How to lose $100 million

A bizarre guru, menacing detectives, a mess of lawsuits: a tale of two heiresses of the legendary Bronfman dynasty

Macleans Magazine, Canada/September 9, 2010

Last week, during a seven-day celebration at an old-fashioned YMCA resort in upstate New York, Keith Raniere, the mysterious and charismatic leader of a so-called "human development" organization called NXIVM Corp., turned 50 years old. Vanguard Week-or VWeek, as the annual festival coinciding with his birthday is commonly called-drew just under 200 Nexians this year, from Albany and the group's thriving outposts in Mexico City, Monterrey and Vancouver. For Nexians, these were heady days. According to "confidential" in-house literature promoting attendance at the retreat-fees ranged from between US$1,400 for shared to US$2,120 for private accommodation-VWeek represents "the prototype and blueprint for a new era of civilized humanity." Writes the event's coordinator, Clare Bronfman, "the very purpose of VWeek is to get the chance to experience a civilized world?.?.?.?[and] craft for ourselves a more fulfilling, purposeful life."

And so, on a sunny August day, the front lawn of the resort's stately main hall overflowed with attractive young people in NXIVM T-shirts, doing yoga or lounging in groups in the lush grass, children racing underfoot. Beyond that relaxing Adirondacks atmosphere, however, VWeek more than anything offers Nexians a rare chance to be near Raniere, a purported genius who normally sees only a small group of high-ranking NXIVM (pronounced NEX-ee-um) executives. Of the estimated 12,000 people who have attended the group's human potential sessions since its founding in 1998-from lowly Albany locals to well-known personalities like Dynasty star Linda Evans and Virgin founder Richard Branson-perhaps only 10 per cent have stayed on to meet either Raniere or Nancy Salzman, the group's dynamic lieutenant. Those at VWeek will see Raniere fleetingly: when he attends the nightly entertainment and, once or twice in the course of the week, when he takes the stage himself for a Q & A. "You can ask him anything and he'll come up with an answer," says a one-time attendee. "It's like Beatlemania," quips another. "I mean, there is crying." Then, every night until early in the morning, with a group of his followers, Raniere plays volleyball, for which he has a passion.

Outsiders are barred from this utopia; NXIVM buys exclusive access to the 700-acre resort, and attendees must identify themselves with colour-coded badges denoting their ranks in NXIVM's rigid hierarchy. One day last week, heavy-set men equipped with earpieces sat in SUVs by the entrance, carefully scanning all who passed. They had reason to be guarded. On Wednesday, 53-year-old John Tighe, who is on disability as a city worker in nearby Saratoga Springs and now spends much of his time taunting NXIVM on his blog, New York Post, arrived to make a scene. Escorted from the property by NXIVM security, Tighe, a diabetic with peripheral neuropathy and no feeling in his legs below the knees, had to answer to police. He handed the officers a sheaf of recent newspapers clippings-most impressive to the police, Tighe himself was quoted in the New York Post-reporting on allegations NXIVM is a cult and Raniere its "absolute" leader.

Triggering this latest round of NXIVM-related news coverage are allegations that Clare and Sara Bronfman, the daughters of Edgar Bronfman Sr. and partial heirs to the Seagram's whisky fortune, have lost in the neighbourhood of US$100 million in failed investment schemes controlled by Raniere, to whom they are devoted. According to a deposition given by Barbara Bouchey, a one-time NXIVM executive and the Bronfman sisters' former financial manager, and filed in California as part of a lawsuit related to a collapsed real-estate venture involving the sisters, Raniere allegedly lost US$65 million of Clare and Sara's trust money in the commodities market testing out a mathematical formula he designed to beat the system. Raniere went on to direct the Bronfman sisters to pour US$26 million into an L.A. development project that ultimately collapsed, charge the court filings, part of a tangle of suits and countersuits involving the Bronfman sisters, their former business partner Yuri Plyam, Raniere, Salzman and others. (Bouchey, who has filed for Chapter 11 bankruptcy and is being sued by the Bronfmans for, among other things, invasion of privacy, would not discuss the sisters with Maclean's, citing a judge's restraining order.)

