Text version below:
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK
UNITED STATES OF AMERICA,
United States Courthouse
Plaintiff, Brooklyn, New York
-against- June 12, 2018 2:00 p.m.
KEITH RANIERE AND ALLISON MACK,
TRANSCRIPT OF CRIMINAL CAUSE FOR STATUS CONFERENCE BEFORE THE HONORABLE NICHOLAS G. GARAUFIS UNITED STATES SENIOR DISTRICT JUDGE
For the Government:
UNITED STATES ATTORNEY’S OFFICE
Eastern District of New York
271 Cadman Plaza East
Brooklyn, New York 11201
BY: MOIRA KIM PENZA, AUSA
TANYA HAJJAR, AUSA
KARIN K. ORENSTEIN, AUSA
For Defendant Raniere:
BRAFMAN & ASSOCIATES, P.C.
767 Third Avenue
New York, New York 10017
BY: MARC A. AGNIFILO, ESQ.
TENY GERAGOS, ESQ.
677 Broadway, Suite 707
Albany, New York 12207
BY: PAUL DEROHANNESIAN, II, ESQ.
DANIELLE R. SMITH, ESQ.
GEORGETTE K. BETTS, RPR, FCRR, CCR
Official Court Reporter
For Defendant Mack:
KOBRE & KIM LLP
800 Third Avenue
New York, New York 10022
BY: SEAN STEPHEN BUCKLEY, ESQ.
WILLIAM F. MCGOVERN, ESQ.
Court Reporter: Georgette K. Betts, RPR, FCRR, CCR
Proceedings recorded by mechanical stenography. Transcript produced by computer-aided transcription.
GEORGETTE K. BETTS, RPR, FCRR, CCR Official Court Reporter
THE COURT: Please be seated in the back.
THE COURTROOM DEPUTY: Criminal cause for status conference. Counsel, please state your appearances.
MS. PENZA: Moira Kim Penza for the United States. Good afternoon, Your Honor. With me at counsel table are AUSA Tanya Hajjar and Karin Orenstein. And with Your Honor’s permission, Samantha Fry, who is an intern with our office who is currently attending Harvard Law School.
THE COURT: Very good. Thank you.
MS. PENZA: Thank you, Your Honor.
THE COURT: Please be seated. Yes.
MR. AGNIFILO: Good afternoon, Your Honor, Marc Agnifilo, Teny Geragos and with Your Honor’s permission we have an intern with us, Sophia Agnifilo. We represent Mr. Raniere. And we also have co-counsel.
MR. DEROHANNESIAN: Paul DerOhannessian and Danielle R. Smith.
THE COURT: Okay. Where does she go to law school?
MR. AGNIFILO: She’s still in undergrad, Your Honor.
THE COURT: Undergrad. Welcome. Yes.
MR. BUCKLEY: Good afternoon, Your Honor, Sean Buckley and William McGovern of Kobre Kim on behalf of Ms. Mack, who is seated at counsel table as well.
THE COURT: Please be seated everyone. Thank you and welcome. At this point I’d like to hear from the government as to the status of the pretrial developments.
MS. PENZA: Thank you, Your Honor. Your Honor, the government has been providing discovery on an ongoing basis. We — as we represented originally, there is a significant amount of discovery in this case. We have recently received additional discovery. We
intend to make a further production this week and we expect that it will still be ongoing for some period of time. We just received, for example, two email accounts, Your Honor,that we believe will contain, at the very least, Rule 16 evidence to be provided to the defendants and we’re going to do that as expeditiously as possible.
We also, as we expressed to Your Honor, there are at least — there is at least one account where we have firewall concerns and we have set up a firewall team. We have an FBI agent and an AUSA who are assigned to that and they will be reviewing materials quickly so we can produce those as well.
THE COURT: Now, I set a trial date of October 1st, when will you be done with your discovery transfers to the defendants?
MS. PENZA: Your Honor, it is difficult for us to estimate right now because we are still in the process of receiving certain materials. We do intend to do it on a rolling basis. As we did tell Your Honor earlier, we do expect — at our last status conference, we do expect a superseding indictment in this case and that there will be additional discovery obligations in accordance with the superseding indictment as well.
THE COURT: So this would be a superseding indictment as to these defendants?
MS. PENZA: As to these defendants — as to these defendants, yes.
THE COURT: And what about the issue of any additional defendants that might come along and whether we would be having one trial or more than one trial in this case?
MS. PENZA: Your Honor, at this time, based on our ongoing investigation and the charges that we do expect to bring in the superseding indictment, which we have made representations to at least Mr. Agnifilo on the phone earlier this week, that we expect to do that within the next month and a half, we would be seeking — the government would expect that the defendants that we seek to charge would be tried at the same time based on the charges that we anticipate bringing.
THE COURT: So let me just understand this in terms of scoping out my schedule and not to put you in a corner, but believe it or not this is not my only case, so are we talking about a trial of a week, a month —
MS. PENZA: Your Honor, we anticipate —
THE COURT: — three months?
