NXIVM sues former officer

Albany Times-Union/October 23, 2010

Albany - An Albany-based self improvement organization labeled by critics as a cult is flexing its legal muscles against a former top officer in Washington state who broke away from the group in an argument over the ethics of its core leaders.

Just a few hours before Susan F. Dones' bankruptcy was to be discharged in U.S. Bankruptcy Court, a NXIVM attorney intervened with an adversarial motion to have her petition thrown out so that she could no longer be protected from creditors.

Dones, 53, of Puyallup, said Friday the move by her former employer is "retaliation" for her departure from the group and lacks legal merit. Saying she is representing herself because she cannot afford a lawyer, she asserted that NXIVM leader Keith Raniere and President Nancy Salzman are attacking her as they have several other former associates who have filed for bankruptcy in a strategy that lacks logic and is without regard for what it costs.

NXIVM lawyers assert Dones and her partner Kim Woolhouse, who ran a NXIVM training center in Washington, violated confidentiality agreements, used protected training material and NXIVM client lists for their own benefit and shut down the Washington NXIVM center, harming the business financially. Lawyers for the firm did not return a call. Dones said the charges have no basis and there is no evidence that NXIVM curriculum, developed by Raniere, of Clifton Park, was used by her or Woolhouse, 54, who is also in bankruptcy. The NXIVM motion came just within the two-month window for such actions after a bankruptcy petition's filing. Similar actions have been taken by NXIVM in cases of four other former associates, including the case of Toni Natalie, of Monroe County, whose bankruptcy case was extended through more than eight years because of repeated motions by NXIVM. Natalie called it a "scorched earth" strategy of vengeance for breaking with Raniere.

NXIVM's lawyers have argued in the bankruptcies in Washington and in the bankruptcy of former NXIVM officer Barbara Bouchey in Albany that the women were part of an extortion attempt to receive $2 million. The women sought the funds by letter for money owed after they left the organization in protest with its administration in April 2009, Dones said.

Dones said the concerns raised by the nine women focused on how NXIVM trained people to follow moral and ethical teachings of Raniere but he and some of his closest aides compromised the principles by not practicing what they preached. Dones said she respected the curriculum but that she came to believe that the organization was rotting from the core and she felt she could no longer be part of it.

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