Numerous people involved with NXIVM have been subpoenaed to testify before a federal grand jury in Brooklyn, and a criminal investigation of the Colonie-based organization is intensifying following last week's arrest of its leader, Keith Raniere, according to three people with knowledge of the matter.
The broader investigation is focusing on NXIVM's finances, including allegations of money laundering and tax fraud that have been revealed in unrelated court filings through the years. Investigators with the Internal Revenue Service have joined the probe, and federal agents, led by the FBI, last week searched the Halfmoon residence of Nancy Salzman, NXIVM's president, and carted away dozens of boxes of undisclosed items.
Raniere, whose organization has been described by experts as a cult, was arrested on March 25 at a $10,000-a-week villa in Puerto Vallarta, Mexico, where he fled to last November as the federal investigation took shape. He appeared before a U.S. magistrate judge at a federal courthouse in Fort Worth, Texas, on Tuesday, and is being held in the custody of U.S. marshals without bond on a federal complaint charging him with sex trafficking and conspiracy to commit forced labor. Raniere will be in custody at least until he makes an initial appearance before a U.S. magistrate judge in Brooklyn, where the U.S. attorney's office for the Eastern District of New York is leading the grand jury investigation of Raniere and NXIVM.
There is no date scheduled for Raniere's court appearance in Brooklyn. The U.S. Marshals Service regularly uses buses to transport people in their custody across the United States, and the process can often take several days or longer to return a defendant to another jurisdiction.
The criminal charges accuse Raniere of organizing a secret group within NXIVM in 2015 in which women were lured into a slave-master club and some were allegedly coerced into having sex with Raniere. NXIVM issued a public statement last year denying any connection between the secret club and Raniere or NXIVM, but federal prosecutors allege Raniere founded the club, in which multiple women were branded with the initials of Raniere and Allison Mack, an actress and Raniere's confidante.
NXIVM's secretive business structure, including its finances and tax filings, as well as Raniere's unfettered access to millions of dollars and private jets, are a focus of the broader investigation, according to court records and interviews with people who have provided information to federal prosecutors.
A former NXIVM associate, Kristen M. Keeffe, who defected from the organization several years ago, alleged in 2015 that large amounts of cash had been stored in a safe at Salzman's residence in Halfmoon. Keeffe's allegations were contained in a transcript of a March 2015 telephone conversation between Keeffe and Barbara J. Bouchey, a former NXIVM executive board member who was facing computer trespassing charges at the time. Bouchey and three others were accused by NXIVM of improperly accessing the corporation's website, but the charges against Bouchey and two others were dismissed.
Keeffe, who was part of Raniere's inner circle for many years, told Bouchey that money collected from people who took NXIVM training sessions in Mexico was funneled across the border into the United States. She claimed that Salzman, among others, would allegedly "bring the cash over the border."
The money was funneled through the bank account of a Mexican associate and "logged on the system as a scholarship, and cash was kept in Nancy's house," Keeffe said.
"And the cash for a certain time period, I doubt it's still there, was kept in a safe in Nancy's house," Keeffe said during the recorded conversation. "If Keith ever had to go into hiding it was Keith's off-the-grid fund. And the last time I heard about it, there was two and a half million dollars in it."
In a federal court filing last week, the Justice Department said that for the past 18 months, Raniere had been using a credit card and bank account in the name of a former NXIVM associate and girlfriend, Pamela Cafritz, who died in November 2016. Federal prosecutors said the bank account holds about $8 million.
Raniere's arrest sent shock waves through NXIVM and has led numerous people to quietly leave the organization, while others have rallied to garner support for their embattled leader, who is revered within NXIVM and calls himself "Vanguard."
The supporters circulated a petition letter, dated March 27, and asked their NXIVM associates to sign the one-page document that described the allegations against Raniere as "antithetical to his philosophy and values," according to a copy of the document shared with the Times Union. "Sadly, we have seen justice corrupted by prejudice, lies and hate."
There have also been emergency group meetings with NXIVM, and many of Raniere's supporters have floated a theory that the unfolding prosecution was set up by Raniere as a way to test their loyalty, according to a person briefed on one of those meetings.