MS. PENZA: We anticipate it would be more in the range of three months.
THE COURT: A three-month trial. That’s including the defense?
MS. PENZA: Yes.
THE COURT: All right. Let me hear from the defense.
MR. AGNIFILO: Thank you, Your Honor. Our concern, and maybe it’s not first and foremost, our concern is if new defendants are added a month and a half, two months from now, and if it’s the government’s position they want to have one trial rather than multiple trials, I can imagine the scenario where a defense lawyer coming into this case and a defendant coming into this case for the first time in say August, says an October 1st trial date is not possible for him or her, and then the date gets moved or it does not, that’s up to Your Honor. And so it’s related to a couple of things, not the least of which is our bail application, and I can do that whenever Your Honor is ready for me to do that.
THE COURT: Well, I was trying to ascertain whether I should set a motion schedule at this point and what it appears is that because you haven’t received all of the discovery, it would be very difficult for you to agree to a motion schedule if we establish a motion schedule where we don’t yet know how much work is going to be involved on your part in making such a motion, and facing — working back from an October 1st trial date. As a practical matter, if there’s a superseding indictment and that superseding indictment includes other defendants, it’s going to restart the clock anyway and then there’s the question of if some of the people indicted are potentially cooperators, there are all kinds of issues here. This is a more complicated case than your garden variety felon in possession case, for instance, or even a larceny case or any of those. So what I’m trying to get a sense of is whether what we’re really talking about in terms of timing, and it’s actually I think premature to set a motion schedule.
Last time, with all due respect to the government, they said it would be four to six weeks or something like that and we would have a superseding indictment. I thought it was scheduled today, a meeting for today we’d have a better understanding what the timing would be for a trial, but now that’s been pushed back and we’re talking about July or August, right?
MS. PENZA: Yes, Your Honor.
THE COURT: Right. So what I think I ought to do is make a schedule such that we have a status conference in July and we see where we are. And if we have to go ahead with just a trial of two people on October 1st, you can hurry up and make your motions at that point. Does that sound reasonable?
MR. AGNIFILO: That’s good for us, yes.
THE COURT: I know it’s good for you.
MR. AGNIFILO: I agree.
THE COURT: I think you would agree with that. And the government, what it does to the government is it tells the government that they have to move with alacrity to deal with any additional potential defendants in the case so that we have a better sense of how many people I would be trying and then we can figure out when I’m going to try them.
There’s one time we’re not trying this case, the month of December there is not going to be a trial because it’s not fair to jurors. So I just don’t do December — I’ve learned after 18 years that I don’t conduct long trials with a two-week break for Christmas and New Year’s and Hanukkah and Kwanza, I’ve got everything covered now, and so it would have to be after the first of the year, which is the winter, which brings other issues along the way, but there’s also the question of should any of the defendants remain in custody, then there’s that concern as well.
MR. AGNIFILO: Understood.
THE COURT: It’s also a concern for someone who is on house arrest. It’s not pleasant, even though it’s at home it is still not pleasant and I understand all of that and there is a presumption of innocence which we have to recognize and appreciate.
So why don’t we set a schedule for the next meeting. But before we do, let me hear from Ms. Mack’s counsel.
MR. BUCKLEY: Thank you, Your Honor. We have nothing to add to Your Honor’s assessment and agree with it in all respects.
THE COURT: All right. Thank you. So we need to do something late in July.
MS. PENZA: Yes, Your Honor.
THE COURT: How about Wednesday, July 25th?
MR. AGNIFILO: That’s fine, Your Honor.
THE COURT: Is that okay for Ms. Mack’s counsel?
MR. BUCKLEY: Yes, Your Honor.
MS. PENZA: That’s fine for the government, Your Honor.
THE COURT: We’ll do that at 2 p.m. on Wednesday, July 25th. And you have an application?
MS. PENZA: Yes, Your Honor. In light of the ongoing trial process, we would like to exclude time in order to allow the preparation for trial. I do not — I don’t know Ms. Mack’s current position. Last time Ms. Mack’s position was that she wanted to waive Speedy Trial to continue to engage in plea negotiations. At this time the government is still willing to engage in such plea negotiations, but we have not heard from defense counsel.
THE COURT: Let’s start with Ms. Mack’s counsel. Does Ms. Mack’s counsel consent to the exclusion of time?
MR. BUCKLEY: Your Honor, we have no objection to the exclusion. We understand that additional discovery is forthcoming as soon as this week, so we have no objection because we need the additional time to review discovery and consider motions.
THE COURT: Mr. Agnifilo.
MR. AGNIFILO: We do not consent to the exclusion.
THE COURT: All right. Under the statute, the time is excluded as Ms. Mack’s counsel has not objected to the exclusion of time between now and July 25th. The time is excluded between today and July 25th, 2018, in the interest of justice for the continuation of discovery delivery and plea negotiations.
MS. PENZA: Thank you, Your Honor.