Should those allegations prove true-the substance of the various and convoluted lawsuits involved remain untested in court (Raniere, NXIVM and the Bronfmans did not provide comment for this story despite numerous requests)-such massive losses would be just the latest in a string of eccentric Bronfman schemes, cock-ups and financial spills. Indeed, the family has become as noted for strife as for its savvy since emerging from penury and the Canadian prairie almost a century ago to dominate the world's alcoholic beverage industry, with lucrative forays into the oil business, the DuPont chemical company and Tropicana juices. The Bronfmans's fortunes fell most recently under Edgar Jr., Clare and Sara's half-brother, whose passion for the entertainment industry prompted a disastrous merger with French media and telecommunications giant Vivendi SA in 2000. Forbes later reported the deal saw the family's net worth plummet from US$6.5 billion to US$2.9 billion in two years.

Such has been the saga that in 1989 Mordecai Richler published a thinly veiled portrait of the Bronfmans: the novel Solomon Gursky Was Here. "I don't know why Mordecai bothered to change the names," cracked long-time Bronfman lieutenant and former senator Leo Kolber, so thin was it. Yet for sheer weirdness, the latest installment in the family's story has nothing on Richler's Gurskys. It is a tale of missing millions, bizarre lawsuits, and menacing private detectives; of a guru who directs his followers to call him Vanguard and to document his every move for posterity; and of the two heiresses whose lives he has so much defined. "Shirtsleeves to shirtsleeves in three generations," worried Mr. Sam, as the first Bronfman patriarch was called throughout his tycooning career, and, in the case of his two granddaughters, Clare and Sara, he may have been right.

Clare Bronfman had been told the executive success workshops offered by NXIVM were life-changing, and she wasn't disappointed. A champion horse jumper in her early 20s who aspired to compete in the Olympics, she was less outgoing than her vivacious older sister Sara, who introduced her to the program. But during her first sessions at the group's branch in Monterrey, Mexico, seven years ago, Clare's trainer and classmates fawned over her, drawing her from her shell as never before. Soon enough, both she and Sara had become committed followers of NXIVM and its leader, Keith Raniere, going so far as to relocate to upstate New York as NXIVM trainers.

So obviously electrifying was the NXIVM experience that the two sisters even managed to convince their hard-driving father, Edgar, to attend workshops in Manhattan led by Raniere's second-in-command, Nancy Salzman, whom Nexians call Prefect. Montreal-born Edgar, who handed control of Seagram's to his son Edgar Jr. in 1994 but was then still president of the World Jewish Congress, briefly followed the regimen, stopping after Salzman's insistence that he enroll his wealthy and influential friends soured him on the program. It was when Clare approached Edgar with her own disenchantment with NXIVM and its leaders that Edgar's concerns about the group turned into action.

Clare's fit of pique followed a NXIVM session in which she felt Salzman had ignored her in favour of Sara. Unloading on her father, she mentioned she had lent Raniere's group US$2 million, at 2.5 per cent interest, an admission that worried him. Months later, in the fall of 2003, Forbes magazine published an exposé of NXIVM, "Cult of Personality," that noted that adherents learn secret handshakes, open meetings with special NXIVM hand claps, and wear different-coloured sashes according to rank. Some-former Nexians included-believe the group simply offers good executive coaching. But Forbes added that Raniere, according to anonymous critics, "runs a cult-like program aimed at breaking down his subjects psychologically, separating them from their families and inducting them into a bizarre world of messianic pretensions, idiosyncratic language and ritualistic practices." Edgar didn't hedge: "I think it's a cult," he told Forbes.The article caused a long period of estrangement between Edgar and his daughters. Clare's unhappiness with NXIVM, as it turns out, had been fleeting, and she now blamed herself for the exposé.

No doubt Clare felt outsiders did not understand her new mentor. How could they? Raniere is an enigma. Photos and rare video footage viewed by Maclean's reveal him as a diminutive man who, with his close-cropped beard, moustache and long hair, cultivates a Christ-like look-one marred somewhat by his thin-framed glasses and the fastidiousness with which he keeps his long locks in check. Under the sweats and old T-shirts that have become his uniform, avid weightlifting has left him looking stiff, as though his limbs were a touch short for his torso. Recent apostates allege he uses sex with a core group of female followers as a mechanism of control (he is known to dismiss jealousy by comparing sex to platonic pursuits like tennis or duets between musicians). Video taken of a group of Nexian women confronting him over his alleged philandering indicates he is a listener of great stamina who enjoys a breathtaking degree of deference from followers. He also uses his intellectual prowess as a blunt-force weapon, batting down the complaints of devotees with non sequiturs and virtuoso semantics.

