Bernie Pazanowski
Bloomberg Law
September 30, 2024
Cult victims sued Bronfam sisters for damages under RICO
RICO, TVPRA beneficiary claims survive; all others dismissed
Sara and Clare Bronfman, who are heirs to the Seagrams estate, must face civil claims against them by victims of the sex cult NXIVM, a federal court said.
According to the complaint, Keith Raniere created NXIVM to offer courses ostensibly designed to help people reach their full “human potential” by overcoming psychological and emotional pitfalls. Many of the groups’ members paid thousands of dollars to attend self-help workshops. Some women belonged to a subgroup called DOS, which had “masters” and “slaves” and performed sex acts at Raniere’s direction.
Sara joined NXIVM in 2001 and Clare joined in 2004, the suit says. Both were on its executive board and held other management positions within the organization. “Together, Clare and Sara Bronfman provided NXIVM and its related entities with more than $100 million in funding,” Judge Eric Komitee of the US District Court for the Eastern District of New York said Sept. 27.
A grand jury handed down indictments against Raniere, Clare, and others, in 2018, alleging violations of the Racketeer Influenced Corrupt Organization Act. All of the defendants except Raniere pleaded guilty, and he was convicted. Clare was sentenced to 7 years in prison.
Seventy former members of NXIVM sued for civil damages, including claims under RICO and the Trafficking Victims Protection Reauthorization Act. Some of the defendants, including Raniere, didn’t respond to the civil suit, but Sara and Clare moved to dismiss the claims against them.
Komitee said that the plaintiffs’ complaint inadequately pleaded a number of their claims against the sisters that were needed as predicate acts for RICO violations, including witness tampering, forced, labor, sex trafficking, and human trafficking.
But they adequately pleaded mail and wire fraud, by alleging that as leaders and chief financiers of NXIVM, the Bronfmans had “knowledge of and influence and control over the content of NXIVM’s doctrines, curricula, sales materials and practices,” the judge said. They also sufficiently alleged immigration fraud against Clare, and witness tampering against Sara, he said.
To have RICO standing for their civil claims, each plaintiff had to assert a specific injury, Komitee said. But their attempts to do so were “insufficient” and they were directed to file a revised schedule of their alleged injuries within 60 days.
The plaintiffs adequately alleged RICO conspiracy claims against the sisters, Komitee said. As for Clare, he said that the plaintiffs raised “a plausible inference that Clare agreed to join a racketeering scheme with the intent that its overall goals be effectuated, and that the scheme involved two or more predicate acts.” The conspiracy claim against Sara survived because the plaintiffs adequately alleged that her status at NXIVM showed that she joined the conspiracy, Komitee said. Sara had de facto power to control NXIVM and gave it large amounts of money, he said.
The plaintiffs didn’t adequately plead that the sisters directly violated the TVPRA, Komitee said. But they did sufficiently allege that their positions in NXIVM and their constructive knowledge of Raniere’s activities allowed them to benefit from various actions of the venture, exposing them to liability under the act, he said.
Zuckerman Spaeder LLP and Kohn, Swift & Graf PC represent the plaintiffs. Ronald Sullivan Law PLLC and Aidala, Bertuna & Kamins PC represent Clare. Fried, Frank, Harris, Shriver & Jacobson LLP represents Sara.
The case is Edmondson v. Raniere, 2024 BL 341906, E.D.N.Y., No. 20-cv-485, 9/27/24.
To contact the reporter on this story: Bernie Pazanowski in Washington at bpazanowski@bloombergindustry.com
To contact the editor responsible for this story: Nicholas Datlowe at ndatlowe@bloombergindustry.com
https://news.bloomberglaw.com/litigation/seagrams-heirs-unable-to-shake-all-claims-linked-to-sex-cult