THE COURT: So that brings us to the next issue.
MR. AGNIFILO: Yes, Your Honor. Your Honor, we’ve given the Court a fairly length written submission, the government has responded, we replied. I think given the circumstances of this case, a reasonable and appropriate set of bail conditions would be to have Mr. Raniere released on a 10 million-dollar bond; he would be secured by, at a minimum of two armed security professionals with TorchStone, and we have the former director of the U.S. Secret Service is sitting in the second row, third from the right, Mark Sullivan, who would be working with torch — there he is, he has his hand up in the air, Judge. Who would be
working with TorchStone as part of the security detail. Let me put a few things —
THE COURT: I’m really curious about this concept that someone would be on house arrest basically guarded by people with guns. What is the purpose of having armed guards? Is the purpose of having armed guards that in case the individual being guarded tries to flee, they have the authority to stop him or her and possibly use their guns to stop the defendant? In other words, to shoot and kill somebody, which sounds absurd to me frankly on its face, or is it to stop people from coming in, like reporters or people who feel wronged by the individual, and then protect the individual by shooting the intruder. What is the purpose of an armed guard?
MR. AGNIFILO: Sure. So to Your Honor’s first question, it is my understanding of the state of the law that someone can consent to physical force being used on him or her but cannot legally consent to deadly physical force being used on him or her. So we would consent to physical — let me —
THE COURT: So then you need a couple of Karate experts, you don’t need someone with a gun.
MR. AGNIFILO: If I were more imaginative I would have led with that. So the idea really at the end of the day is it’s an emphasis on trust rather than arms. And it’s a matter of integrity, it’s a matter of reputation. The last thing, frankly, I want, the last thing that TorchStone wants, Mr. Sullivan wants is for this to go in the wrong direction, because that’s — we’d have to come back in front of Your Honor and nobody wants to be in that position. So the guns are, I don’t know, the icing on the cake. What really keeps him there is there are guards — let me back up. This goes to Your Honor might have been wondering why I structured the bail application the way I did and there’s a reason.
There is a trust, a defense trust that has been created since the inception of this case. It’s being administered by a trustee. The trustee has a lawyer and no defense costs — and I say this because the renting of the apartment, the paying of the armed guards would be defense costs which could not be paid unless it were ordered by Your Honor. So the guard, just to be clear, the guards and the apartment would be paid from this irrevocable trust that’s been created. Right now there is no apartment because there’s
no bail condition authorizing the expenditure of money on an apartment. So the idea is this —
THE COURT: I’m like the co-trustee if I agree to this.
MR. AGNIFILO: I —
THE COURT: It’s a condition precedent to the expenditure of the funds that the Court agree to something of this nature.
MR. AGNIFILO: It ends up being that, but it’s not that by design. It’s that because they can’t spend anything unless it’s a reasonable defense cost and it’s not currently, as we sit here today, a reasonable defense cost because it’s not been ordered.
THE COURT: Well, I’m not aware of the trustee’s name, I’m not aware of who the settlors are of the trust, I’m not aware of the funds that are in the trust, but put all that aside, this is not your client’s money.
MR. AGNIFILO: Correct.
THE COURT: No one is coming forward to be a — to sign on this bail application, right?
MR. AGNIFILO: The way it’s currently situated, that’s correct.
THE COURT: Right. The purpose of having individuals act in that capacity is that they place some moral suasion on the defendant to adhere to the terms of the release. But there is no one to do that in this case, the way you have structured it.
MR. AGNIFILO: That’s correct.
THE COURT: I’m only talking about your concept.
MR. AGNIFILO: Yes.
THE COURT: This is a concept.
MR. AGNIFILO: That’s right.
THE COURT: And so someone can write a check for a large sum of money, take a million dollars just out of air here, put it into an irrevocable trust and that trust could be used for the purposes that you have outlined, but there’s no moral suasion placed upon the defendant to adhere to the terms of the bail because, frankly, he has nothing to lose. The only people who have something to lose are the settlors of the trust and perhaps the trustee for some fiduciary misbehavior, if that should happen, but there’s nothing really that keeps the defendant in tow in effect or — he has no family members who are going to sign the bond, he’s just — it’s just him.
And so the question then becomes, assuming that we go forward with something like this, how does — apart from the fact that there is money available, how does this guarantee that your client doesn’t get on an airplane at Teterboro Airport without any kind of travel documentation and fly on a private plane to a place where he gets off the plane and nobody knows where he is, the flight plan changed in mid-flight, that happens, and he’s gone? And then the only thing that’s out there is the bond company, which has to pay $10 million because he absconded.
MR. AGNIFILO: There is two things: First, Mr. Sullivan and the other agents of TorchStone aren’t going to let him do that. They’re not going to let him leave. Now, I think to Your Honor’s other question, the rules of engagement, as I understand it — and it’s a direct question, I want to give Your Honor a direct answer — I don’t believe they’ve been authorized to shoot him unless it were an independently dangerous situation. It’s a complicated analysis and probably not one that I’m able to make. But that’s what — we have very experienced former law enforcement personnel who are putting their reputations on the line and rather than moral suasion, we have guards. Moral suasion is usually the thing that’s compelling in these courtrooms for bringing something back.