It can be difficult to disentangle the facts of Raniere's life from the sometimes cringe-inducing hagiography presented on NXIVM websites. The son of a New York City adman and a mother who taught ballroom dancing, he grew up in the bedroom community of Suffern, N.Y. His father, James, has said he exhibited early athletic gifts, tying the New York high school record for the 100-yard dash and becoming East Coast judo champ at 12. Home movies show a young boy in martial-arts garb dominating his opponents with quiet, unfussy aggression. He arrived in the Albany area at 16 or so-about the time his mother died-to attend the well-regarded Rensselaer Polytechnic Institute. Contemporary local news accounts say he earned a triple-major in math, physics and biology, with minors in psychology and philosophy-an academic feat that briefly made him a local celebrity (the accounts gushed that he slept just two hours a night, rarely attended class and could spell "homogenized" as a toddler after seeing it on a milk carton). In 1988, a test developed by New York philosopher Ron Hoeflin and printed in Omni magazine placed his IQ at between 188 and 194 (Hoeflin confirms the result). The score is said to have landed him in the 1989 Guinness Book of World Records (a former associate claims he once saw an Australian edition with Raniere's name in it at NXIVM headquarters). He now claims a 240 IQ and is billed as the smartest man in the world.

Raniere's notoriety stretches back to Consumers' Buyline, Inc., or CBI, a multi-level marketing company he established in 1990 that, in exchange for an annual fee, offered members steep discounts on retail goods. The company reportedly signed up 250,000 customers to gross millions. Toni Natalie, a long-time Raniere intimate and ex-Nexian, first met Raniere as a clean-cut businessman in those early days. "He looked like Little Lord Fauntleroy," she says. "He was shiny, he had beautiful blue eyes, perfect skin, with just a blush in his cheek. He had a little bounce in his walk. I thought to myself, ‘Wow. That's the smartest man in the world.' " When Raniere learned Natalie wanted to quit smoking, he invited her to sit with him in a quiet room. "He started to ask me questions about what makes me nervous and what relaxes me and talking to me in a monotone and touching my fingers," says Natalie. Later, her then-husband asked what she'd been up to all that time. "All that time? I was in there 15 minutes," she told him. "He's like, ‘Toni, you were in there two hours and 45 minutes.' " She never smoked again.

His magnetism became widely noted. A 1993 news account describes him as a "charismatic speaker" who, during a CBI meeting, recalled "his pain while growing up among divorced parents, one an alcoholic. Recounting the death of his mother?.?.?.?he cried, prompting several colleagues to do the same." His plans often went beyond mere commerce. He told a reporter he hoped CBI could earn enough money to fund institutes that would teach people how to lead better lives and added, according to a news account, that he "tried to structure the company to help people end a societal problem of low self-esteem." A TV spot from the period shows him gesticulating with quick, captivating movements as he explains how the human brain can be harnessed to improve memory and learning. CBI, he adds, is "merely a stepping stone to really change the way we live and maximize human potential."

Yet the company drew government probes almost at the same rate as it attracted members, and closed in 1993 amid allegations, made by N.Y. attorney general Robert Abrams and others, that it was a "pyramid scheme" (sued by Abrams, Raniere settled for US$40,000 but admitted no wrongdoing). In 1998, he and Salzman, a former nurse, partnered to create Executive Success Programs, or ESP. NXIVM, as the company they built around the curriculum came to be known, would be oddly similar to the shuttered CBI.

During NXIVM's annual three-day celebration of Nancy Salzman's birthday-VWeek's distaff counterpoint-an elite group of Nexians screened a series of droll but gratitude-laden video shorts imagining where they might be had they never met the woman they call Prefect. In her clip, Sara Bronfman recalled how she had once been the victim of her own infatuations, madly dashing around the world, awaking in strange hotel rooms, with little clue where she was and with yet another broken heart. Her more reserved sister Clare, who first sought NXIVM's help correcting a riding tick and securing a spot on the U.S. Olympic team, presented a satirical clip she prepared herself, showing her in the midst of an intense heart-to-heart with an interlocutor who turned out to be a horse.

Both sisters had come to feel they'd been rescued from their own foibles, and shared a sincere desire to do good by spreading Raniere's message. "Before I came and took a NXIVM course I was much less driven in my life, I knew less who I was, I was less happy," Sara told an Albany radio host last year. "I had certain self-destructive patterns." She noted how some relatives reacted to the change. "They were like, ‘You're doing so well, you're so much happier, you're successful in your life, all of your relationships are going better?.?.?.?but I don't know who you are anymore, I preferred it when you were miserable and used to cry on my shoulder.' " Meanwhile, one source describes Clare's connection to Raniere as "bordering on what a devoted daughter would feel toward her father, whom she simply adores-maybe even a prepubescent daughter. She used to run up and kiss him and sit at his feet." He adds of the sisters: "This NXIVM community, it was for them their family, their love, their life. For Clare and Sara, this became their real family."

