I suspected something was wrong in December 2007 [see earlier post] when I was asked to find a $5 million loan for Clare and Sara Bronfman.
The money was to be used for an investment in a residential real estate project in Los Angeles. Under the guidance of Keith Raniere, the Bronfmans were building about 30 hillside homes in Los Angeles county. Each home was to be sold for more than $1 million, some for much more than that.
Since the Bronfmans had good credit, and, I was told, they owned the land free and clear, it should be easy to get a $5 million first mortgage on properties.
When I examined the project, I was surprised to learn that they had already invested $26 million. After two years, not a single home had been completed.
By chance, I ran into Barbara Bouchey at a restaurant. She was the Bronfman’s financial manager and an ardent follower of Keith Raniere. I told Miss Bouchey about my concerns about the Los Angeles project.
She told me something surprising: that while the Bronfman sisters had invested more than $26 million. they did not own the real estate and had nothing in writing to secure their investment.
Nancy Salzman was, in fact, the owner of record, along with a Los Angeles developer, Yuri Plyam, who was described as “Keith’s best friend.”
Keith Raniere had authorized sending all the money for the real estate project. But Miss Bouchey’s name, not his, was on the authorization slips for the money that had been wired out of the Bronfmans’ accounts.
I told her this was a highly suspicious investment. Miss Bouchey said she had been trying to tell Mr. Raniere the same thing.
After we left, I was called by one of Mr. Raniere’s assistants. She told me that Nancy Salzman asked that I please not talk with Barbara Bouchey about the project because she was “high strung and given to bizarre imaginations”.
I was told that Ms. Bouchey was kept in her position as manager of the Bronfmans’ money only because of Mr. Raniere’s compassion for her. Mr. Raniere, in fact, personally handled all the Bronfmans’ investments – and worked through Miss Bouchey’s “more stable” employee, a woman named Becky Freeman.
I was also told that Nancy and Lauren Salzman, Pam Cafritz and others were working overtime giving Miss Bouchey “Exploration of Meaning” (EM) therapies to calm her down.
I spoke to Nancy Salzman directly. I told her my concerns about the project. She admonished me, saying I did not understand the genius of Keith Raniere.
I told her she did not understand that if the Bronfmans were being swindled, as I suspected, she and Barbara Bouchey might be charged as co- conspirators.
At that time, I did not suspect Keith Raniere.
Instead, I suspected the Bronfmans’ Los Angeles partner, Yuri Plyam.
I told Nancy Salzman I was going to Los Angeles to find out what was going on.
When I arrived, I believed that Mr. Plyam was handling the project in a suspicious manner.
Mr. Plyam, however, immediately agreed to sign an agreement putting the Bronfmans’ name on the company that owned the real estate.
As I recall, Mr. Plyam told me [January 2008] that he had been trying to get Mr. Raniere and Nancy Salzman to formalize the real estate deal in writing for almost two years before I got involved.
It was Mr. Raniere, not Mr. Plyam, who did not want the Bronfman’s name on anything.
When I told Mr. Raniere that Mr. Plyam was prepared to sign over a share of the company to the Bronfmans, he agreed to allow the Bronfmans to have their name on the company.
Within hours, I received a call from Miss Salzman, asking me to take her name off the project and give her share to the Bronfmans.
I did that and Mr. Plyam signed a new agreement that gave the Bronfmans’ majority control of the company that owned all the real estate in Los Angeles.
Thus, within a few weeks of my arrival, the Bronfmans had gone from having zero ownership to 66 percent ownership of real estate in which they had invested $26 million to obtain hillside properties and develop them.
I still had suspicions, however, about the manner in which the development was being conducted. Not a single home was finished and there were foundations built on more than a dozen lots scattered across Los Angeles County.
Mr. Plyam explained that, per the original plan with Mr. Raniere [which was not in writing], the entire $26 million was to be used to build the very expensive and carefully engineered foundations for the homes, all of which were to be built on steep hillsides.
Mr. Plyam said he explained to Mr. Raniere that a “construction mortgage” could be obtained for a difficult-to-build hillside home only after the foundation was built and approved.
Mr. Raniere denied knowing any such thing and sent me, through Karen Unterreiner’s email, pictures of the homes taken almost two years ago showing that he had a different understanding.
There was nothing in writing to prove this one way or another.
Either way, I believed there was as much as $10 million missing.
Mr. Raniere had directed the Bronfman’s to wire $26 million to the Los Angeles project. It appeared to me that only about $16 million made it into the project.
I retained Ted Phelps, a forensic accountant from Los Angeles, to conduct a forensic audit. I instructed him to investigate without bias, without seeking a predetermined result. If Mr. Plyam was innocent of stealing money, I wanted him to put that in writing and share it with me, the Bronfmans, our mutual attorney, Robert Crockett, and Mr. Plyam and his lawyers.
I also suggested that Mr. Phelps and I conduct an additional audit to determine what happened to some $65 million that the Bronfmans had “lost’ in the commodities market. Mr. Plyam had been the commodities broker.
Mr. Phelps began his audit on the Los Angeles real estate.
I began to investigate the $65 million loss in the commodities market.
I questioned Clare Bronfman about her $65 million loss in commodities. She told me that Keith Raniere handled all the investments for her and her sister.
She told me that Keith had devised a mathematically perfect system to make an enormous profit in commodities. But Mr. Raniere explained to her that her father, the late billionaire Edgar Bronfman Sr., had foiled the plan. Her powerful father had manipulated the commodities market to make sure they lost all their money in order to embarrass Keith and drive a wedge between Keith and her and her sister, Sara.
I asked her if she had any actual proof that the $65 million she and her sister lost really went into commodities.
She said no.
I asked if Keith had proof. She said she would ask him and get back to me.
She never got back to me.
I was fired.
James Del Negro was placed in charge of the Los Angeles project.
A few months later, Mr. Phelps was fired. I was told by a source involved in the project that Mr. Phelps was fired because he did not find Mr. Plyam had stolen any money, and because he would not adjust his findings to divert attention away from the possibility that Mr. Raniere had stolen money or misled Mr. Plyam with an intent to sabotage the project.
The Bronfmans started a lawsuit against Mr. Phelps. It was an intense litigation assault, the purpose of which was ostensibly to get a refund of the money he had been paid in retainer.
I suspect the true purpose was to silence him.
I believe he settled and most likely with a gag order to not discuss his findings with the press or Mr. Plyam.
Mr. Phelps, who had an unblemished reputation in his field, was up against unlimited wealth and, behind the money was Keith Raniere, who was likely hell bent on destroying his practice and reputation if he did not concede.
At the time I was fired, I did not suspect Mr. Raniere of stealing.
I thought him merely incompetent.
After he began his multi-front attacks on me, I started a more serious investigation. I later learned much more about him.
I have come to believe Keith Raniere is willing to steal, perjure, bribe, lie, rape, mutilate, extort, swindle, and deceive. I also believe he has done all of those things many times.
I suspect he is willing to do [and may have done] bodily harm to his enemies – even up to and including murder.
I suspect he would do this to both his enemies and his “friends” for he does not distinguish between them.
His greatest talent is in deceiving people that he is concerned about them, as he destroys their lives and robs them of their dignity and freedom.