Here we have something that’s more immediate and more compelling, I submit, which is that we have actual guards, at least two of them depending on the location, who are not going to let him leave and who, if there was any inkling of him trying to leave or do anything inappropriate whatsoever in violation of Your Honor’s condition, would immediately tell anybody Your Honor wanted us to tell, including the prosecutors, including pretrial, including the Court if the Court wanted to be involved in that. Anybody
Your Honor wanted us to tell they’re going to tell. This is not the kind of thing where anybody is going to want that to
My job in this case is if the case goes to trial, I try the case. The guard’s job is to make sure Mr. Raniere is safe, secure, that he comes back to court each and every time he has to come back to court through the end of this proceeding. So what we lack in moral suasion, and Your Honor is right about that, I think we more than make up for in armed personnel who are going to secure an apartment that, not that Mr. Raniere chooses, that they choose. We’re happy to have pretrial services or anyone from the government or the FBI involved in that process. We’re not trying to keep anybody out.
And the benefits really are these, and I think this is a significant one. We have a very, appropriately so, restrictive protective order in this case. I think it is easier, it’s safer, it’s more secure to review discovery not in a prison setting and to prepare a defense in a fairly complicated case, and a complicated case where there might be superseding indictments into the future and we all know the government is continuing to investigate, not in a prison setting.
And here while it’s a little, admittedly, unorthodox the way we structured the bond package, I think it’s very effective. He won’t have his passport, he can’t apply for new passports and he’s going to be watched by guards with a GPS monitor. So there really are belts and suspenders on this one. He can’t leave because Pretrial Services will have a GPS monitor on his ankle. He can’t leave because he doesn’t have a passport to leave and he can’t leave because he has armed guards who are former very high level law enforcement officials whose own credibility — and I mean that’s really at the end of the day I think, you know, a form of moral suasion and not on the defendant but on the integrity of the process.
The last thing these guys are going to want to have to happen is Keith Raniere sneaks out behind their back. That would be a disaster for them professionally. It would be a disaster for me professionally, I’ll say that in front of Your Honor. Nobody wants that to happen, that would be horrible. And I have every reason to expect that he’s going to come back to court, he’s going to fight this case. I don’t want to get too much into the merits of the case, I think it’s a triable case, it’s an interesting case, it’s a serious case and it’s a triable case.
THE COURT: What about the situation with him going down to, what was it, Puerto Vallarta —
MR. AGNIFILO: Mexico.
THE COURT: — Mexico and staying in a gated community and operating an email account with the protection that he couldn’t be — he couldn’t be checked as to his email.
MR. AGNIFILO: So I think for better or worse —
THE COURT: Why? Why would you do that if you were not trying to evade law enforcement?
MR. AGNIFILO: Because there are two, in what I’ve seen, well-entrenched, passionate factions having nothing to do with law enforcement that surround Mr. Raniere. There are people in Nxivm and in DOS, some of whom are very loyal to Mr. Raniere, and there are people who have left Nxivm and/or DOS who are, from what I’ve seen, equally passionate anti-Raniere folks.
And I don’t tend to reference the press in Court matters, but I think it’s interesting to note, I think The New York Times magazine piece the journalist noted people were taking photographs of her and others at different points in time. So there’s no reason to think — and I can go through the details of Mexico, there is no reason to think Mr. Raniere was evading law enforcement. I think he was trying to remain secure in the face of people who I don’t think mean him well.
And that’s certainly his belief and that’s the belief of some other people. I don’t besmirch these people, they are entitled to their views. But Your Honor asked why would he do that and I think that’s the reason. The reason more pointedly, and I know the government was concerned about his trip to Mexico, the mother of his child’s visa was about to expire and they traveled to Mexico and when they traveled to Mexico — we have this in our written submission —
THE COURT: But they are not living in Puerto Vallarta, they are living five hours away somewhere.
MR. AGNIFILO: I think you’re right, I don’t think they’re in Puerto Vallarta.
THE COURT: He’s in one place and they are more than down the road, they are in another area of the country.
MR. AGNIFILO: I can double check, I thought they were all together. Just give me one second, Your Honor.
MS. PENZA: Your Honor, at the time of the defendants apprehension in Mexico the mother of his child I believe was in Monterrey, while the defendant was in the Puerto Vallarta area with DOS slaves.
THE COURT: With who?
MS. PENZA: With DOS slaves including his co-defendant, Ms. Mack.
THE COURT: Oh, you called them DOS slaves, I see. All right.
MR. AGNIFILO: So —
THE COURT: So, look, I understand that your presentation, very extensive, clear presentation, I’m concerned about the fact that what could happen is that you’ve got these law enforcement people, who retired, who are in this organization, this company, and if he has people who are mad at him then everybody is at risk because he’s at risk. If these people come after him and then you’ve got people protecting him with guns. This is not your ordinary bail application, you understand that.