The sisters are the products of Edgar's third and fourth marriages, both to Rita Webb-they married and divorced twice-a one-time barmaid at Ye Olde Nosebag, her father's pub in Essex, England. Rita, more than 20 years his junior, quickly changed her name to Georgiana-George for short-on Edgar's advice. Their first wedding, eventually conducted to the theme from Love Story and the hum of news helicopters above, was briefly delayed while police sought Edgar's 21-year-old son, Sam Bronfman II, who'd apparently been dragged away by kidnappers. During the ordeal, amid reports his abductors had buried Sam alive with 10 day's supply of air and water, Edgar participated in a dramatic ransom transaction involving US$2.3 million.

Edgar and George's first child, Sara, was born in New York in 1976. Shortly after Clare arrived in 1979, George sought a divorce. "[A] few years later, being really naive, I married her again," Edgar later wrote. The girls grew up with George on a farm in the "lush English countryside," as Clare puts it on her blog (they retain their British accents). If George tried not to spoil them, it was still an idyll of horses and ponies. The girls attended boarding school and holidayed with Edgar in the U.S. or with George in Kenya, where she was involved with Richard Leakey, son of famed archaeologist Louis Leakey (she is now married to Chariots of Fire star Nigel Havers). Once, George left them with a tribe on the African plains for two weeks. "We lived very simply," Clare writes, "in mud huts with no electricity, a hole for a toilet, and extremely simple food."

Clare's show-jumping career later had her trotting around the world with her horses (among other contests, she won the 2002 Rome Grand Prix). Sara, meanwhile, grew her hair into dreadlocks and drifted through her early 20s. She ran a skydiving operation in the Turks and Caicos, then briefly studied at university (neither sister has much formal education). Otherwise, she bounced from country to country pursuing a series of love affairs. In Las Vegas on April 15, 2002, when she was 25, she married Ronan Clarke, a 22-year-old jockey from County Sligo, Ireland; they spent seven months together in Belgium, say divorce papers filed in Florida.

Sara was still living outside Antwerp in the fall of 2002 when Susan White, a Bronfman family friend, recommended NXIVM. She first attended a workshop in Mexico City, where the group has drawn in members of that country's elite, including the offspring of two former presidents (Emiliano Salinas, the Harvard-educated son of Carlos Salinas, now sits on NXIVM's executive board). She quickly became committed; a financial affidavit filed in 2003 as part of her divorce, just months after her introduction to the group, is notarized by Raniere devotee Dawn Morrison. That affidavit suggests a woman of great wealth but modest needs: she says she spent just US$106 a month on clothing in 2002, and US$42 a month on non-prescription medications, cosmetics, toiletries and sundries. Described as "unemployed," she lists assets, including properties across the U.S., the Turks and Caicos and in Granada, totalling over US$6.5 million. Yet that figure, the affidavit goes on to say in the small print of a footnote, doesn't begin to capture her total wealth: "There are some trusts that are irrevocable the assets of which do not belong to nor does the Wife control [sic]." Yet if court documents filed this year are any indication, the sisters have fought hard for more control of those trusts-only to put them at the service of NXIVM.

Bad press has dogged NXIVM for years, due largely to its zeal for litigating detractors. "They're trying to kill flies with sledgehammers and all they're doing is breaking tables," says Tighe, the Saratoga Springs blogger. In 2003, when anti-cult consultant and "deprogrammer" Rick Ross posted a psychiatrist's assessment of NXIVM's "secret" manual on his website-the report called the regimen expensive brainwashing-it launched a US$10-million federal trade-secrets suit that's yet to be resolved. A year later, NXIVM hired Interfor, a security consultancy firm headed by Juval Aviv, reputedly the ex-Mossad agent who inspired Steven Spielberg's counter-terrorism film Munich, to investigate Ross and contrive a situation in which NXIVM might convert him. Soon, Ross told Maclean's, an actress posing as the concerned mother of a NXIVM devotee approached him about a rescue. Accepting a retainer, he later saw the plan scrapped after he informed the woman of his policy never to be left alone with a cult member during a deprogramming.

