One of the counts in the federal indictment unsealed Tuesday includes an allegation that NXIVM officials destroyed "videotapes of Nancy Salzman" as part of an effort to conceal evidence from use in a civil case in which NXIVM had sued Rick Ross, a cult expert. The lawsuit, filed in 2006, accused Ross of publishing — without authorization — protected materials from its training programs. NXIVM has denied it is a cult. Ross eventually prevailed in the litigation, which dragged on for years.
Ross had accused the corporation of hiring a New York investigative and security firm, Interfor, to conduct background checks on him, including obtaining details of his banking records, phone calls and personal relationships.
The Salzmans and Russell made their initial appearances before U.S. Magistrate Daniel Stewart in Albany on Tuesday afternoon.
Russell, who has been associated with NXIVM since coming to the Capital Region from Alaska in 2002, was the first to appear in federal court. Accompanied by U.S. marshals, she shuffled down the hallway to the fourth floor courtroom with shackles on her ankles and her hands cuffed behind her back.
Federal prosecutors asked Stewart to set bond for Russell at $50,000, but he lowered it to $25,000 at the request of her attorney, William Fanciullo. However, Fanciullo told the judge his client had very little cash, a car worth about $8,000 and no assets. He said she lives in a Clifton Park apartment.
"She is a 60-year-old woman," Fanciullo told the judge. "She has next to no money. ... Her release poses no danger to anyone or to the community."
Prosecutors noted that Russell, who has an accounting background, is known for her ability to travel long distances and is accused of helping commit identity theft and aiding in an illegal border crossing. They said she also allegedly took part in a scheme to help obtain computer user names and passwords of people "believed to be NXIVM enemies," prosecutors said.
Lauren Salzman remained in custody at the Rensselaer County jail late Tuesday after the judge had agreed to her release on $5 million bond. The release required her grandparents — traveling from New Jersey on Tuesday — to pay $50,000 cash to secure the bond.
Nancy Salzman was also ordered released pending the execution of a $5 million surety bond that was to be signed by her parents and a friend, Capital Region resident David Messing. It was not clear late Tuesday whether she remained in custody.
The Salzmans will be allowed to maintain contact, the judge said, primarily because Lauren Salzman is helping care for her mother, who is facing what was described in court as a "life-threatening" medical condition.
The Salzmans were ordered to appear in federal court in Brooklyn at 2 p.m. Wednesday. Russell also remained in federal custody late Tuesday pending her release.
Bronfman made her initial court appearance at a federal courthouse in Brooklyn on Tuesday afternoon and was released on $100 million bond after pleading not guilty, according to the U.S. attorney's office.
All of the defendants were described as flight risks by federal authorities, and their conditions of release include home detention and electronic monitoring.
The arrests are part of an investigation that led to the indictment in April of Raniere and Mack, a longtime NXIVM member. They were initially charged with sex trafficking and conspiracy for allegedly organizing a secret group within NXIVM in which some of its female members said they felt coerced into joining a slave-master club, and were later branded with a design that included the initials of Raniere and Mack.
But the indictment unsealed Tuesday sharply expanded the breadth of the case. Among the allegations are that Bronfman aided in the illegal entry of an immigrant for her personal gain and committed money laundering using international wire transfers.
Prosecutors filed a memorandum Tuesday outlining details of the alleged crimes against Bronfman. They said she conspired to commit identity theft, facilitated Raniere's use of his deceased girlfriend's credit card, and led efforts to discredit Raniere's alleged victims.
Lauren Salzman's alleged crimes include trafficking a victim for forced labor, including helping facilitate the captivity of a Mexican woman who was Raniere's sexual partner; the woman was allegedly locked in an apartment for more than a year as punishment for showing interest in another man.
Prosecutors said Lauren Salzman also was a "first line master" in the underground slave-master club, and led efforts to disseminate misinformation about the secret group to discredit victims who defected.
Nancy Salzman, president of NXIVM, was revealed as a target in the probe several months ago when the Times Union first reported that FBI agents seized more than $520,000 in cash after they raided her Saratoga County residence as part of the intensifying investigation of NXIVM's business dealings.
Federal court records indicate she took part in illegally obtaining user names and passwords to monitor the email accounts of NXIVM's perceived enemies. She also allegedly altered videos of her training seminars that were ordered to be turned over to a former student who was sued by NXIVM — and countersued — as part of pre-trial discovery.
Salzman "agreed to edit the videos to remove material that they believed would have supported the former student's claims and to make it look as if the videos were unedited," prosecutors wrote in memorandum filed Tuesday.
People familiar with NXIVM's inner workings said that Lauren Salzman has served as CEO of some of the businesses connected to the organization. Russell, they said, left her family in Alaska to join NXIVM and had helped with its financial and business operations for more than 15 years.
In 2000, during a deposition in a bankruptcy proceeding, Nancy Salzman, who records indicate has been a licensed nurse in New York since 1983, described herself as a "psychotherapist," while acknowledging that it is "not an earned degree ... it's a descriptive term." She also testified that beginning in 1985 and continuing through 1992, she had taken "neurolinguistic programming courses."
The Times Union reported last October that Nancy Salzman had recruited participants who took part in unsanctioned brain-activity and other human experiment studies that were conducted by at least one doctor, Brandon Porter, associated for years with NXIVM. Porter is facing disciplinary charges from New York state for his unsanctioned experiments and did the work for both NXIVM and a non-profit set up by Bronfman, who has been a close confidante of Raniere's and Salzman's and one of the organization's biggest sources of funding.
NXIVM, headquartered in Colonie and with offices in Los Angeles, Canada and Mexico, recently suspended its operations in the wake of Raniere's arrest.
While the case had focused on the alleged sex trafficking of Raniere and Mack, the investigation also has probed the business dealings of NXIVM and allegations that large amounts of cash had been smuggled into the United States from Mexico.
In the sex trafficking charges against Raniere, the government alleged that some of the women said they felt coerced into having sex with Raniere because of the threat of having their personal material or "collateral" released if they tried to leave the group or failed to follow orders.
Prosecutors have not described NXIVM as a cult or raised that issue in the indictment or other court filings. They have described NXIVM as a multi-level marketing — or pyramid — scheme.
A federal judge recently rejected Raniere's request to be released from custody while his criminal case is pending. He is being held at the U.S. Metropolitan Detention Center in Brooklyn.
Raniere, 57, was arrested in March at a luxury beach villa in Puerto Vallarta, Mexico. In Mexico, authorities said, Raniere got rid of his mobile phone and used encrypted email to communicate. It took authorities nearly two months to locate him before he was deported and arrested by U.S. federal agents.
Mack was released on bond under conditions that include remaining at her parents' California residence and wearing an electronic monitoring device on her ankle.
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