MR. AGNIFILO: I do, I do. But I don’t think there’s any reason to think that anyone is going to resort to violence.
THE COURT: No.
MR. AGNIFILO: We haven’t had that. This group, and what I mean by the group sometimes it was one group, and then people left, are much more in to trying to figure out who is speaking to who and what they are saying. I mean, they are much more likely to try and hack into — I’m not suggesting any of this, I’m just saying what I think the reasonable fear would be, they are trying to hack into different communications rather than hurt someone. I don’t think there’s — I have not seen any evidence of anyone trying to hurt anyone and so we don’t have that problem under our situation because he’s not going to have any Internet access.
If Your Honor permits him to have a computer on site, it’s not going to be hooked up to the Internet. We’re going to basically stick a disk in it and go through the government’s discovery to the extent that we can. So I don’t think we’re setting up a situation where we’re going to have violence. I think we’re just setting up a situation where he is more able to defend himself, easier for his lawyers to see him, easier for his lawyers to spend time with him and spend time going through the extensive discovery that we’ve gotten and will be getting on the computer and preparing this case for trial. I mean —
THE COURT: All right.
MR. AGNIFILO: Thank you, Judge.
THE COURT: Is there anything you would like to say about any of this, ma’am?
MS. PENZA: Your Honor, only if you have any questions, I believe our submission was fairly extensive.
THE COURT: Well, you’re concerned about the fact that we don’t know where this money is coming from and the fact that people who have private jets can fly people wherever they want to fly them and they don’t necessarily have to have travel documentation in order to do that, and we really don’t know whether in effect we’re setting up a private jail here, and does the Court have to start taking into account the fact that what the Court may be sanctioning is in effect a private jail with all the accoutrements of a mansion perhaps. People with a great deal of money can set up a private jail with all kinds of amenities, then it sort of makes a mockery of the system of justice, while other people can’t get a hundred dollars together to get out of Rikers Island. I think this is a really big problem. It’s not just a social problem, it’s a criminal justice problem and I don’t know that I want contribute to it unless I know who is providing the money and how much we’re talking about. If it’s going to be a hundred thousand dollars a month for private gun-toting guards and placement in some sort of a home that I don’t know the nature of, then I’m a little bit concerned about it, even apart from the issue of the possibility of flight.
I’m concentrating on flight, but I think that if we get past the issue of flight and we move on to some of these other issues, I know that some courts have addressed these other issues, I’d prefer not to have to do that, but does the government have a position on all of that?
MS. PENZA: Yes, Your Honor. So, Your Honor, the government absolutely believes that the private jail concept has inherent problems, but this case in particular is a case where it clearly is not the right outcome. The only cases in which this type of private jail has been allowed, which does have enormous policy implications, have been cases in white collar criminal cases where the defendants themselves were putting up enormous sums of their own money. And in this situation, Your Honor, the defense counsel has given his best guess as to who is financing the trust in this case —
THE COURT: You mean he’s given a guess?
MS. PENZA: Yes, Your Honor.
THE COURT: He doesn’t know.
MS. PENZA: He doesn’t know.
THE COURT: Let’s put it this way, he hasn’t indicated that he knows.
MS. PENZA: He hasn’t indicated that he knows. He has indicated who he believes may be funding the trust.
MR. AGNIFILO: I — it’s better that I guess. I mean, I don’t know in that I’ve never seen the trust documentation, but, you know, I’m — I’m —
THE COURT: When a surety comes in here I get to question the surety. I get to say, what is your relationship? How do you know this person? What’s in it for you? Are you going to be able to cast moral suasion on this individual to guarantee that this person is going to come back? I get to do that. What your structure or the structure that’s been sort of devised eliminates is the role of the Court in making a fair judgment as to whether if, by releasing someone, they’re likely to show up again in court absent, you know,
gunfire. So I’m just concerned about that as much as I’m concerned about anything else.
MR. AGNIFILO: Just so Your Honor — I didn’t want to interrupt the prosecutor.
THE COURT: Continue.
MR. AGNIFILO: Go ahead.
MS. PENZA: So, Your Honor, the person who the government believes, based on Mr. Agnifilo’s guess —
THE COURT: We’ve all guessed. We’ve all read the article in The New York Times magazine, all right. I made a promise in my life never to finish any article in The New York Times magazine because they’re all too long, but I made an exception regarding this article. I read the whole thing, so I’ve read everything that was put forward there.
MS. PENZA: All the way to my shoes, Your Honor.
THE COURT: That’s all I know about this case is what I read in The New York Times magazine and the Albany Times Union. Okay?
MS. PENZA: Understood, Your Honor.
THE COURT: So that’s the extent of my understanding. And so based on that, I could reach certain guesses.
MS. PENZA: Okay, so, Your Honor, based on that guess, this is a person who the government does believe has acted as a co-conspirator in criminal activity with the defendant.
