AnonyMaker
This is in response to Did Raniere Lose or Steal $65.6 Million of Bronfman Money in Supposed Commodities Losses? – Did Nancy Salzman Help in a giant Swindle?
One of the interesting issues this post leaves unanswered is whether the money Clare and Sara Bronfman provided to cover the commodities trading losses was essentially a gift – even if they were initially structured as loans, but then not repaid – and, thus, should have been declared as such for tax purposes, by whoever received it (It seems to have essentially been provided to Raniere, but put through a corporation [First Principles] controlled by Salzman).
I did a quick search about the commodities issues to see what other sources of information there might be and found a fair bit of the documentation in Precision v. Plyam which is available online, such as a declaration by Bouchey in which she refers to the Bronfman money as “loans” (in quotes in the original):
http://www.documentcloud.org/documents/238697-bjb-declaration-plyam-precision.html
She also notes that even as Raniere was continually losing money, he frequently made promises that “it would all come back” – classic problem gambler behavior.
There’s also an article that reports this:
”It was a very tight, tight constricted circle because what would the NXIVM community think if they found out that the leader of the mission was irresponsibly gambling millions and millions and millions of dollars and losing it?” Bouchey said in sworn testimony. “This would shake the confidence of many people. … It looked crazy. It was crazy.”
Raniere told them the losses were due to outside forces out to foil him, such as Edgar Bronfman, the father of the sisters, Bouchey testified. Raniere, she said, chalked up the losses as a learning experience that could help with dealing with world markets.
“Keith wanted to have our own country, our own currency and market, our own way of doing things,” she said. “So he needed to learn how the cheaters in the world markets worked.”‘
The Losses Were Staggering
According to Suzanna Andrews’ 2010 Vanity Fair article The Heiresses and the Cult, “In early 2005, they [The Bronfman sisters] began covering Raniere’s losses in the commodities market. According to Bouchey, Raniere believed that he had come up with a mathematical formula that would enable him to make a killing. He’d already lost nearly $7 million on his commodities bets several years before. But, according to a declaration by Yuri Plyam, Raniere’s Los Angeles-based commodities broker, with the Bronfmans on board, he began to trade ‘with the same extreme pattern’ except that the trading positions were much bigger.
“From January 2005 to late 2007, according to court filings, Raniere, trading through First Principles, a company registered in Nancy Salzman’s name, would lose close to $70 million—and the Bronfmans would cover $65.6 million of it. ”
It sounds like he lost more than just the Bronfmans’ money, on more than one occasion – so that may have been what happened to any profits from NXIVM’s heyday.
There’s also a story by Claviger that explains the financial dealings in detail, but boils down to this:
“The bottom line is that Raniere lost $1.2 million of Bouchey’s money, $5 million of [Michael] Sutton’s money, and $65 million of the Bronfman sisters’ money because he had no idea what the fuck he was doing. It’s really as simple as that.”
The fact that this ended up being part of a lawsuit with the commodities broker Plyam, who was involved in the real estate deals, also makes it unlikely that there was any unaccounted for money.
There’s also this Frank Report account that details some earlier losses as well. Raniere starts to sound like a gambling addict who was always losing at the commodities market, and never learning his lesson but, instead, going back again and again with the typical delusional belief that he would somehow start coming out ahead:
And, as Frank points out in that last piece, the guy who couldn’t stop losing millions at commodities trading, was someone who claimed to be one of the world’s top problem solvers!
You can read the cover of the book in some of the better photos of the above picture. The title is How to Win at Gambling by Avery Cardoza.
It talks about winning at games besides just blackjack and poker, the only two where a player can gain an actual advantage, through card counting, so it’s obviously gamblers’ delusion, if not casino industry propaganda.
In poker, the ability to read facial and behavioral clues counts as well; interestingly, author Maria Konnikova, who wrote the book “The Confidence Game: Why We Fall For It” (about scams, but very relevant to the psychology of cults as well) and learned a lot in the process of researching how to tell when people are lying (most of us think we are good at it but are actually not, which is why we fall for it), has gone on to a successful career as a professional poker player.
