Law enforcement has fielded NXIVM complaints for years

No indication multiple agencies ever launched deep probes of self-help organization

Albany Times-Union/November 12, 2017

By Brendan J. Lyons

For years, numerous people with connections to NXIVM made troubling reports about the Colonie-based self-help group to a host of law enforcement agencies. They shared allegations of money laundering, tax evasion, immigration fraud, kidnapping plots and perjury.

Despite the litany of complaints, no criminal charge has ever been leveled against the secretive organization or its leader, Keith Raniere.

Rather, on several occasions, it is critics of NXIVM who have found themselves subject to investigation and damaging lawsuits.

But recent scrutiny by national media, including reports that some women loyal to NXIVM were secretly branded with Raniere's initials, may have changed the equation.

New York Attorney General Eric Schneiderman's office has begun examining NXIVM's dealings, according to two people with knowledge of the matter. The new interest comes after multiple law enforcement agencies, including Schneiderman's office, had for years brushed aside the concerns from Raniere's critics and others about the murky inner workings of NXIVM, which one expert has characterized as an "extreme cult." A spokesman for Schneiderman did not respond to questions about the investigation.

The agencies that have fielded complaints but declined to pursue deep investigations of NXIVM also include the U.S. attorney's office in Albany, the New York State Police, the U.S. Immigrations and Customs Enforcement Agency, the Internal Revenue Service and the FBI,

according to interviews with law enforcement sources and people who said they provided information to those agencies.

Questions have also been raised about the response of state health officials to a complaint filed in August against a NXIVM-connected doctor who allegedly subjected multiple women to brain-activity studies that apparently did not follow standard research protocols. Gov. Andrew Cuomo last month ordered a review of the Health Department's handling of the complaint.

NXIVM officials and associates have repeatedly denied any wrongdoing and dispute any allegation they are a cult. They did not return calls seeking comment for this article.

Aides to Schneiderman met this week with actress Catherine Oxenberg, who has been waging a high-profile battle to get her 26-year-old daughter, India, to leave NXIVM. Oxenberg said she suspects her daughter was one of those branded. She declined to discuss her meeting with officials from Schneiderman's office.

"I have one goal, which is to get attention from the authorities," Oxenberg said, in an interview with the Times Union. "It seems like things have slipped through the cracks. ... Nobody has taken responsibility."

Still, it's unclear what the governor's review or the renewed attention from the attorney general may mean for NXIVM, which has been a focus of concerns from its defectors dating back at least eight years.

In May 2009, Barbara J. Bouchey, a former NXIVM board member, and two of her attorneys met with federal authorities in Albany as she outlined questionable activities involving people associated with the group.

Bouchey, who had been a financial adviser to Clare Bronfman, one of NXIVM's largest financial supporters, had abruptly resigned from the organization a month earlier. Bouchey's departure came after she and eight other women met with Raniere, NXIVM's co-founder, to address their concerns about unethical practices and the alleged abuse of his leadership status to sexually manipulate women in the organization.

In her meeting that spring with federal prosecutors — a group that also included agents with the FBI, ICE and the IRS — Bouchey said she told them that after she left NXIVM she uncovered troubling emails and documents that were in her office computer system without her knowledge. She said they indicated there may have been irregularities in the organization's accounting office, which Bouchey said she was never allowed to enter.

Bouchey, who was with NXIVM for about a decade, also told the federal agents of her uneasiness when two Mexican citizens who were associated with NXIVM had suddenly married U.S. citizens. She said other Mexican immigrants associated with NXIVM also were apparently being paid cash for their work.

"I shared with them everything I knew, which at that time wasn't much," Bouchey said. "They were already investigating NXIVM, that's what they told me."

Bouchey's meeting that May would be one of multiple times that people who have separated from NXIVM would provide New York or federal law enforcement and regulatory agencies with information about the inner workings of NXIVM, which offers human growth and executive training programs to thousands of clients, including residents of Mexico and Canada.

In December 2014 and January 2015, Bouchey met again with members of the FBI and U.S. attorney's office in Albany. Officials in those offices declined comment on their meetings with Bouchey.

