Ex-aide calls Nxivm 'extremely dangerous'

Company attorney denies allegations; neighbors concerned about home

Albany Times-Union/November 3, 2005
By Dennis Yusko

Halfmoon -- A former Nxivm Corp. insider recently became the first to publicly condemn the secretive human development company, while unauthorized construction on a $400,000 Halfmoon home has raised local concerns.

The construction on the home recently purchased for Nancy Salzman, Nxivm's president, has worried neighbors, some of whom opposed construction of the company's proposed $15 million headquarters nearby.

Separately, Joseph O'Hara, an Albany consultant and former Nxivm official whom the company sued in August, has turned on it. His statements make him the first company official to publicly join with critics in criticizing Nxivm's founders, Keith Raniere and Salzman, and its controversial Executive Success Program (ESP) courses.

"I can certainly attest that, based upon my own experience, it is an extremely dangerous group," said O'Hara, who recently established the Stop Nxivm/ESP Now Legal Defense Fund. He seeks financial support from "anti-cult organizations and families whose children are Nxivm students."

O'Hara accuses the company of filing costly lawsuits to harass and silence critics and says its teachings intentionally separate families so Raniere and Salzman can gain control over members and their finances.

Nxivm's attorney, Judd Burstein of Manhattan, calls the allegations "complete lies." O'Hara can't be trusted, and he happily took pay for advising strategies he now condemns, Burstein said.

"If he can convince people they should support him because he's a victim, then he's a better con man than I thought he was," Burstein said. He dismissed O'Hara's claims that the outfit and its self-auditing courses are harmful.

"It's not a cult. I've taken the time to go through the program. This is a very thoughtful ethics program that makes people think about the important issues in one's life," Burstein said.

Nxivm (pronounced "NEX-ee-um") alleges in a pending lawsuit that O'Hara swindled at least $2.5 million from it and clients from 2003 to 2005 while posing as its lawyer when he had no license to practice law in New York.

O'Hara says Nxivm employed him as a consultant and says he'll repay a $2 million loan from Nxivm employees Clare and Sara Bronfman before it's due next year.

Raniere's seminars in "Rational Inquiry" teach professionals how to excel by removing negative influences from their lives, Nxivm boasts. Courses that sell for thousands are offered in Colonie, Saratoga Springs, Alaska Mexico.

Edgar Bronfman Sr., Clare and Sara Bronfman's father who is heir to the Seagram's fortune; Sheila Johnson, of Black Entertainment Television; Antonia C. Novello, former U.S. surgeon general; and relatives of the last two former presidents of Mexico are among those who have taken courses, according to an October 2003 Forbes Magazine profile of Raniere titled "Cult of Personality."

But the "intensives," what the course work is called, can confuse and upset students vulnerable to stress, mental health experts have said. Bronfman Sr. and students like Stephanie Franco of New Jersey have called Nxivm a cult.

O'Hara compared Nxivm to an onion. Its courses and the professionals they attract represent the vegetable's outer layer. But peel a few layers away and the core of the group contains committed "ESPians," mostly women, who are extremely devoted to Raniere and his philosophies. Raniere's theories, O'Hara charged, have more to do with ideology and self-enrichment than self-improvement.

But Nxivm says it's O'Hara who engages in sordid business schemes and its suit claims the former Capital Region Pontiacs and Albany Firebirds executive ripped it off by directing a series of hiring schemes and kickbacks while working for the company.

Though O'Hara denies acting as Nxivm's lawyer, Rensselaer County Republican Chairman Jack Casey defends Nxivm. In an affidavit filed recently in court, Casey says, "It was always my understanding, based in part upon representations made by Mr. O'Hara himself, that he was serving as Nxivm's attorney, not as a mere advisor and/or consultant."

Federal Judge Gary L. Sharpe recently denied a motion by Nxivm to freeze O'Hara's assets.

Raniere, 45, graduated from Rensselaer Polytechnic Institute, and his students address him as "Vanguard." Before forming Nxivm, he founded Consumers Buyline in 1990. The multimillion-dollar Halfmoon company, which sold membership in a discount buying club, collapsed after investigations by 23 states and two federal agencies alleged it was a pyramid scheme. Raniere admitted nothing but recently paid the state nearly $50,000 in settlement fees.

Nxivm considers Raniere's self-discovery theories trade secrets and students who don different colored sashes signifying rank must sign a confidentiality agreement about what is taught. Participants also pledge, and are rewarded, to recruit others, former student Franco says.

The success of the company, combined with contributions from members like Clare and Sara Bronfman, has paid for the formation of Nxivm Properties, which with ESP and Salzman owns at least nine properties in Halfmoon and Clifton Park. The holdings include single-family homes, town houses and condos, according to filings with Saratoga County.

Sara Bronfman recently submitted an application to the Halfmoon Planning Board to renovate and expand the home on Oregon Trail, dubbed the "Salzman home" on plans. It marks the first building project advanced in town by company members since 2003, when Nxivm's elaborate plan for a 65,000-square-foot headquarters froze due to public opposition.

Sara Bronfman applied for the 285-square-foot addition and renovations after town officials received multiple complaints from neighbors that construction was occurring at the site, said Steven Watts, Planning Board chairman.

"Our inspectors made a visit and determined there was construction activity, including rehabbing of the basement. We left them notice indicating they needed a building permit. We're now reviewing the plan," Watts said.

One Halfmoon resident, who asked to remain anonymous but has become a de facto spokesman for the neighbors, said they are concerned that unrelated people may reside at the Salzman home or that Nxivm will do business at the site, both of which would violate the area's single-family, residential zoning. While Nxivm stresses physical health, Raniere's habit of walking around the neighborhood, often with several women late at night, concerns residents, who plan to monitor the house, the neighbor said.

Much of the local suspicion stems from criticism of Nxivm on an anti-cult Web site published by Rick Ross of New Jersey. In 2003, Nxivm sued Ross and Franco, alleging she supplied Ross with Nxivm's copyrighted materials after signing a pledge not to.

In a more than $20 million lawsuit refiled in Albany in April, Nxivm also sued Franco's father, Morris Sutton, the owner of Lollytogs Inc., a leading supplier of children's apparel, and Paul Martin, a psychologist who analyzed Nxivm as a cult on Ross' site.

The suit alleges Sutton is trying to destroy Nxivm because his son, Michael Sutton, quit Lollytogs for Nxivm courses. It alleges Morris Sutton paid for a campaign to discredit the company through Ross, who published Martin's material, causing Nxivm irreparable harm.

A federal judge in Albany and the 2nd U.S. Circuit Court of Appeals in Manhattan rejected Nxivm requests to strike the critical postings. The U.S. Supreme Court denied an appeal to review the case, and it rests in Albany federal court.

In court filings last month, Franco denies the allegations and accuses Nxivm of operating a "personality cult built around Raniere." Program participants identify each other as their true families, and those who doubt Raniere's teachings are "suppressives" and "parasites," Franco says in her response.

Meanwhile, the Halfmoon Planning Board is expected to take up Sara Bronfman's building permit application in the near future, Watts said.