I highly recommend reading Konnikova; her book is very readable besides being well based on modern cognitive and behavioral research. She has a number of YouTube videos, including this one about her book:
https://www.youtube.com/watch?v=M6GQGW7obL8
A Sex Addict Too
The New York Observer wrote back in 2010, “Sixty-five million dollars alone bankrolled what Ms. Bouchey and Mr. Raniere’s former commodities broker Yuri Plyam describe in court documents as a pathological day-trading addiction.”
Raniere was also arguably a sex addict and brought himself to ruin with that, too.
Did Raniere Stash Any Money Away?
Scientology’s L. Ron Hubbard was a certain type of wealth hoarder who just wants to have the money rather than necessarily enjoying the trappings of wealth. He died in a motor home, though a top of the line one – but there were still all sorts of paper trails, and testimony from defectors, making it abundantly clear that he had vast sums at his disposal even if he wasn’t obviously enjoying the benefits.
If Raniere had been smart enough to calculatedly stash away a bunch of money, he’d have gone somewhere that had no extradition treaty with the US to enjoy it, not to Mexico.
These sorts of people seem to almost always have a sort of gambler’s mentality that leaves them blind to considering the possibility of going bust and having to deal with the consequences of it, and so they almost never have a contingency plan – Robert Vesco in the 1970s is the most recent case I can think of, and even then he didn’t really pull it off and ended up dying in prison.
I want to note for anyone who might come across this piece, that Barbara Bouchey has since had posted a piece in which she responds to some of the issues that have been brought up, and claims that she wasn’t part of any conspiracy to divert trading money – she details her own losses, and the promises Raniere and Nancy Salzman initially made to repay them. She also points out that hers and others’ initial losses of several million dollars came something like 6 years before the losses that the Bronfmans covered, which to me further suggests a hapless and reckless pattern of gambling, rather than a calculated con.
see https://frankreport.com/2019/10/21/barbara-bouchey-breaks-long-silence-and-speaks-out-about-commodities-losses-and-other-raniere-bronfman-matters/
[…] Keith Raniere Couldn’t Stop Losing Millions at Commodities Trading, While Claiming to be One of th… […]
Maybe he was funneling the money somewhere else.
But then where would the money be – and why wouldn’t he be with it, rather than sitting in prison?
If Raniere had been smart, he would have put any money someplace like one of the posh Persian Gulf states that have no extradition treaty with the US – and then he’d be there enjoying it, rather than having just made a pit stop in Mexico on his way to the US prison where he sits now. Even Venezuela, closer to his Mexican following, would have been a much better choice as they have only a limited and largely unenforced extradition treaty with the US.
All of the testimony from people familiar with Raniere and the case, and all the legal and circumstantial evidence, is that he really was almost unimaginably stupid in his gambles of various sorts, and just has virtually no assets left.
My unfounded opinion and speculation, without verification of the exact facts:
If Plyam as a broker had structured the counter position of the commodity transactions of Keith Raniere in such a way that only very certain providers of this counter position would have had a chance. Then it would have been possible to ensure who was making the profit on these trades because Raniere had bet on loss-making trades from the front because he wasn’t skilled enough to be successful on these types of trades anyway. This means that Raniere and Plyam’s people knew from the outset who was making the profits and where the money was going, and they did so deliberately.
That’s indeed theoretically a possibility, but I discounted it as highly unlikely for a number of reasons.
I haven’t dealt in commodities in decades, but certainly nowadays more than ever, it would be hard to set up a situation where it was possible to know who the counter-parties were for losing transactions. And there should also be significant brokerage and regulatory safeguards against such subterfuges, or else crooked brokers could use them all the time to defraud clients, though again I’m not familiar with the specifics of how that works currently.
And again, the Precision v. Plyam legal battle would likely have lead to the uncovering of any such collusion, and strongly suggests that there wasn’t that high a level of cooperation to begin with. If Plyam had been involved in Raniere defrauding the Bronfmans, his knowledge of that would have been leverage for him to keep from being sued to begin with, and driven into bankruptcy.