Those meetings, Bouchey said, were prompted by a September 2015 Times Union story which, citing court records, reported allegations that Bronfman, who has been described as NXIVM's operations director, paid a Canadian private investigative firm to examine the banking records of U.S. federal judges and others, including journalists.

The U.S. attorney's office did not fully investigate the allegations, according to a person with direct knowledge of the matter. The involvement of numerous agencies has raised questions about whether law enforcement should have dug deeper or whether they determined there were no issues worth pursuing.

"The question has always been, 'Why don't they want to deal with it?'" said Pamela Hayes, a Manhattan attorney who has represented Bouchey. Hayes sat in on six meetings last year that she set up between Bouchey and representatives of the state attorney general. "There have been so many people who just refuse to get involved, and look the other way," she said.

The 2016 meetings between Bouchey and the attorney general's office followed numerous other complaints to that office about NXIVM over the years.

Former NXIVM associates Susan Dones, Toni Foley and Joseph O'Hara all said that in 2011 they turned over records and information to investigators in Schneiderman's office. The information included banking records and internal emails attributed to NXIVM officials who were discussing issues ranging from property transfers to the use of a NXIVM-related charitable foundation, the Ethical Science Foundation, to help Mexican women gain access into the United States.

The documents that Foley and O'Hara gave to the attorney general included a May 2008 email attributed to Bronfman, who was a large financial contributor to the Ethical Science Foundation, that stated the nonprofit might be used as a mechanism "to bring in the nannies through a scientific endeavor and provide them with the necessary Visa's."

Foley and O'Hara provided the Times Union with copies of dozens of pages of documents they sent to Schneiderman's office that year. Foley, who had been Raniere's girlfriend before she left the organization in 1999, said that in November 2011, a prosecutor in the attorney general's securities fraud unit, Brian Whitehurst, abruptly asked them to stop sending the materials.

"We are getting bombarded with stuff and need to evaluate where we are at," Whitehurst said in an email that month. "I promise we will be in touch ASAP."

Foley and O'Hara said they never heard back from Whitehurst or anyone else in Schneiderman's office. A spokesman for Schneiderman's office declined to comment on Whitehurst's email.

"Each and every time someone says, 'Look at NXIVM,' they become the brunt of the investigation. It's happened to me four or five times," Foley said, referring in part to a computer-trespass charge filed against her and three others by State Police in 2012 based on allegations from NXIVM. The charges were later dismissed against Foley, O'Hara and Bouchey.

Dones is a former NXIVM trainer from Washington state who successfully defended herself against a NXIVM lawsuit that accused her of violating a confidentiality agreement after she and Bouchey left the organization. In 2011, Dones said, two officials with Schneiderman's office contacted her seeking information about NXIVM.

"Then they just said, 'Stop sending us stuff,'" Dones recalled of her dealings with Schneiderman's office.

Before founding NXIVM, Raniere had operated Consumers' Buyline Inc., a nationwide buying club that offered discounts to members who could recruit more members. In 1996, Raniere signed a consent order with the New York attorney general, in which he did not admit any illegal activities but agreed to be permanently barred from "promoting, offering or granting participation in a chain distribution scheme," according to a 2012 Times Union story. The agreement included a fine of $40,000 against Raniere and his business.

Many of the women who worked for Raniere at Consumers' Buyline stayed with him when he later co-founded NXIVM.

Bouchey and others said that during their interaction with officials from the attorney general's office in 2011, the investigators' questions focused on whether Raniere may have violated the 1996 consent order that settled allegations his company operated like a pyramid scheme. Bouchey said they asked her about the structure of NXIVM and how it had been designed, including whether it was a multilevel marketing operation.

"Anybody who's ever spent any amount of time in NXIVM knows that Keith runs everything," Dones said.

In 2012, the Times Union reported that Dones and Bouchey had given sworn depositions in a federal court proceeding alleging that Raniere advised his close associates to avoid paying taxes. In a recent interview, Dones said that she told the investigators with the New York attorney general's office that she also had been scolded by another high-ranking NXIVM official for paying government taxes.

Dones said she told the attorney general's investigators about those conversations related to not paying taxes. Dones said that she also raised questions about whether NXIVM had paid taxes in the state of Washington during her personal bankruptcy case filed in U.S. District Court there in 2010. She filed for bankruptcy as a result of the financial fallout from her business dealings with NXIVM, records show.

