Ex-NXIVM official loses bankruptcy bid

Financial planner forced to face creditors, but escapes dozens of subpoenas

Albany Times-Union/April 14, 2011

Albany - An area financial planner who broke away from the cult-like group NXIVM had her bankruptcy case dismissed on Thursday by a federal judge who scolded her for inaccurately disclosing her assets.

Barbara J. Bouchey told Judge Robert E. Littlefield Jr. that the errors were caused by a combination of ignorance by her and poor guidance by lawyers she ended up firing. The judge was troubled by an amendment to her Chapter 11 filing to include the value of antiques in her Waterford home, which added $38,000 to the $13,000 in household items she had disclosed initially in June 2010.

But by throwing out the bankruptcy, Littlefield may have helped Bouchey in the short term to escape a series of legal headaches. More than four dozen subpoenas recently issued by NXIVM-related adversaries within the bankruptcy case will be rendered moot. Her case had drawn an extraordinary amount of litigation from her former clients, Sara and Clare Bronfman, wealthy sisters who are key members of NXIVM, and from NXIVM itself. In 2009, Bouchey broke from the Colonie-based personal development training group, which some critics have labeled a cult.

"Debtors have to take responsibility for their own actions or inactions," Littlefield told Bouchey. Representing herself, Bouchey responded that she intends to pay creditors fully and believes she can do so now that she has found a buyer for her custom house and has reduced her overhead by no longer renting office space. The house, which she built for more than $900,000 a few years ago, has drawn a buyer willing to pay $550,000.

Calling for converting her case to a Chapter 7 liquidation, William F. Savino, the Bronfmans' lawyer, accused Bouchey of "reckless disregard for the truth" and of acting like a "martyr." He said she would have more time to tend to her finances if she had not traveled to California. Earlier this week, Bouchey was a witness in Los Angeles for defendants sued by the Bronfmans.

Bouchey said that she would be able to build her business if not for her entanglement in Bronfman-related litigation. Assistant U.S. Trustee Lisa M. Penpraze, added that more than 300 documents have been filed in the Bouchey case, resulting in distraction and time spent on the Bronfmans' and NXIVM's suits which don't belong in Littlefield's court.

Savino complained the trustee's office is too sympathetic to Bouchey, who said, "has the best federal attorney money can buy," drawing a rebuke from Penpraze.

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