At the heart of it, it’s clear that Raniere was functionally a stupid loser with a gambling addiction, who showed that he didn’t really understand how commodities markets worked. Such a person would be very unlikely to be pulling off some sophisticated back-end connivance, and we also see in many other aspects such as the cash left laying around Nancy Salzman’s house, that they were essentially disorganized amateur criminals.
Plus of course there’s no sign that Raniere was accumulating hidden assets, including that he ended up being arrested in Mexico rather than fleeing to the sort of banking and legal haven that someone truly devious would use.
We could come up with dozens of different ways money could have been siphoned off from the Bronfmans and secreted, many of them involving much less trouble and risk and perhaps better outcomes, particularly since the girls were apparently stupid and unquestioning cash cows.
AnoyMaker,
“The fact that this ended up being part of a lawsuit with the commodities broker Plyam, who was involved in the real estate deals, also makes it unlikely that there was any unaccounted for money.”
Good point.
I must of not read the article where “it” was mentioned that the commodities loss was attached to the real estate lawsuit…..
……However, I would counter, why was Keith Raniere so enraged when Frank Parlato uncovered and retrieved the Bronfman’s money from the fraudulent real estate development?
Maybe Raniere and the Russian had an agreement and the lawsuit ended up providing a smokescreen?
I am just playing devil’s advocate. The only thing I believe Socrates was write about was “question” and debate everything and only then does the truth emerge. The field Physics is proof of this concept.
If my memory is correct the Russian trader alleged that Frank Parlato played “hard ball”. My take on the “hard ball” is that Frank Parlato is an extremely shrewd and street smart man.
AnoyMaker remember Frank went to LA and magically returned with the Bronfman’s money.
I believe Frank somehow bluffed the Russian and then eventually Raniere realized Frank was bluffing.
Why did the Russian handover the money to Frank and why was there a time lag between Frank recovering the money and Raniere going “ape shit”?
Why was Raniere so upset? Did Frank ruin things for Raniere?
Disclaimer: This comment is all off of memory and subject to errors.
Nitguy, good questions.
The fact that the commodities losses ended up being at issue in the Precision Development case is something that is easy to overlook, or to not fully consider the implications of, on a cursory or first pass review of the matter. I think that very (and typically) thorough piece that Claviger did a while back, got into everything, or at least pointed me towards looking further into that angle.
I actually did ask myself if there was any scenario under which it was plausible that Plyam wouldn’t have revealed the faking of commodities losses and the diversion of money, had it occurred. The case was long and dragged out, and eventually lead to Plyam’s bankruptcy, so I think it has all the characteristics of typical NXIVM-Bronfman scorched earth legal tactics against a perceived enemy, not a sham.
I hadn’t thought of the possibility of the lawsuit itself being a smokescreen, but to begin with I don’t know what purpose that would have served – the Bronfmans, for instance, were apparently so clueless as to just accept whatever Raniere told them without any substantiation or proof – plus again the bitter and protracted nature of the case point to it being a genuine dispute. It’s also one of those scenarios that, like conspiracy theories, starts to break down on consideration of the actual logistics and number of colluding parties that would be required; the filing of such a sham suit would either risk lawyers, paralegals, forensic accountants and investigators on one side or the other accidentally uncovering any hidden diversion, or else require both sides to be in on the sham and any necessary cover-up.
That brings us back to Occam’s Razor: The simplest solution is most likely the right one (even though that is somehow not always satisfactory-seeming)
Raniere was obviously behaving irrationally with regard to the investments, as well as consumed the the manipulations required to juggle his supposedly asset-less financial situation and his multiple relationship entanglements, and the way those overlapped, so I don’t think there is any point in trying to figure out how to try to ascribe anything to Raniere’s state of mind, nor that it would necessarily reveal anything significant about the facts of the case even if we could. Maybe Raniere was upset because he felt that Frank had upstage the supposed top problem solver, or maybe he was just in a pique because he was having a bout of impotence – who knows.
