Alabany, New York -- A federal judge has ordered a former NXIVM business associate to pay more than $3 million to two sisters who have been major backers of the Colonie-based self-improvement company.
The ruling is a legal victory for Sara and Clare Bronfman, heirs to the Seagram's fortune, who sued to recover $2 million they loaned in 2004 to Joseph J. O'Hara, an attorney who once owned a downtown bar called Broadway Joe's, as well as Albany teams in the Arena Football League and the Continental Basketball Association. O'Hara and the sisters had clashed since he abruptly left the unusual NXIVM organization in 2005, accusing it of misdeeds.
Last month, District Judge Gary Sharpe granted a motion from the Bronfmans and required O'Hara to pay each woman $1 million plus interest. According to court papers, the sums relate to a deal involving two parcels of real estate in New Baltimore and Saratoga Springs.
Sharpe's order also dissolves a 2007 settlement agreed to by O'Hara that the sisters had claimed O'Hara had violated.
That now-canceled settlement described in court required O'Hara, of Colonie, to pay the sisters $200,000 and transfer deeds to the properties to at least one of them. The $200,000 payment did not happen, and the Bronfmans discovered one of the properties had a $900,000 "undisclosed mortgage" placed 22 days before the settlement was made.
O'Hara filed for personal bankruptcy in June 2008, and his two businesses also declared bankruptcy. In his personal bankruptcy, O'Hara had identified debts owed to each sister of $1.25 million for "settlement agreement." O'Hara's bankruptcy was dismissed, although he has appealed the decision.
O'Hara worked for NXIVM as a business adviser from October 2003 until he quit in January 2005. He sued NXIVM, the Bronfmans and others in February this year as part of a wide-ranging civil rights claim being challenged by its defendants.
O'Hara's lawsuit also named many lawyers, including Albany County District Attorney David Soares. At one point in 2007, Soares' office had indicted O'Hara, accusing him of stealing money from the Bronfmans, but a judge dismissed the case, leaving Soares the right to re-indict. Soares dropped the matter, despite pressure from representatives of the Bronfmans and NXIVM for him to pursue it.
O'Hara, 64, said he did not know about Sharpe's decision but has been dealing with personal health issues. "I'll deal with it the best I can given my abilities right now," he said.
Sharpe's judgment is worth about $1.6 million, including interest, to each Bronfman.
O'Hara had told the judge that the Bronfmans should not be granted their motion because he had borrowed from them without knowing "that they are the de facto owners of the NXIVM cult and all of its related business entities."
"Nor was he aware that the NXIVM cult and the members of its 'inner circle,' including the Bronfman sisters, were already engaged in a variety of illegal activities," he said, acting as his own attorney in the case. He wrote in his response papers that he believed the Bronfmans have invested $175 million in NXIVM.
The judge denied a request by the Bronfmans for sanctions against O'Hara. They claimed he had filled his court papers with "malicious and scurrilous attacks" and wrongly labeled NXIVM a cult. "O'Hara erroneously accused the Bronfmans and NXIVM (interchangeably) of multiple criminal actions without any evidence in the record or even a legitimate reason why these accusations have been made or would be relevant," lawyer William Savino, representing the sisters, wrote to the court. "If O'Hara has a concern, it should be voiced to the appropriate governmental authorities." O'Hara was indicted in U.S. District Court in Texas for allegedly bribing an El Paso public official to secure a school contract. His trial was recently postponed until February next year.