Justin Elliot, who became associated with NXIVM along with two of his brothers, Marc and Brian, are among those who have been subpoenaed to testify before the federal grand jury, according to two people with knowledge of the investigation. Justin Elliot has been a close aide to Salzman and other top NXIVM officials. Marc Elliot has given testimonials that treatment in NXIVM programs helped him overcome Tourette's syndrome.
Justin Elliot said "nope ... nope" and hung up the phone when contacted for comment. Marc and Brian Elliot did not return telephone calls seeking comment.
The Times Union reported March 25 that New York Attorney General Eric Schneiderman's office is investigating a nonprofit foundation associated with NXIVM that allegedly sponsored brain-activity and other human behavioral studies, including for Tourette's, without proper oversight, according to court records. The nonprofit Ethical Science Foundation was formed in 2007 by Clare W. Bronfman, an heiress of the Seagram Co. business empire who has described herself as NXIVM's operations director and is listed in public records as the trustee and donor of the foundation.
Bronfman has provided Raniere with millions of dollars through the years and also paid for attorneys who filed lawsuits against NXIVM critics, according to the Justice Department.
A state Supreme Court justice recently signed an order directing Bronfman and Dr. Brandon B. Porter, who is involved with NXIVM and conducted the human studies, to turn over all documentation associated with the research.
Multiple commercial and residential properties in Halfmoon that are associated with NXIVM's participants, including Raniere and Salzman, recently had notices taped to the front doors indicating access to the property can be arranged by calling a mobile phone listed on the notice. A man who answered that phone declined to identify himself and hung up.
One of the notices was also taped to the back door of the Lape Road residence of Mack, an actress who is widely known for her role in the television series "Smallville," and is listed in the federal criminal complaint as Raniere's unidentified co-conspirator. Mack was with Raniere in Mexico when he was taken into custody by Mexican federal police officers, who arrested Raniere at the request of U.S. law enforcement authorities.
Last week, in a request that the Justice Department filed asking a judge to hold Raniere without bond, prosecutors described him as a danger to the community and a flight risk, noting he absconded to Mexico when the investigation began and had been using only encrypted email while there. They said Raniere, who co-founded NXIVM more than two decades ago, "has spent his life profiting from his pyramid schemes and has otherwise received financial backing from independently wealthy women."
The federal complaint filed against Raniere said that emails seized from Raniere's private messaging accounts "support the conclusion that Raniere created" the secret club, known as "Dominus Obsequious Sororium," which means "Master Over the Slave Women."
The women in the group, according to the federal complaint, were lured into the club by other female NXIVM members, including Mack, and required to provide "collateral" in order to join.
"Collateral consisted of material or information that the prospective slave would not want revealed because it would be ruinous to the prospective slave herself and/or someone close to her," states an FBI agent's affidavit filed as part of the complaint. "Collateral provided by prospective slaves included sexually explicit photographs; videos made to look candid in which the prospective slaves told damning stories (true or untrue) about themselves, close friends and/or family members; and letters making damaging accusations (true or untrue) against friends and family members."
The federal criminal complaint filed against Raniere said the slaves understood that if they left the club, publicly spoke about it, or failed in their obligations, their collateral could be released.
"Some of the masters gave their slaves assignments that either directly or implicitly required them to have sex with Raniere, which they then did," the complaint states. "Other assignments appeared designed to groom slaves sexually for Raniere."
Women who took part in the branding said it was done by Dr. Danielle Roberts, an osteopath associated with NXIVM.
Multiple people who have defected from NXIVM or publicly criticized Raniere have received letters purported to be from Mexican officials warning them to "cease and desist" making statements about the organization. Federal prosecutors said that Raniere was behind the letters.
NXIVM's supporters have insisted it is a self-help group focused on business improvement. NXIVM officials and associates have repeatedly denied any wrongdoing and dispute any allegation that it is a cult. Recent efforts to reach NXIVM officials for comment have not been successful.
Dating back years, people with connections to NXIVM have filed complaints with various law enforcement agencies, including the New York state attorney general, the U.S. attorney's offices in Albany and Buffalo, the New York State Police, the U.S. Immigrations and Customs Enforcement Agency, the Internal Revenue Service and the FBI.
The Times Union reported last year that none of those agencies pursued criminal cases. The investigation by the U.S. attorney's office in Brooklyn is the first significant investigation of Raniere and NXIVM.
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