Heiress to Liquor Fortune Charged in Sex-Slavery Case

BROOKLYN (CN) – Seagram’s liquor heiress Clare Bronfman is out on a $100 million bond after she was arraigned in Brooklyn federal court on racketeering charges Tuesday in connection with a group that prosecutors say operated like a secretive cult and recruited women as sex slaves.

Clare Bronfman leaving the Brooklyn federal courthouse on Tuesday, July 24, 2018. (Photo by Amanda Ottaway/CNS)

Bronfman signed the bond around 5 p.m. Tuesday, but U.S. District Judge Nicholas Garaufis called for a continuation of the hearing Friday morning, as the heiress still needs to call sureties and make available $50 million in assets. Until then, Bronfman will be on house arrest in Manhattan and under electronic monitoring.

Flanked by court marshals and with her hands clasped behind her back, a thin Bronfman pleaded not guilty to all charges, wearing a pale pink T-shirt, dark jeans, ice-blue flip-flops and thin-rimmed glasses. Her brown hair frizzed to her chin.

On Tuesday, prosecutors unveiled their anticipated superseding indictment against Keith Raniere, founder of international professional-development group NXIVM, and his “inner circle,” charging them with running a cult-like criminal enterprise.

Raniere is accused of having created a pyramid sex-slavery scheme called “DOS” or “The Vow” within NXIVM (pronounced “nexium”) in 2005.

Prosecutors claim women known as “masters” recruited other women, known as “slaves,” to join DOS, while concealing Raniere’s position at the top of the pyramid.

The indictment filed by U.S. Attorney Richard Donoghue adds as defendants Bronfman, 39, alongside Kathy Russell, Nancy Salzman and her daughter Lauren Salzman. Russell and the Salzmans were arraigned in Albany on Tuesday.

A detention memo filed Tuesday by Assistant U.S. Attorney Moira Kim Penza said Bronfman had schemed to get usernames and passwords from people “believed to be NXIVM’s enemies,” so the group could monitor their emails. She’s also accused of wire fraud to make it appear that a victim was eligible for an investor visa, and of helping Raniere avoid paying taxes by “arranging to pay the monthly credit card bill using [a] dead person’s bank account.” She has also tried to discredit victims and “orchestrated abusive litigation” against people who spoke out, Penza wrote.

The superseding indictment also names “Smallville” actress Allison Mack, who was arrested earlier this year.

According to the indictment, Bronfman and the other defendants were part of a criminal enterprise that demanded “absolute commitment to Raniere, including by exalting Raniere’s teachings and ideology, and not tolerating dissent; inducing shame and guilt in order to influence and control members and associates of the enterprise; obtaining sensitive information about members and associates of the enterprise in order to maintain control over them; recruiting and grooming sexual partners for Raniere; [and] using harassment, coercion and abusive litigation to intimidate and attack perceived enemies and critics of Raniere.”

After collecting damaging information about slaves’ family members or compromising photos, masters like Mack allegedly blackmailed them to keep the group a secret and to have sex with Raniere.

Bronfman surrendered to federal authorities Tuesday and was represented in court by Susan Necheles of Hafetz & Necheles LLP.

Bronfman’s arrest comes as no surprise to those following the case, and her lawyer said in court Tuesday that she knew she was a target for prosecutors.

Bronfman is worth nearly $200 million, though about $100 million of that money is held in a Goldman Sachs trust that she cannot touch, Necheles explained. Judge Garaufis said at least one of Bronfman’s two trust advisors would have to personally appear at Friday’s continuation of the hearing.

“She is a very wealthy woman, but even wealthy people are entitled to get bail,” Necheles said.

Raniere has claimed no income and almost no assets, and his lifestyle is said to be bankrolled at least in part by Bronfman and her sister Sara Bronfman. Clare Bronfman served on NXIVM’s executive board since 2009, according to the indictment, and will likely serve as a surety on her sister’s bond, Necheles told Garaufis, who said Sara would have to fly from her home in France to appear in court on Friday.

“I have a bank that’ll handle the money — it’s the clerk of the court,” Garaufis quipped, after some discussion of banks being reluctant to hold Bronfman’s trust given the federal proceedings.

When Raniere argued for $10 million bond in June, it was strongly implied in the courtroom that Clare Bronfman was the unidentified financial backer of the proposed bail package, which U.S. District Judge Nicholas Garaufis denied.

Sara Bronfman is not named in Tuesday’s indictment.

Allegedly a member of NXIVM’s executive board, Bronfman is charged with racketeering conspiracy, including conspiracy to commit identity theft, encouraging and inducing illegal entry of an alien, and money laundering.

Necheles emphasized in court that her client had not been charged with sex trafficking or any violent crime, and was not accused of involvement with DOS — the name of the group within NXIVM where the alleged trafficking occurred – “in any way.”

A federal search warrant in March described an “heiress” who allegedly helped Raniere send cease-and-desist letters to women who had left the group or criticized NXIVM, and tried to bring criminal charges against a NXIVM defector who went public.

Raniere was arrested at a luxury villa in Mexico in March and extradited to the U.S. to face the charges. Mack, a two-time Teen Choice award winner for her work on CW’s “Smallville,” was arrested about a month later. The indictment says Raniere was also known as “Vanguard.”

Nancy Salzman, also known as “Prefect,” according to the indictment, is president of NXIVM. Investigators seized over half a million dollars in cash from her home during the March raid.

A house Salzman allegedly purchased in Albany was used by Raniere as a “sex lair,” according to a May forfeiture demand by the government.

Salzman’s daughter, Lauren, is also named in the superseding indictment. It says she is a member of NXIVM’s executive board and “a first-line master in DOS.”

Another defendant, Kathy Russell, is described in the indictment as NXIVM’s “bookkeeper.”

Russell and the Salzmans entered not guilty pleas in Albany on Tuesday. Russell was released on $25,000 bail, and the Salzmans each were granted $5 million bonds.

Prosecutor Penza and attorney Necheles argued over people with whom Bronfman should be allowed to have contact between Tuesday and Friday.

Penza did not want her to talk to anyone who had been involved with NXIVM, saying they were “potential witnesses.”

“They’re her friends,” Necheles responded.

The superseding indictment charges Raniere with extortion, forced labor conspiracy, wire fraud, sex trafficking and attempted sex trafficking, identity theft, and conspiracy to alter records for use in an official proceeding.

Mack is charged with racketeering conspiracy, extortion, sex trafficking and attempted sex trafficking, forced labor, and wire fraud.

Raniere and Mack have previously pleaded not guilty to all charges. Raniere’s lawyers insist everything that happened was consensual.

A status conference is scheduled for 2 p.m. Wednesday. Judge Garaufis said all defendants should appear.

%d bloggers like this: