Judge Rules NXIVM No Longer Exists! – EDNY Signals It’s Not Done With Nxivm Leaders!

On August 26, 2019, the U.S. District Court for the District of New Jersey issued its ruling in the long-standing legal battle between NXIVM and Interfor, Inc.

The primary legal issue involved in the case was whether NXIVM had to indemnify Interfor for the expenses it had incurred in conjunction with NXIVM’s lawsuit against Rick Ross.

In a lengthy opinion, U.S. District Court Judge Katharine S. Hayden reviewed the entire 15-year history between NXIVM and Interfor – before concluding that Interfor is entitled to recover $1,369,157.51 plus its attorney fees for the period from May 31, 2017 onward.

But, along the way, Judge Hayden made a number of interesting findings-of-fact and rulings – some of which could have major impact on other legal matters.

First and foremost, she ruled that “NXIVM is no longer in operation” – a ruling that we’ll explore more fully in the second half of this post.

Some of Judge Hayden’s other noteworthy findings-of-fact and rulings are as follows:

– The overall direction and philosophy of NXIVM were guided by its “conceptual founder”, Keith Raniere.

– Nancy Salzman owned NXIVM, served as its president, and oversaw the development of its curriculum.

– Kristin Keeffe served as NXIVM’s “Legal Liaison” – and in that role, she facilitated communication between NXIVM and its attorneys as well as among NXIVM’s attorneys.

– Interfor would only provide services to NXIVM through counsel – which is why it was my law firm that actually hired Interfor.

– Per the applicable retainer agreement, Kristin Keeffe was designated as NXIVM’s representative – which meant that all communications between Interfor and NXIVM went through her rather than me (The only communications I was supposed to receive were Interfor’s monthly bills – which I promptly paid and then submitted to NXIVM for reimbursement ).

– Separate and apart from the retainer agreement between Interfor and my law firm, Interfor and NXIVM entered into an indemnity agreement which provided, among other things, that NXIVM would indemnify Interfor for any legal fees and related expenses in might incur in conjunction with its work for NXIVM.

– Interfor was initially tasked to investigate the disappearance of Kristin Snyder in Alaska.

– Soon thereafter, Interfor was also tasked to undertake an investigation of Rick Ross.

– Interfor attempted a “sting operation” on Rick Ross that had been designed collectively by Juval Aviv, Keith Raniere, Nancy Salzman, and Kristin Keeffe.

– NXIVM continued to use Interfor’s services until at least May 2005 (Since I had quit as a consultant to NXIVM in early January 2005, it is unclear whether Interfor was dealing directly with NXIVM or had arranged to be hired through another law firm).

– In February 2005, Keeffe authorized Interfor to do additional research on anyone who had been deprogrammed by Rick Ross – and on three members of the Sutton family (Maurice and Rochelle Sutton – and their daughter, Stephanie Franco).

– When Ross served a subpoena on Interfor to obtain copies of the documents and records it had obtained about him, NXIVM hired a law firm to represent Interfor (I had tipped off Ross about those documents and records – many of which appeared to me to have been obtained illegally).

– Ross eventually filed a claim against NXIVM, Interfor, Raniere, Salzman, Aviv and Anna Moody (an attorney for Interfor), for intrusion.

– Interfor settled Ross claims against the company for $25,000 – and Ross dismissed his claims against Aviv and Moody.

– Initially, NXIVM paid the bills for the law firm it had hired to defend Interfor, Aviv and Moody (From September 2006 through April 2007, those bills totaled $165,619.18). But then, NXIVM stopped paying those bills – and told Interfor it was on its own.

After undertaking a detailed analysis of the applicable statutes and case law regarding the case, Judge Hayden then ruled that NXIVM has to pay $1,369,157.51 – plus the to-be-determined legal fees – to Interfor.

Which would be great news for Interfor were it not for the fact that NXIVM no longer exists – and likely had few, if any, unattached assets left before it ceased operations.

So, all in all, a pretty mundane and boring case – with an ironic ending – right?

But wait, there’s more.

*****

The EDNY Seeks to Obtain Evidence That It Was Previously Denied

Yesterday, Tanya Hajjar, Mark J. Lesko, and Kevin Trowel filed a motion with Judge Nicholas G. Garaufis via which the EDNY is seeking a reversal of a prior ruling that prevented it from obtaining “certain documents from defendant Clare Bronfman’s email account (because they) were protected by attorney-client and work-product privileges asserted by Nxivm”.

Citing the New Jersey court’s ruling that “NXIVM is no longer in operation” – and quoting extensively from subsequent filings by some of NXIVM’s attorneys in which they allege that “Nxivm is no longer in operation and they are unable to contact any representative of Nxivm” – the EDNY attorneys are asking that they be provided with all of the previously denied evidence.

As is succinctly stated in the motion, “In light of Mr. Crockett’s and Mr. Tajima’s repeated sworn declarations that no corporate representative of Nxivm appears to exist because Nxivm is no longer in operation, Nxivm is defunct and may not assert attorney-client and work-product privileges”.

Given that the New Jersey federal court has already ruled that NXIVM no longer exists – and given that NXIVM’s former attorneys have made the same assertion – it is quite likely that Judge Garaufis will grant the EDNY’s motion (Seriously, which of the about-to-be-sentenced defendants wants to argue against the EDNY motion in front of Judge Garaufis?).

*****

Why Does the EDNY Want the Previously Denied Evidence?

The really interesting question is why the EDNY filed this motion.

Is it just because the EDNY attorneys were unhappy with the original ruling – and want to get a clarification on the record for future cases?

Is it because the EDNY attorneys are just nosy people, and, out of curiosity, want to see the documents that they were previously denied?

Is it because there’s not much going on in the EDNY these days – and this was just a make-work filing?

Or is it because the EDNY is not done investigating all of NXIVM’s illegal operations – and wants those emails from Clare Bronfman in order to see if they will support more charges against her and/or others who were involved in the NXIVM crime syndicate?

It is believed that many of the emails in question have to do with the various illegal schemes that NXIVM was using to get foreign students into the U.S. – and/or to keep them here after their visas ran out.

If that’s the case, then Clare Bear – and anyone else who was involved with those illegal immigration schemes – might have a little extra on their minds over the upcoming holiday season.

J.J. O'Hara