Lawsuit claims group was portrayed as a cult

In new court action, NXIVM seeks millions in damages over alleged infringement of its copyright

TimesUnion.com/August 30, 2003
By Dennis Yusko

Albany -- A new lawsuit filed by NXIVM, the controversial company that wants to build what it calls a human potential school in Halfmoon, claims it is losing members and money because of negative publicity characterizing it as a cult.

Named as defendants in the copyright infringement suit are social movement commentator Rick Ross of New Jersey; the Ross Institute; clinical psychologist Paul Martin of the Wellspring Retreat of Ohio; and former NXIVM student Stephanie Franco of Deal, N.J.

Franco's dissemination of a confidential NXIVM (pronounced NEX-ee-um) manual to Ross, Ross' portrayal of the copyrighted work and statements to the media, and Martin's critical characterizations of the company on Ross' Web site have caused irreparable harm to NXIVM, said Arlen Olsen, the group's attorney.

Actions and statements by the defendants have caused the 5-year-old Colonie company, also known as ESP, to lose such things as the support of prominent members, $10,000 per day in revenue and a speaking engagement by actress Goldie Hawn, Olsen said.

"When you put a taint on a human potential school, it's hard to cleanse," Olsen said.

The suit does not specify damages. It was filed Aug. 22 in U.S. District Court Northern District of New York.

"We've had two billionaires retract their support from us" because of untrue publicity, said Keith Raniere, the founder of ESP, in his first public statements on the company's legal maneuverings. He said that more than 20 billionaires had taken his courses.

Olsen said Hawn had been signed by ESP to speak at Vanguard Week, a birthday celebration held for Raniere this week in Lake George, but canceled after Ross told an MSNBC reporter that he had received very serious complaints about NXIVM from former participants.

Hawn was to speak about the importance of seeking joy in one's life, according to the MSNBC report. She could not be reached for comment.

Ross defended the interview. "Ms. Hawn made her own decision based on her own judgment," he said.

ESP also lost a four-year coach over the recent publicity, according to the suit. It seeks damages from lost profits and customers, and a permanent injunction against the defendants from revealing the contents of the ESP manual.

Raniere, 43, is known as Vanguard to NXIVM students. The group's more than 3,700 students worldwide wear special scarves denoting their rank and must bow to Raniere and NXIVM President Nancy Salzman, dubbed Prefect, before and after long seminars, known as "intensives."

The intensives cost thousands of dollars and last 10 hours a day for 16 consecutive days.

The company models itself after motivational speaker Tony Robbins and applies mathematical systems to business and personal relationships, Olsen said.

But Ross has publicly called ESP "cult-like" and an expensive family-buster. In court documents, former ESP members Stephanie Franco and Toni Natalie describe the group's leaders as manipulative, controlling and litigious.

"What Mr. Raniere and NXIVM refuse to acknowledge is that, in a free country, disagreement with them and/or critiquing their programs is not against the law," Ross wrote U.S. District Court Judge Thomas J. McAvoy. "It is also my right to express opinions when requested to do so by the press.

Ross compares Raniere's "rational inquiry" teachings to an amalgamated version of belief systems like Scientology, EST and Landmark Education.

Ross, his institute, Franco and a California psychologist are named in a $9.7 million suit that ESP filed in federal court on Aug. 6. That case is scheduled to be heard Sept. 8 in federal court in Albany.

ESP has sought permission to construct a 67,000-square-foot headquarters off Woodin Road in Halfmoon, an application that has drawn the opposition of residents.

Raniere, of Clifton Park, said his goal was to build a successful center where "the honor system is a viable alternate for human beings."

He said he imagines a world in which people walk into employee-less stores in the middle of the night and dutifully drop off money for the products they want.

The word NXIVM is a contraction of the words next millennium and nexus, Raniere said.