THE COURT: Who has?
MS. PENZA: The person who is funding this trust —
THE COURT: Yes.
MS. PENZA: — has acted as a co-conspirator of the defendant over many years. And given that, and in addition to the fact that over years she has given — when we’re talking about amounts of money —
THE COURT: He or she.
MS. PENZA: Yes, Your Honor. He or — this person on one occasion, just to give Your Honor an example, provided a 65 million-dollar loan to the defendant for the commodities market, which then all of that money was lost and has never been repaid. So this is the type of amounts of money. It is really unimaginable wealth and limitless wealth that we’re talking about here. So the idea that any amount of money would not be worth it to this person to allow the defendant to flee, should we end up in that situation, is unimaginable.
And she — this person, is also somebody who, Your Honor, is equally capable along with the defendant of trying to live off the grid. We’re talking about people with private islands, talking about people with access to private air travel, which the defendant has participated in. People who have also been using encrypted email. People who have also been dropping their phones so that the government is unable to track them. So this is the environment we’re operating in, Your Honor, and so we do believe that the risk of flight is significant in this case. But, Your Honor, we also believe that this, unlike many cases in which private jails have been
proposed, is a case where there is real danger to witnesses, to victims if the defendant is released.
This is somebody who has a network operating around the world that literally one text message he can mobilize hundreds of people who could do his bidding and so that, with all due respect to Mr. Sullivan, there is nothing that Mr. Sullivan is going to be able to do on a day in, day out basis to prevent something like that from happening, Your Honor, and people are truly petrified of the defendant. This is an organization that has operated for years by manipulating people, by abusing people and by intimidating them.
THE COURT: Anything else before I rule?
MR. AGNIFILO: Yes. So we have spoken about this and Your Honor’s right, Your Honor’s suspicion of who is funding the trust, whether that’s a hundred percent or 99.5 percent, that’s exactly what it is.
THE COURT: My suspicion is not a suspicion, I’m just saying that in the ordinary course sureties come before the Court and explain what their relationship is with a defendant and attempt to give the Court some assurance that as a surety they are doing so voluntarily, that they have a relationship, that they will do everything they can to oversee the defendant’s behavior to the extent that the defendant will return to court, and provide that sort of assurance or group of assurances so the Court can feel that there is a strong likelihood that the person will not abscond, among other things.
MR. AGNIFILO: I understand. I understand the Court’s concern completely. I can absolutely attempt to make that happen. I don’t control this person, this person has her own lawyers, but Your Honor’s concern is very well taken by me. I hear the Court loud and clear and if that’s something that —
THE COURT: But then there is this other issue that’s raised obliquely by the government that this supposed financial backer of this irrevocable trust may be either an unindicted co-conspirator or subsequently an indicted co-conspirator with the defendant, where are we then? That complicates the analysis substantially it would seem to me.
MR. AGNIFILO: It would complicate it in one regard, I don’t think there’s any suggestion that this person’s money — we know who we’re talking about and her money is inherited, is not ill-gotten gains, so I don’t think there is a fear that —
THE COURT: I’m not talking about money that — this isn’t an organized crime case, all right, where the money was the result of illegal activity, I would assume based on what’s believed by everybody in this room as to the source, but there is the issue of the fact that if one party, one defendant is supporting another defendant financially, then that raises other issues, wouldn’t you say?
MR. AGNIFILO: I agree. I agree. But as we sit here today, there has been no charge —
THE COURT: Right.
MR. AGNIFILO: And —
THE COURT: Okay.
MR. AGNIFILO: — the money is clean money.
THE COURT: I understand.
MR. AGNIFILO: I understand.
THE COURT: I’m just putting that on the table for you to chew on it.
MR. AGNIFILO: I appreciate that. I am chewing.
THE COURT: Good. Anything else? That’s it?
MR. AGNIFILO: That’s it for me.
THE COURT: All right. The defendant, Keith Raniere, has been charged with sex trafficking, conspiracy to commit sex trafficking, and conspiracy to cause another to engage in forced labor. The defendant has moved for release on bail pending trial. The Court finds that the government has shown that the defendant is a flight risk, notwithstanding the proposed conditions. The Court, therefore, denies the defendant’s motion without prejudice.
Pretrial detainees have a right to bail under both the Eighth Amendment and the Bail Reform Act. The latter provides that a court must release a defendant, quote, subject to the least restrictive further condition, or a combination of conditions, that it determines will reasonably assure the appearance of the person as required, the safety of other persons, and the community, end quote.
Only if, after considering the factors set forth in Title 18 United States Code Section 1342(g), the Court determines that, quote, no
condition or combination of conditions will reasonably assure the appearance of the person as required and the safety of any
other person and the community, end quote, may the order — the Court order the defendant to be held without bail. If, however, there is probable cause to find that the defendant committed one of the offenses enumerated by the Bail Reform Act, a rebuttable resumption arises, quote, that no condition or combination of conditions will reasonably assure, end quote, the defendant’s appearance or the safety of the community or others. In such a case, quote, the defendant bears a limited burden of production to rebut that presumption by coming forward with evidence that he does not pose a danger to the community or a risk of flight, end quote. United States v. English, 629 F.3d. 311, Second Circuit, 2011.