But if you have any further plausible possibilities to suggest, or questions about angles that you think haven’t been adequately addressed, I’d be glad to hear them.
Occam’s Razor Is probably correct hypotheses…
Raniere’s megalomania ate away his common sense and he lost the money on trades. People who trade commodities are usually the biggest degenerate gamblers.
The most interesting part of the story is how Frank went out to LA and came back with the money. I suspect we will never know how Frank Parlato pulled it off. I am sure the back story is as monumental as the fictional movie The Sting with Paul Newman.
One last thing,
Frank Parlato saved the Bronfman girls millions in lawyer fees.
Frank deserved the one million or so.
What a con artist.
There’s an old saying:
“Don’t throw good money after bad.”
If you are in an investment situation and you keep losing money and there is little or no prospect of making money, the best choice is to cut your losses and get out of that investment ASAP.
The vacuum clear maker Dyson got into the electric car business two years ago.
Just the other day Dyson declared that they were losing money in that business and there was no way they could catch up with Tesla, Ford, Volkswagen and other car makers.
So Dyson is pulling out of that business and cutting their losses.
legitimate businessmen do that all of the time.
Several years ago Target tried to open discount stores in Canada.
When Target could not make money in that market they closed down the stores.
Those Target stores in Canada closed within two years of opening.
Keith Raniere is too stupid to cut his losses.
Raniere is a gambler who thinks that with a little more self-confidence he can turn things around.
Self-Confidence will not save a bad investment.
Keith Raniere is the world’s Third Dumbest Man.
Dyson scraps its electric car plans
PUBLISHED THU, OCT 10 20191:43 PM EDT
Elijah Shama
https://www.cnbc.com/2019/10/10/dyson-scraps-its-electric-car-plans.html
Business
Target Canada to close all stores by April 12
Fixture sales may continue after official closing
Sophia Harris · CBC News · Posted: Apr 01, 2015 8:14 PM ET | Last Updated: April 1, 2015
https://www.cbc.ca/news/business/target-canada-to-close-all-stores-by-april-12-1.3018677
There’s an old saying:
“A gambler never makes the same mistake twice. It’s usually three or more times.”
Gambling addicts by definition, don’t know when to cut their losses, and succumb to various cognitive biases including “sunk costs” – one that actually causes people to throw good money after bad, or to continue commitment to some detrimental situation like a high control group or cult:
the sunk cost fallacy
“You irrationally cling to things that have already cost you something.
When we’ve invested our time, money, or emotion into something, it hurts us to let it go. This aversion to pain can distort our better judgment and cause us to make unwise investments. A sunk cost means that we can’t recover it, so it’s rational to disregard the cost when evaluating. For instance, if you’ve spent money on a meal but you only feel like eating half of it, it’s irrational to continue to stuff your face just because ‘you’ve already paid for it’; especially considering the fact that you’re wasting actual time doing so.
To regain objectivity, ask yourself: had I not already invested something, would I still do so now? What would I counsel a friend to do if they were in the same situation?”
https://yourbias.is/the-sunk-cost-fallacy
The money’s not gone, it just changed hands.
Anonymous:
The real problem is tracking down where the money went.
Particularly after the passage of so many years.
As I’ve noted elsewhere, since the commodities trades and losses were at issue in the Precision v. Plyam suit, the matter has already been subject to legal scrutiny and it’s unlikely any significant amount of money remains unaccounted for; trading records may even have been entered into evidence.
Since you like to research, why don’t you go through the case records and tell us what can be found? The link I provided in the piece shows that there is information to be readily found. And your library might have access to legal databases, as well.
Yes, it would have ended up with those who held the winning end of all the commodities trades that Raniere lost – plus significant commissions to Plyam and his brokerage along the way.
Given that the commodities trades were an issue in a bitter legal battle between the Bronfman’s Precision Development and Plyam, they likely held up to legal scrutiny and thus it’s improbable that any significant amount of money went anywhere unknown.