Why Frank Parlato Established Several Companies and Multiple Bank Accounts

BY: J.J. O’Hara

[This is Part 7 of a series of articles that I am writing about the U.S. v. Parlato Et Al case. Along the way, I am detailing what a sham this case is – and how it was orchestrated by two inner circle members of the NXIVM criminal enterprise, Clare and Sara Bronfman, and a conman named Shmuel Shmueli – all three of whom just happened to be represented by the same attorney, William F. Savino.

I am also explaining how many of the slimy tactics that were used to indict Frank have become the norm in the everyday operations of the U.S. criminal justice system. Readers are encouraged to ask questions – which I will endeavor to answer on a timely basis].

Part 1: The Buffalo News Raises Questions About Frank Parlato’s Case – More Detailed Analysis Needed

Part 2: The Convoluted History of U.S. v. Parlato Began With Bronfman Sisters

Part 3: The Federal Case Against Frank Parlato – a Prosecution in Search of a Crime

Part 4: What Are the Charges in U.S. v. Parlato — and What Do They Mean?

Part 5: The Conman Cometh – Schmuel Schmueli – Who, Combined With the Bronfmans, Led to Parlato’s Indictment

Part 6: Fate Brings Conman Shmuel Shmueli Into Frank Parlato’s Life

In Part 6 of this series, I explained how Frank met Shmuel Schmueli – a consummate conman who is one of the key figures that led to Frank’s indictment. In this part, I will explain why Frank established several companies and multiple bank accounts – and why those actions do NOT constitute crimes.

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Raniere & Shmueli Both Engaged in “Terror-gation”

Once Keith Raniere got a firm hold on the Bronfman sisters’ financial teats, he was able to wage legal terrorism against all of his perceived enemies – and drive many of them into submission.

That’s why his lawsuit against Rick Ross went on for fourteen years – and why he appealed the denial of a preliminary injunction in that case all the way up to the U.S. Supreme Court.

It’s why Raniere was able to hire packs of attorneys to pursue people like John Tighe, Barbara Bouchey and me.

Shmuel Shmueli, the transported con artist from Brooklyn who became entwined in one of Frank Parlato’s business ventures, was similarly unencumbered when it came to litigation.

Unlike Raniere – who was entirely dependent on the Bronfman sisters’ largesse to fund all of his baseless lawsuits – Shmueli raised his litigation funds the same way he did everything else in life: i.e., he pilfered, plundered and purloined from others.

Shmueli’s scheme was fairly simple but also very effective.

Whenever he wanted to assert some sort of baseless claim, he would initiate a lawsuit in the name of whatever company he claimed had been wronged.

He would then set up other companies in the exact same name in other states and countries (One of the inherent weaknesses in the U.S. business enterprise system is that we allow each state to establish its own corporations, limited liability companies, partnerships, etc. – which is why entities named NXIVM Corporation were established in several states plus Puerto Rico).

Then, Shmueli would approach individuals and companies that routinely loan money to finance would-be plaintiffs – and borrow funds from them on behalf of several of the companies with the same name (See Case Cash, Enjuris, Nova Legal Funding, Prime Case Funding, etc.).

So, whereas, for example, a legitimate plaintiff might raise $500,000 to fund a major lawsuit, Shmueli would raise $3 or $4 million for the same purpose.

The extra money allowed Shmueli to retain top-notch law firms to represent him at every step of every lawsuit he ever initiated.

It also allowed him to bring multiple lawsuits against the same defendant in an effort to force a settlement.

And it allowed him to hire replacement law firms whenever his legal bills got too high with his current law firm – and he decided to simply stiff those law firms rather than pay them.

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Shmueli’s Unconventional Litigation Tactics Required Unconventional Response

Because he had almost unlimited funds to finance his lawsuits, Shmueli was also able to get his attorneys to utilize tactics they would normally not utilize.

And if one of his legal representatives balked at doing something that he wanted doing, Shmueli could easily fire them – and replace them with a law firm that was not restricted by ethical considerations or legal standards.

And so it was that when Frank refused to agree to any of Shmueli’s proposals that he receive a share of the proceeds from one of Frank’s development projects in Niagara Falls, NY, Shmueli unleashed his unconventional legal tactics on Frank and his then-business partner, Larry Reger.

Over the course of 9 years, Shmueli initiated ten different legal actions against Frank and Larry Reger.

Although some of those lawsuits were in state court and others in federal court, they all shared one common characteristic: they were completely and totally without merit. That’s why Frank and Larry Reger won all ten of them.

But it wasn’t just the number of lawsuits that Shmueli initiated against Frank and Larry Reger that made dealing with him so problematic. It was also the unconventional tactics that he used in those lawsuits.

Shmueli did things like filing an ex parte action that claimed Frank was about to skip town and move to Bimini with all the funds that were in dispute. Of course, that claim kind of fell apart when Frank revealed that he didn’t even have a passport, let alone a plane ticket to Bimini.

Shmueli treated legal battles like street fights rather than like sanctioned pugilistic fisticuffs.

There are no rules in street fights. The combatants can do whatever they need to do to win.

And when you find yourself in a street fight, you will quickly find yourself the loser if you try to abide by the Marquess of Queensbury Rules.

So, Frank did what he had to do in order to fend off an opponent who was willing to do anything to win.

He set up several companies through which he could conduct his day-to-day business activities.

And he set up multiple bank accounts for the same purpose.

But here’s what he did NOT do.

He did not try to hide what he was doing from the banks that were involved or the government. That’s why, despite being assured that he had ample legal reasons not to do so, Frank registered every company in his own name and home address.

And he registered every bank account in his own name and Social Security Number – And in the name of the company he owned and its Federal Employer Identification Number (FEIN).

When U.S. Assistant Attorney Anthony M. Bruce regaled the members of the sitting grand jury about all the evil deeds that Frank had done, he apparently forgot to tell them that everything was done openly and above-board.

No hiding behind the rules that allow the owners of limited liability companies to remain hidden.

No “inadvertently” mixing up his Social Security Number to avoid a bank account being traced back to him.

Frank did everything out in the open – in a way that everything could be immediately traced back to him.

There was no subterfuge whatsoever.

It is not illegal to have multiple accounts.

Nor is it illegal to own several companies.

Frank’s message has always been very clear: He controlled the companies and bank accounts. If anyone had any questions about them, his home address, his cell phone number, and his social security number were all clearly listed on every single bank account he had. No exceptions.

This is not the mark of a man hiding his bank accounts — or his business operations – from the government.

But somehow, Assistant US Attorney Anthony M. Bruce forgot to tell the grand jury about those facts.

Which is totally understandable because he was probably waiting until he maximized his retirement benefits from the federal government – and/or until the “bonus” payment from the Bronfman sisters cleared – whichever occurred first.

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There’s much more to tell in this tale of what are really illegal misdoings and/or prosecutorial misconduct on the part of the government.

And there’s much more to write about why an innocent man’s freedom and livelihood are on the line.

So, settle back Frank Report readers – and enjoy the show.

J.J. O'Hara