If the defendant offers such evidence, the presumption favoring detention does not fall away, but, quote, remains a factor to be considered among those weighed by the district court, end quote. Even if such a presumption case, however, quote, the government retains the ultimate burden of persuasion by clear and convincing evidence that the defendant presents a danger to the community, and by the lesser standard of preponderance of the evidence that the defendant presents a risk of flight, end quote. Quoting United States v. English. The parties agree that this is a presumption case; isn’t that right?
MR. AGNIFILO: That’s correct, Judge.
THE COURT: Right?
MS. PENZA: Yes, Your Honor.
THE COURT: The defendant has been indicted by a federal grand jury on sex trafficking and sex-trafficking conspiracy charges for which the maximum sentence is life in prison. The grand jury’s indictment conclusively establishes that there is probable cause to believe that the defendant committed these offenses. The only questions before the Court, then, are whether the defendant has rebutted the presumption in favor of detention, quote, by coming forward with evidence that he does not pose a danger to the community or a risk of flight, end quote. Quoting, again the English case, and whether the government has shown that the defendant is dangerous or a flight risk notwithstanding the proposed conditions.
The defendant has presented the Court with a bail package that includes a number of conditions of release. These proposed conditions include a 10 million-dollar appearance bond; travel restrictions; home detention enforced by GPS monitoring and round-the-clock armed guards; and restrictions on defendant’s access to computers and phones and contact with his co-defendant, alleged co-conspirators, and other Nxivm affiliates.
The government contends that this bail package is insufficient to reasonably assure the defendant’s appearance at trial, to protect the safety of the community, or to mitigate the risk that he will obstruct justice. After considering the four Section 3142(g) factors,
the Court agrees with the government that the proposed bail package is inadequate to reasonably assure the defendant’s
appearance at trial. In the Court’s view, all four of these factors, the nature and circumstances of the offense charged, the weight of the evidence against the defendant, the history and characteristics of the defendant, and the nature and seriousness of the danger to any person or the community that would be posed by the defendant’s release, weigh in favor of continued detention. As the Court will explain, the first and third of these factors particularly support continued detention.
First, as to the nature and circumstances of the offenses charged, the Court notes that the charges on which the defendant has been indicted are extremely serious. The sex trafficking and sex-trafficking conspiracy charges are each punishable by a sentence of life imprisonment, and the forced labor conspiracy charge is punishable by up to 20 years imprisonment. Because the defendant is charged with sex trafficking by, quote, force, threat of force, fraud, or coercion, end quote, the substantive sex trafficking charge is also subject to a 15-year minimum sentence under Title 18 United States Code Section 1591(b)(1). Faced with the possibility that, if convicted, he may spend the rest of his life in prison, the defendant clearly has, quote, a strong motive to flee, end quote. United States v. Sabhnani, 493 F.3d 63, Second Circuit, 2007.
Second, as to the defendant’s history and characteristics, the Court finds that this factor strongly supports detention to avoid the risk of flight. Certain aspects of the defendant’s history and characteristics support his pretrial release. He is a long-time resident of upstate New York, and there is no indication that he has a criminal record, a substance abuse problem, or a history of missed
court appearances. The Court is troubled, however, that defendant’s conduct in recent months, his lack of an ordinary job or personal financial resources that could secure a meaningful bond, and his access to third parties’ extensive financial resources all show that he may flee if given the opportunity.
The Court is troubled by indications in the record that the defendant attempted to allude law enforcement by moving to Mexico last fall. According to the government, once, quote, law enforcement began interviewing witnesses about defendant’s criminal conduct, end quote, he fled to Puerto Vallarta, Mexico, where he lived in a luxury villa, began using fully encrypted email, and stopped using his phone.
In response, defendant argues that he traveled to Mexico to be with his child and his child’s mother, a Mexican citizen whose U.S. visa expired last October. While he admits he used different phones and email addresses, he contends that he did so not to evade law enforcement but to evade anti-Nxivm — an anti-Nxivm group that he says harassed him for years.
Finally, defendant contends that the government was or should have been aware of his location because he filed a document in state court resigning as executor of the estate of his deceased significant other. That document identified by name and location the Mexican notary before whom defendant appeared, which he argues shows that authorities knew his location.
Defendant’s explanations are not persuasive. Even if the Court were to accept defendant’s explanation for why he traveled to Mexico, this explanation would not give the Court — I’m sorry, would still give the Court pause as it would indicate that the defendant has close personal ties to Mexico and thus may be a flight risk. In any event, this explanation rings false, as defendant’s motion indicates that the mother of his child lives in or near Monterrey, but Monterrey is hundreds of miles from Puerto Vallarta.
