FBI agent: NXIVM lawyers knew about efforts to get enemies' bank info

Albany Times-Union/July 7, 2019

By Robert Gavin

ALBANY – NXIVM's long list of perceived "enemies" included politicians, journalists, cult de-programmers and defectors from the Colonie-based organization.

And when top officials with the secretive self-help group hired a Canadian firm to obtain the purported bank records of many of those foes, it was no secret to their attorneys in the Capital Region.

That's what an FBI agent revealed while testifying at the recent trial of NXIVM leader Keith Raniere. The 58-year-old guru — known within NXIVM as "Vanguard" — is facing life in prison after a jury convicted him June 19 in U.S. District Court in Brooklyn of racketeering, sex trafficking, forced labor and every other accusation included in the seven-count indictment.

On June 13, the government's final witness, FBI Special Agent Michael Weginer, walked jurors through a series of emails exchanged in 2009 between top NXIVM officials — including one exchange that said lawyers were trying to "legitimize the bank information" to use against cult tracker Rick Ross, a top foe of NXIVM and one of its longtime litigation targets.

The bank information in question came from Canaprobe, a Montreal-based company, and other sources, Weginer testified on June 13. He said Seagram's heiress Clare Bronfman, NXIVM's director of operations, paid around $400,000 to Canaprobe to obtain the records.

Assistant U.S. Attorney Moira Penza asked Weginer if he had an understanding of "whether lawyers in Albany were aware of the details of what was happening with Canaprobe."

"I believe they were, yes," Weginer replied.

"In Albany?" Penza asked.

"Yes," the agent responded.

The testimony did not explicitly explain whether the conduct of the Albany lawyers, who were not identified, was ethical or even legal when it come to their alleged knowledge of NXIVM's efforts to obtain the U.S. banking records.

Answering that question remains difficult two weeks after the Raniere verdict: The State Police, FBI, U.S. Attorney's office in Brooklyn, state Attorney General's office, State Bar Association, Federal Trade Commission and Federal Deposit Insurance Corporation declined to provide an opinion on the matter. Emails to the district attorney offices in Albany and Saratoga counties were not answered.

Jacob Parks, associate general counsel for the Association of Certified Fraud Examiners, an anti-fraud trade organization, said under federal banking privacy laws, banks cannot turn over the financial records of customers without the person's consent or a valid legal order. He said it is a crime for a private party to obtain or attempt to obtain financial records from an American bank by deceit.

Under the Gramm-Leach-Bliley Act, a federal law passed in 1999, financial institutions must have measures in place to safeguard customer information.

The transactions with Canaprobe had been investigated by the U.S. Attorney’s office in Albany, which determined no crimes had been committed in the United States. That investigation began around 2015, after the Times Union reported that NXIVM officials had hired the Canadian company to sift the banking records of multiple federal judges, among others.

In Canada, there is no law similar to the U.S. statute prohibiting access to financial records without a person’s consent. The decision by federal prosecutors in Albany also was influenced by the fact Canaprobe had hired subcontractors to obtain the banking information, and the reports that had been provided to Bronfman were fabricated.

Retired Court of Appeals Associate Judge Robert S. Smith, who spent more than a decade on New York's highest court and was one of its most respected voices, said the testimony and supplementary evidence raised serious questions about the unnamed attorneys' conduct.

"The question is what 'legitimize' means," Smith told the Times Union.  "It might mean simply misrepresenting the source of the information to the court, which would obviously be both unethical and illegal. It might also mean trying to get the same information from a 'legitimate' source, which I think would be questionable because the lawyers would be trying to help their client get the benefit of illegal activity."

Smith said it is not improper for a client to tell their lawyer they have information from a source they cannot disclose and ask the lawyer to corroborate it during the discovery process, such as by asking a witness about it.

"I guess someone might argue that 'legitimize' means only 'make a legal argument that the information is admissible even if the source is tainted.' There's nothing wrong with making such an argument, of course — but it's hard to believe that's what the author of the email meant," he said.

Bob Rock, a managing partner at the firm of Tully Rinckey, said the questions are not as simple as they may appear.

He said the fact that attorneys were aware of their clients' efforts to obtain the records could be protected by attorney-client privilege. Had the lawyers disclosed it, they could have violated their duty to their client.

Rock said if a client presents an attorney with information the client wants to use in a lawsuit, the attorney has an obligation to determine if it was obtained properly. What they cannot do, he said, is change the facts.

"What really troubles me is this comment that ... the lawyers were trying to 'legitimize' the information," Rock said. "If it was gotten improperly, you can't somehow make it legitimate and be able to use it. ... If it is improperly obtained, there is nothing that a lawyer can do that can fix it."

In May, State Police Investigator Charles Fontinelli testified that in 2018 officers seized files on NXIVM's perceived enemies — which contained the bank information — from the basement of NXIVM president Nancy Salzman's home on Oregon Trail in Halfmoon. The files included information on Albany County District Attorney David Soares, former state Senate Majority Leader Joseph Bruno, former Gov. Eliot Spitzer, notorious Republican political consultant Roger Stone and several past and former reporters and executives at the Times Union, among others.

On July 6, 2009, NXIVM official Emiliano Salinas emailed Raniere, NXIVM president Nancy Salzman and high-ranking NXIVM official Kristin Keeffe to update them on "legal projects" he was involved in. Salinas – the son of former Mexican president Carlos Salinas de Gortari – mentioned the litigation against Albany attorney Joseph O'Hara, NXIVM defector Barbara Bouchey and the cult tracker Ross.

"The lawyers are still trying to figure out how to legitimize the banking information we have in the Ross, et al case, in case we need our lawyers in Albany to present it," Salinas wrote.

At one point while discussing "banking insiders," Keeffe was upset that Raniere was included in an email, telling Salinas: "Never send to Keith. Ever. Please don't forget this again. XO."

The attorneys were not identified. None were accused of wrongdoing.

In 2015, the Times Union reported that in a phone conversation attributed to Keeffe, she told Bouchey that Keeffe, Clare Bronfman and Albany lawyer Pamela A. Nichols were involved with the Canaprobe transactions.

"Pam Nichols and Clare flew to Canada on more than one occasion to try to, you know, vet the information, to get some of the money back, it was never done through an attorney, so they have, you know, again you have a closed circle of financiers," Keeffe told Bouchey, according to a transcript of the discussion.

Albany lawyer Stephen Coffey, who works with Nichols at the firm of O'Connell & Aronowitz, scoffed at Keeffe's allegations when interviewed in 2015.

"As to the allegations contained in the self-serving submissions of an indicted defendant, we do not intend to comment on something that purports to be an uncertified transcript of a staged conversation," Coffey said at the time.

Coffey declined to comment on last month's testimony.

Nichols told the Times Union: "With respect to the paragraph referenced in your 2015 article, It is not my practice to discuss any clients or their cases," and added, "With respect to the referenced trial testimony, I do not know who either the questioner or the witness were referring to."

Over the years, a number of attorneys in Albany have represented NXIVM or its top members, including other members of O'Connell & Aronowitz. NXIVM has also been represented by attorneys in New York City, western New York and New Jersey, among other places.

At the recent trial, Raniere was primarily represented by lawyers Marc Agnifilo and Paul DerOhannesian, neither of whom would comment on the agent's testimony.

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