Dones also reported to New York investigators that many of the Mexican immigrants who have been involved with NXIVM paid cash for their NXIVM-related training, and that there were large amounts of cash flowing across the U.S.-Mexican border related to NXIVM's work, echoing allegations in court filings.

In October 2015, the Times Union published a story highlighting allegations about the organization — some of which, if true, would be criminal offenses — that were made by Kristen M. Keeffe, a paralegal who was once part of the inner circle that ran NXIVM. The accusations by Keeffe, who left the group in 2014, were outlined in a March 2015 telephone conversation that was secretly recorded by Bouchey, and later filed in Albany County Court as part of Bouchey's defense against criminal trespass charges that were later dismissed.
The accusations were never fully investigated and did not result in any charges being filed.

Keeffe, according to a transcript and recording of the conversation, also alleged that undocumented cash tied to NXIVM's programs was flowing in from Mexico.

In addition, she alleged that the Ethical Science Foundation, which acquired tens of thousands of dollars in brain-monitoring and other medical equipment, was involved in the effort to help Mexican citizens gain legal status in the United States.

"Some people were just flat-out illegal ... some people were in the country on fraudulently obtained visas," Keeffe said during the conversation. "Clare was involved with every aspect of this. What they would do is, Clare's foundation, the Ethical Science Foundation, was obtaining visas for teachers in connection with an alleged scientific study about the language development in children. ... And the teachers were required, and had to be paid a certain amount of money in order to get the visa, and they had to kick back the money, they had to kick back a portion of the money, or they had to work it off. That was one level of fraud."

Keeffe, who for many years did paralegal work on behalf of NXIVM, also accused its top members of other activities, including using a Canadian private investigative firm to research U.S. judges and journalists. In the transcript filed in Albany County Court, Keeffe also alleged that Raniere and Emiliano Salinas, a high-ranking NXIVM official and son of a former Mexican president, had unsuccessfully plotted to lure Bouchey, Foley, Dones and another NXIVM defector to Mexico.

"The thing with Keith, Nancy, Emiliano, and Clare are the heart of the foundation, the money, and the operations," Keeffe told Bouchey, according to court records. "All three of them have done criminal acts, but none of them knew what the others had done. Clare did the stuff getting the financial records, Nancy hid the money and did the tax fraud, and Emiliano set up the scheme to get you and Toni thrown in a Mexican prison."

A U.S. Justice Department document obtained recently by the Times Union indicates the Internal Revenue Service has also investigated NXIVM, including gathering recordings of telephone calls that were made to the group's Capital Region headquarters in 2007. A spokesman for the U.S. attorney's office in Albany said they would not comment on their meetings with former NXIVM associates or any investigations they may have conducted of the organization.

Bouchey and Foley both said they have endured years of crippling litigation filed against them by NXIVM officials as well as criminal charges — later dismissed — accusing them of logging into the organization's servers without permission.

Two years ago, the Times Union reported that attorneys for NXIVM were heavily involved in the State Police investigation that resulted in criminal charges against four people accused of hacking into the organization's computer system.

Records from the two-year investigation showed the State Police's lead investigator in the case, Rodger Kirsopp, had contact dozens of times with NXIVM's attorneys, who pressured him to file criminal charges. The records, filed in the criminal cases in Albany County Court, indicated NXIVM officials, and their attorneys, also provided much of the evidence used by Kirsopp to build the unusual criminal case against the defendants, all of whom were considered adversaries of NXIVM.

By the time the investigation ended in March 2014, three attorneys from the Albany law firm of O'Connell & Aronowitz, whose attorneys had represented NXIVM for years, had contact with the investigator Kirsopp more than 30 times, including attending interviews he conducted with NXIVM employees and delivering documents and other evidence, including computer records, to the investigator's State Police barracks in Clifton Park.

Foley said she and Joseph O'Hara, another former NXIVM adversary who was charged in the criminal trespass case, are still fighting the State Police to return their computers that were seized more than five years ago.

"Nothing seems to happen to them," Foley said. "Every time a story comes out, one of us gets arrested."

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