The Court is skeptical of defendant’s explanation that he began using fully encrypted email and stopped using his phone to
evade Nxivm critics, not law enforcement, as the Court is not aware how the former could have the ability to track his phone. Nor is the Court persuaded by defendant’s argument that his filing of the executorship document in state court indicates that he did not attempt to conceal his location from the government. The document states that the Mexican notary before whom he appeared was located in Guadalajara, Jalisco. According to Google Maps, Guadalajara is about a five-hour drive from Puerto Vallarta. The Court does not see how the government should have inferred this location from this document.
The Court also has grave concerns about the defendant’s financial resources. According to defendant’s financial affidavit, he is self-employed and has no income and no assets other than a 50 percent interest in a home in Clifton Park, New York, worth approximately $60,000. He thus has nothing material tying him to this district, or this state beyond his half interest in the Clifton Park, New York real estate. On the other hand, defendant appears to have access to enormous financial resources contributed by third parties. According to the government, these resources include millions of dollars as well as access to private air travel and to a third party’s private island in Fiji.
Defendant himself proposes that he should be subject to home detention, monitored by armed guards at the cost of at least $40,000, and possibly more like $140,000 per month, to be paid through a special trust funded by third-party contributors. This access to third parties’ extensive financial resources exacerbates the Court’s concern that the defendant might attempt to
abscond if given the opportunity to do so.
Nor do defendant’s proposed conditions of release cure these concerns. Defendant proposes release on a $10 million bond, but this Court views this bond as basically worthless, in light of defendant’s lack of personal assets. To cure this defect, defendant proposes that he should be monitored by armed guards. At this point, however, the Court is not satisfied that the armed guard condition is a reasonable alternative to pretrial detention.
First, the Court does not yet understand how defendant intends to pay for the cost of private security. The defendant cryptically avers that the guards will be paid, quote, by an irrevocable trust funded by third-party contributors to pay for reasonable defense costs in connection with the instant prosecution, end quote. What the Court does not have in front of it, however, is any information about the trust; its detailed terms; its corpus; or its settlors.
Without such information, the Court cannot make a reasoned assessment of the armed guards’ ability to assure defendant’s
appearance. The Court, likewise, has in number of questions about who would be guarding the defendant and their ability to
prevent him from fleeing. How, for example, was TorchStone selected as the proposed security company? Who does TorchStone employ as guards, and what sort of background check and security screenings are these guards subject to? While the Court has no intention of impugning TorchStone’s or its employees’ integrity by asking these questions, it is concerned that without a great deal more of information it cannot make an informed assessment of these guards’ ability to prevent the defendant from fleeing.
And I might add, that the Court really isn’t in a position to be assessing law enforcement techniques and the qualifications of law enforcement officers. We have law enforcement officers who work for the government and, with all due respect to retired law enforcement officers, I don’t think that it’s the job of the Court to be micromanaging the activities of law enforcement or replacements for law enforcement. And this is particularly true here where the defendant may have both access to extraordinary financial resources and a number of loyal adherents, which could easily facilitate his escape at some point.
For the aforementioned reasons, the Court concludes that the proposed conditions of release are insufficient to reasonably assure the defendant’s appearance at trial. The Court therefore denies the defendant’s motion for bail. This denial is, however, without prejudice to the refiling of a revised bail package that provides greater transparency about the defendant’s access to financial resources and the proposed terms of his home detention and armed guards. Because the Court determines that the government has shown that these conditions are insufficient to reasonably assure the defendant’s appearance, the Court need not consider at this time whether the government also has shown that these conditions are insufficient to protect the community and others.
So the application is denied without prejudice. And you understand what the concerns of the Court are.
MR. AGNIFILO: Very much so, thank you.
THE COURT: All right. Is there anything else from the government today?
MS. PENZA: No, Your Honor, thank you.
THE COURT: All right. Now with respect to the government, if for any reason we require a meeting before, I think it’s the 25th —
MS. PENZA: Yes, Your Honor.
THE COURT: — of July, please give adequate notice to both of the defendants, because I’m requiring that the defendants appear including Ms. Mack at every status conference.
MS. PENZA: Understood, Your Honor.
THE COURT: All right.
MS. PENZA: Thank you.
THE COURT: That’s your obligation to keep them informed so that they can give Ms. Mack adequate time to get here, because that’s the requirement of this Court in this very significant case.
MS. PENZA: Absolutely, Your Honor.
THE COURT: Got it?
MS. PENZA: Yes.
THE COURT: Is there anything else from you, sir?
MR. BUCKLEY: No, thank you, Your Honor.
THE COURT: Anything else from you, sir?
MR. AGNIFILO: No, thank you, Your Honor.
THE COURT: All right. We’re adjourned.
* * * * *
I certify that the foregoing is a correct transcript from the record of proceedings in the above-entitled matter.
s/ Georgette K. Betts June 13, 2018
GEORGETTE K. BETTS DATE
GEORGETTE K. BETTS, RPR, FCRR, CCR
Official Court Reporter