Ruling lets Web site critical of NXIVM stay online

Judge says Colonie-based school failed to prove the accusations created irreparable damage

Times Union/September 9, 2003
By Dennis Yusko

Albany -- A Web site that accuses a Colonie-based human potential school of being a cult can remain online, a U.S. judge ruled Monday.

U.S. District Judge Thomas J. McAvoy denied multiple requests from NXIVM (pronounced NEX-ee-um) to have critical opinions of the group removed from the Web site of The Cult Education Institute, which tracks information about alleged cults, controversial groups and movements. He cited NXIVM's failure to demonstrate a strong case and said irreparable damage to the company was not proven.

"Today is a very good day for the First Amendment and freedom of expression on the Internet," said Rick Ross, the Web site's owner.

NXIVM, known as ESP for its Executive Success Programs, has applied to build a 67,000-square-foot headquarters off Woodin Road in Halfmoon. The plan has drawn the opposition of residents.

The company claims in two federal lawsuits filed in August that a former ESP student, Stephanie Franco of New Jersey, supplied Ross with a copy of ESP's confidential operating manual after signing an agreement not to disseminate it.

Ross and two mental health professionals read the manual and published articles on Ross' site that falsely characterize ESP as an expensive form of mind control, ESP lawyers argued.

The postings caused ESP to lose the support of prominent members, $10,000 per day in revenue, a speaking engagement by actress Goldie Hawn, a four-year coach and more, ESP alleges.

Besides trying to stop Ross and the others from commenting on ESP, the suits seek to have ESP manuals in possession of the defendants returned and $9.7 million in compensatory and punitive damages.

McAvoy previously denied a temporary restraining order against Ross.

On Monday, he rejected the preliminary injunction requests. He did, however, order Franco to stop showing the manual to anyone but her attorney, Anthony Sylvester. Sylvester said Monday that he has the manual in his possession. Franco only supplied the disputed manual to her brother, Sylvester said.

On Monday, he and Albany attorney Thomas Gleason, who is representing Ross, presented a defense based on free speech.

"These cases are a blatant affront to the First Amendment," Gleason argued. "(ESP) doesn't want public criticism. If they are such great ideas, why don't they want them known?"

ESP attorney Kevin A. Luibrand unsuccessfully argued that the First Amendment argument carried no weight because Franco gave out confidential materials after signing a document promising not to.

"We're very happy about the injunction on Franco and we will be monitoring the remaining defendants for any further misappropriation of the plaintiff's ESP materials," Luibrand said after the hearing. "At this stage, we're looking forward to a trial."

Gleason and Sylvester said they anticipated the court would rule on the case before it goes to trial.

ESP was founded by Keith Raniere and Nancy Salzman, both of Clifton Park.

The group claims more than 3,700 students in the United States and Mexico and is making a push into Europe. Enrollees wear special scarves denoting their rank within the school, must bow to Raniere, known as Vanguard, and Salzman, called Prefect.

Sixteen consecutive 10-hour classes cost $7,500, Franco said. Students are encouraged and rewarded to find new members, Franco said.

Raniere is prohibited by New York state from running chain distribution businesses. Raniere's former company, Consumers Buyline, ceased operations after dozens of state and federal investigations in the early 1990s alleged he was operating a pyramid scheme.

That company settled with the state for $40,000 but admitted no wrongdoing.