Albany - In an increasingly adversarial and bizarre bankruptcy case, lawyers for the wealthy Bronfman sisters on Wednesday revealed they are seeking a contempt of court ruling because of press leaks involving private financial information about the backers of a Capital Region business that some have classified as a cult.
In an argument he had sought to make in private, attorney William F. Savino said his motion to hold Barbara Bouchey and her lawyer, Richard Croak, in contempt was related to an article that appeared earlier this month in the New York Observer.
Savino represents Sara and Clare Bronfman, heiresses to the Seagrams fortune; Bouchey is a former high-ranking member of NXIVM, a controversial Colonie-based self-improvement training organization with financial ties to the Bronfman sisters.
The revelation came during a hearing in U.S. Bankruptcy Court related to Bouchey's Chapter 11 petition, which includes her claims that the Bronfmans owe her money.
Savino argued to Judge Robert E. Littlefield that his order called for Bouchey to keep mum on financial matters involving the Bronfmans. "I want to explore how this Observer article happened," he told the judge.
Bouchey, who runs Barbara Bouchey Asset Management in Waterford, was a financial planner for the Bronfmans for much of the past decade before she discontinued her work as a top officer of NXIVM last year.
Lawyers representing the Bronfmans have disputed the characterizations in court documents of NXIVM as a cult. Bouchey, a former member of the NXIVM board, has in court records disclosed details about some of its leaders and devotees -- including the Bronfmans.
Littlefield ruled that the parties should concentrate on Bouchey's bankruptcy. "I would like to draw a line in the proverbial sand," he told Savino. "I don't think this is as newsworthy as you think it is."
But Littlefield took the unusual route of keeping several records relating to the contempt of court motion under seal. He also authorized the removal of Bouchey's lengthy July 23 disclosure statement from the file -- Croak agreed earlier this week to withdraw the record from the bankruptcy file, apparently as a good-faith offering to the Bronfmans. Savino had complained that the statement seemed to have been written by a non-lawyer, likely by Bouchey; he suggested his clients disliked its contents.
Savino said he was being careful with his statements in court because a reporter was in attendance. He asked Littlefield to clear the court of media or move the discussion behind closed doors, but the judge kept the court open.
In an interview, Croak said Savino is mistaken if he believes Bouchey provided information about the Bronfmans for the Observer story. He said the New York City weekly reported information that became public record in January in an unrelated case involving the Bronfmans and others linked to NXIVM related to a sour real estate venture in California. In that case, part of a deposition from Bouchey was included in which she stated that about $100 million of the Bronfmans' money had gone into the real estate deal and bond investments at the direction of NXIVM leader Keith Raniere of Clifton Park.
Croak, who has been specializing in bankruptcy law for several years, said the sealing of records in bankruptcy court was uncommon. He said it is difficult for him to defend himself and Bouchey from allegations because the charges are under seal.
The case has been confrontational since Bouchey filed for protection from creditors in June. Her letter to the court stated that she possessed numerous records involving the Bronfmans and NXIVM, which the sisters support.
The records, Bouchey told the court, "document their involvement in a myriad of activities that are questionable, and, in some cases, potentially illegal."
Savino has described Bouchey as the "factotum, majordomo, gatekeeper for Sara and Clare Bronfman ... the conduit for them," and complained that she has discussed confidential matters such as their liquidating monies and the existence of trust funds.
He has also questioned Bouchey's hiring of various lawyers and a marketing consultant. Croak has said that a financial manager in bankruptcy obviously needs some help with marketing.
Savino responded that "what we need to find out is whether or not the agenda is positive for Ms. Bouchey or negative for the Bronfmans and NXIVM." Bouchey informed the court that she has retained attorneys to help with a post-divorce property settlement, anticipated criminal charges, and a complaint filed by Clare Bronfman to the financial-planning licensing body that accredited Bouchey.