Niagara Falls developer Frank Parlato dives into real estate dispute involving Seagrams heirs

The Buffalo News/April 20, 2008

Frank Parlato is no stranger to controversy, but he's now knee deep in one, and it's a long way from here and involves people you might not expect the Buffalo and Niagara Falls developer to be mixing with.

Parlato is deeply involved in a $26 million dispute that centers around heirs to the Seagrams liquor fortune and the head of a self-help group that critics say is a cult.

The fight is over a luxury housing development in Los Angeles and Parlato's claims that the heirs, Clare and Sara Bronfman, were cheated out of millions of dollars.

The dispute also involves the head of NXIVM, an Albany-based self-improvement group that Edgar M. Bronfman Sr., the sisters' father and one of the wealthiest men in the world, claims is a cult.

"They were defrauded out of multiple millions of dollars by an absconding partner who diverted the money into his own personal real estate," Parlato said of the two Bronfman sisters.

Parlato, a well-known local developer who has his own critics, became a central figure in the West Coast real estate deal through G. Steven Pigeon, the former Erie County Democratic Party chairman. Pigeon recruited Parlato to represent the Bronfmans' interest in the project.

The culprits in the dispute, Parlato insists, are Yuri and Natasha Plyam, Los Angeles developers who oversaw the luxury housing project until he took over in January.

The Plyams, in turn, claim Parlato drove the project into the ground.

"He was running amok," Natasha Plyam said. "Now, he's nowhere to be found. We can only speculate that he went back to Buffalo."

The dispute, which has led to lawsuits by both sides, also involves Nancy Salzman, president of NXIVM, a group based in Albany that supporters say is a successful executive coaching program.

Salzman and group founder Keith Raniere, who members call "Vanguard," are regarded by supporters as inspirational, empowering mentors.

"It's like a practical MBA," Emiliano Salas, son of a former Mexican president and a member, told Forbes magazine in 2003.

The Bronfmans and Salas are NXIVM's clients. And the client list also includes Antonia C. Novello, former U.S. Surgeon General; Sheila Johnson, co-founder of the Black Entertainment Network; and Stephen Cooper, former acting chief executive of Enron.

Others say NXIVM uses brainwashing and other psychologically damaging tactics, including separation from members' families, to manipulate followers.

"I think it's a cult," Edgar M. Bronfman Sr., a former follower, told Forbes.

Development in dispute

Natasha Plyam said she and her husband, Yuri, met the Bronfmans in 2005 and persuaded them to invest in their Los Angeles housing development.

Three years and $26 million later - the amount of money the sisters invested in the deal - Natasha and her husband are suing Salzman, Parlato and the Bronfmans.

"They're blaming us for stealing millions when, in fact, they owe us $300,000," Natasha Plyam told The Buffalo News. "They also claim my husband confessed to Parlato, which is preposterous. That's a total fabrication."

Parlato counters by suggesting the Plyams used much of the Bronfmans' $26 million on their own real estate, including a mansion in Beverly Hills and two vacation homes in Lake Arrowhead.

At the Bronfmans' urging, Parlato traveled to California in January to check on their investment. What he found, he said, was 14 unfinished, cliff-side homes.

"They were all in the preliminary stages of construction," said Michelle Gallo, a Los Angeles real estate agent Parlato hired. "Nothing was framed. Some had foundations. Some didn't."

Parlato also discovered the Bronfmans, despite their investment, had no legal ownership in the property. He said the original corporation listed the Plyams and Salzman as 50-50 partners with no mention of the sisters.

"Yuri and Natasha are pretty convincing people," said Paul Grenga, a Niagara Falls lawyer who represents Parlato and met with the Plyams. "They repeatedly looked me in the eye and said none of the money had been diverted."

Upon arriving in Los Angeles, Parlato said he asked the Plyams for documentation of their expenses and found they didn't jibe with the work done. He said he also found no evidence of the 126 workers listed on the payroll.

"I couldn't find people working on the properties, and that bothered me," he said.

Parlato eventually succeeded in getting a new agreement that gave the Bronfmans, Salzman and the Plyams each a one-third share in the project. Salzman later gave her one-third to the Bronfmans, who now have a 66 percent interest in the development.

In their court papers, the Plyams claim the Bronfmans wanted their interest kept secret.

"They wanted to finish everything and show their father how well they had done," said Natasha Plyam.

Trading accusations

Natasha Plyam thinks the Bronfmans hired Parlato to remove them from the project and that it was Parlato, not the Plyams, who killed the housing development.

"He came and destroyed a business," she said. "Right now, everything is in shambles."

Plyam said Parlato was later fired, but Parlato said he returned to Buffalo because his work for the Bronfmans was done.

Now on opposite sides of the country, they continue to fire barbs back and forth.

Parlato is quick to refer to Yuri Plyam as a "barred" commodities dealer, a reference to a 2007 action against Plyam by the National Futures Association. The independent regulatory group fined his company $30,000 and banned him from operating a similar investment pool for three years.

The Plyams counter by pointing to Parlato's controversial housing record in Buffalo.

In the late 1990s, city and county lawmakers accused Parlato of running a housing scam that hurt poor people, took advantage of taxpayers and added to neighborhood blight.

The federal government went so far as to suspend Parlato family members from doing business with the government three times. The ban followed a federal audit that found 23 percent of the houses sold by the Parlatos were in default.

Despite the contentious nature of their dispute, the Plyams and Parlato would not comment on the role, if any, that NXIVM played in the Los Angeles development.

"I was told Keith [Raniere] and Yuri were best friends," is all Parlato will say about the group.

Natasha Plyam acknowledges her husband's friendship with Raniere, as well as their eight-year relationship with Salzman, but says they were never members of NXIVM. She said both relationships ended because of the real estate dispute.

"He and Keith were friends," Plyam said of her husband, and "we were friends with Nancy Salzman."

Robert Crockett, the Bronfmans' Los Angeles lawyer, said he has seen no evidence that NXIVM was involved in the development.

"The Plyams contend there's a connection, but I don't see it," Crockett said. "Nancy Salzman [also] has, as far as I know, no role in this at all."

NXIVM's critics say Raniere is nothing but a con man. They point to his involvement 15 years ago in an Albany marketing company that the New York State attorney general, in a civil suit, called a pyramid scheme.

Raniere never admitted any wrongdoing but, as part of a settlement, agreed to pay the state $40,000. He also closed the company.

A few years later, Raniere met Salzman, a registered nurse, and together they formed Executive Success Programs, which later became NXIVM.

Since then, the group has flourished with followers and benefactors across the country. Chief among them are the Bronfman sisters, who live in Albany and now work as coaches for the group.

Despite efforts by The News, Salzman, Raniere and the Bronfman sisters could not be reached to comment.

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