Nxivm accuses Albany businessman of fraud

Self-awareness training firm, 11 other plaintiffs allege former attorney bilked $2.5M

Albany Times-Union/August 25, 2005
By Dennis Yusko

Albany -- A local company that offers self-awareness training for professionals has sued an Albany businessman, alleging he defrauded it and several wealthy members through racketeering schemes that he allegedly masterminded while acting as the company's attorney.

In the latest lawsuit filed by Nxivm (pronounced "NEX-ee-um") of Colonie, the company and 11 plaintiffs charge that Joseph O'Hara, the former owner of the semi-pro Capital Region Pontiacs basketball team, cheated them of roughly $2.5 million in payments and loans from 2003-05.

Acting as Nxivm's attorney and adviser, the suit states, O'Hara bilked hundreds of thousands of dollars from Nxivm in business deals from which he profited, kickbacks and fraudulent claims.

The suit also accuses him of unfairly obtaining $2 million in loans from Nxivm clients Clare and Sara Bronfman, the daughters of Edgar Bronfman Sr. of the Seagram's fortune. And, in the complaint, O'Hara is described as an attorney who is not licensed to practice in New York.

O'Hara responded that the suit amounted to a misunderstanding that he was working to resolve.

Complainants also include Pamela Cafritz of Halfmoon, the daughter of Washington, D.C., socialites William and Buffy Cafritz; Barbara Bouchey of Saratoga Springs; Ellen Gibson, Suzanne Kemp, Wayne Bates and Franca DiCrensenzo, all of New York; and Alex Betancout, Edgar Boone and Luis Montes, all of Mexico. All work for the company's co-founders, Keith Raniere and Nancy Salzman of Halfmoon.

The suit, filed last week in U.S. District Court in Albany, also names Albany attorney Douglas Rutnik and O'Hara's ex-wife, Denise Polit, as co-defendants. It seeks compensatory damages, plus punitive costs.

"The conduct of defendants was so gross, wanton, and malicious that plaintiffs are entitled to punitive damages in an amount to be determined at trial," states the suit, filed by Nxivm's new attorney, Judd Burstein of New York City.

In a faxed statement, O'Hara said he terminated his relationship with Nxivm after 18 months.

"The lawsuit that has been filed against me contains a variety of statements that are irrelevant, misleading and/or taken out of context. In addition, however, this particular lawsuit also contains numerous statements that are factually inaccurate," wrote O'Hara, who has interests in real estate and health care.

Nxivm is also called Executive Success Programs. It conducts group awareness seminars in various centers, but principally at 455 New Karner Road, Colonie.

Nxivm applied to build a 65,000-square-foot headquarters in Halfmoon, but halted the plan in the face of local opposition. It has employed at least a half-dozen local lawyers in suits, including one against a past Nxivm student who was also Raniere's girlfriend. It unsuccessfully tried to take a separate suit against a detractor, who has published criticism of Nxivm's teachings on his Web site, to the U.S. Supreme Court.

In its latest legal action, Nxivm accuses O'Hara of lying to the Bronfmans about property he offered as collateral for the $2 million loans.

O'Hara never provided Nxivm more than two years of free legal services the suit claims he agreed to provide the company in return for securing the Bronfmans' loans. In addition, the suit alleges, he embezzled hundreds of thousands of dollars in kickbacks from his associates, Rutnik and Polit, after Nxivm hired them upon his advice.

The suit claims Rutnik and Polit knowingly benefited from O'Hara's fraudulent activities.

O'Hara said the $2 million loans were arranged by Salzman, and he defended them as legitimate and well-documented. No payments are due on the loans until Dec. 31, 2006, O'Hara said.

He said he's negotiating with Nxivm to resolve a variety of "open issues" concerning their relationship, and proposed a settlement agreement with the company the day before the suit was filed.

"It is my expectation that this lawsuit will be completely resolved in the near future -- or that it will be dismissed in its entirety by the U.S. District Court," O'Hara said.

Rutnik also released a statement: "This lawsuit is ludicrous and totally without merit." The firm decided to stop working with Nxivm after a thorough review of the company, he said.

Neither Polit, Nxivm officials nor the Bronfmans could be reached for comment. The latter seem to be doing OK for money.

The suit alludes to Nxivm trying for a $20 million contribution to a tax-exempt foundation to pursue scientific research.

Clare Bronfman, a competitive horse jumper, recently closed on a $2.3 million estate in Knox, according to records filed in the Albany County clerk's office. The Greek revival home dates to 1799. It includes a 234-acre estate with three houses, a 10-stall stable and a carriage house with another three stalls.