More than one NXIVM apostate or former business associate has wound up in court, and then filed for bankruptcy. When Toni Natalie, a Raniere intimate, left NXIVM in 1999, Raniere sent her passages of John Milton's Paradise Lost-a seminal NXIVM text-with notations comparing himself to Jesus and Natalie to Lucifer. "I was the chosen one," she says. "I was brought in to bear the child that would change the world." Natalie later filed for bankruptcy-Raniere was a creditor, in an ordeal that lasted over eight years and which a judge ultimately complained "smacks of a jilted fellow's attempt at revenge, with many attempts at tripping her up along the way."

Critics say NXIVM's workshops, which cost US$6,000 for a 16-day "intensive," use 14-hour days, warm rooms and protein-poor meals to push newcomers into a psychologically pliable state. They point to the handful of people who have suffered breakdowns while pursuing the NXIVM curriculum, including an Alaskan who in 2003 paddled a canoe to the centre of a lake and drowned herself. "I was brainwashed and my emotional center of the brain was killed/turned off," she wrote before her death. Yet even former Nexians with good reason to distance themselves from the group say such reports fail to reflect how effective Raniere's program can be in raising self-esteem and erasing anxieties, and stress that good, intelligent people often stay with the program. Says a former member who admits she spent US$90,000 on workshops over 10 years: "I will never regret it."

Yet, in an eerie echo of Consumers' Buyline, high-ranking Nexians can earn over US$100,000 a year enrolling new recruits, former members say. Those high rollers increasingly live outside Albany, where bad press has led to the group's decline in numberes there. Focus has now shifted to NXIVM's outposts in Mexico and in Vancouver, where it has made inroads recruiting TV actors, including Smallville cast members Allison Mack and Kristin Kreuk, and Battlestar Galactica's Nicki Clyne. Vancouver boasts 133 active members. NXIVM's success there is puzzling given the amount of negative reporting on the group available online.

Former Nexians, meanwhile, say Raniere has become increasingly eccentric. Five years ago, he invited a Mexican family to Albany, where they worked as videographers and documented his every move-whether he was pronouncing on some aspect of his philosophy or merely playing volleyball. A more professional crew of Nexian filmmakers has since taken over these duties. He is also said to encourage his lovers to remain thin, going so far as to prescribe foods; fat, he tells his intimates, disturbs his subtle energies.

It was chie?y his philandering that, 14 months ago, led to the mass defection of nine well-placed NXIVM members. One of those, Bouchey, is a one-time Raniere intimate who, as a former executive, is the highest-ranking Nexian to ever leave. For Raniere, hers is likely an unhappy departure. It was her deposition that contained the allegations he gambled away US$65 million of the Bronfmans' money trading commodities-a loss so deep, according to the Bouchey deposition, that the sisters at one point had to borrow money against a trust they do not receive until Edgar's death. Speaking to the Albany Times Union, Robert Crockett, one of the sisters' attorneys, demurred, saying the two women, and not Raniere, made the commodities investments. Clare and Sara, meanwhile, are suing Yuri Plyam, Raniere's former broker and their partner in the L.A. development project, for embezzling money (Plyam, in turn, has countersued).

Raniere does not appear to live lavishly. His home, a blue-beige townhouse in suburban Albany, is modest. He does not drive and apostates say he owns no fancy cars. He does not travel outside upstate New York or wear expensive suits. In the house next door lives Gaelen, a three-year-old boy whose upbringing he is said to oversee. Sources say that under his direction five nannies, each with a different mother tongue, arrive one after the other to care for the boy, who eats a diet of nuts and berries and is allowed no contact with other children.

What must Edgar Bronfman Sr. think? At 81, he perhaps fears intervening in his daughters' affairs will trigger another wintry period of estrangement. Perhaps too he reckons US$100 million doesn't begin to compare with his son Edgar Jr.'s losses of over US$3 billion in the Vivendi catastrophe. Whatever he's thinking, he's not saying. "His relationship with his daughters is excellent and it continues to be and that's what's important to him," says Stephen Herbits, Edgar's spokesman, a long-time Seagram's executive, and a Washington insider who has worked closely with, among others, Donald Rumsfeld. Indeed, the Bronfman sisters' legal trouble, he suggests, really isn't all that interesting. "It's just not a big gossipy, negative, horrible?.?.?.?" He pauses. "I don't know," he says. "Do you watch Gossip Girl on television? Well, it's nothing like Gossip Girl."

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