By: J.J. O’Hara
This is Part 13 of a series of articles that I am writing about the pending prosecution of Frank Parlato (Frank’s trial is scheduled to start on May 19th). As usual, readers are encouraged to ask questions – which I will endeavor to answer on a timely basis.
In my last post about this case, I reviewed some of the evidence that was in the 21-page document Frank’s attorneys turned over on March 17, 2015 to then-U.S. Assistant Attorney Anthony M. Bruce to refute his allegations that Frank had defrauded Larry Reger, who was one of his business partners.
When Bruce was confronted with that evidence, he did what any ill-intentioned and unprincipled prosecutor would do: he ignored the things that he couldn’t explain away – and he came up with new charges to replace the ones that could no longer be prosecuted.
Above all else, Bruce was a man of his word – and when he promised to indict somebody, there was nothing that would stop him.
Certainly not a few inconvenient facts that proved Frank had not committed any crimes.
Today, we’ll look at some of the evidence that Frank’s attorneys provided in that same 21-page document to prove that Frank had also not defrauded Clare and Sara Bronfman.
Although the Bronfman-related allegations in Frank’s case were subsequently dropped by federal prosecutors just prior to Clare being indicted for various NXIVM-related crimes – and after sister Sara fled the country to avoid having the same thing happen to her – it’s important to examine how Bruce originally refused to dismiss these charges even after Frank’s attorneys produced evidence to prove they were untrue.
Anthony M. Bruce is not a man who would let a few inconvenient facts get in the way of a promised prosecution.
The Bronfman Allegations Against Frank Parlato
The Bronfman sisters’ allegations centered around their hiring of Frank to investigate what was going on with a real estate development project in Los Angeles, CA in which they had already invested $26 million.
The project was the brainchild of that former options trading savant, Keith Raniere – who, as unbelievable as it may sound, knew even less about real estate development than he did about options trading.
Under Raniere’s guidance, Clare and Sara were to provide all the capital for the real estate development project – which was being managed by Yuri Plyam.
And per the plan that Raniere had put together, the ownership interests in the project were set up as follows: 1/3 to Plyam; 1/3 to the Bronfman sisters; and 1/3 to Nancy Salzman (Presumably, Nancy was just a “beard” for Keith’s ownership interest in the project since he never liked to put his name on anything).
But, in typical Raniere fashion, he kept putting off having Clare and Sara sign the “Operating Agreement” – which meant that on paper, they owned nothing at all.
(Raniere used this same ploy when I was hired to provide consulting services to NXIVM – and with several other consultants that he hired during the 15 months I worked there).
But in the midst of the real estate development project – which the Bronfman sisters had kept hidden from their father, Edgar Bronfman, Sr. – Raniere was suddenly dealing with a new problem.
The Trustee overseeing the trust funds that Clare and Sara had inherited was pressing Raniere to sign a “Promissory Note” for the $65 million he had “borrowed’ from them to cover his losses in the commodities market.
Since he had no intention of taking on a $65-million liability, Raniere decided to change his explanation for why those losses had happened.
Originally, he had told the Bronfman sisters that it was their father who had caused the losses by rigging the commodities markets against the “100% guaranteed, can’t miss” algorithm that he had developed.
But with the Trustee – and Edgar’s accountants and lawyers – closing in on him, Raniere had to come up with a new explanation.
And so it was that Yuri Plyam became the new scapegoat for the commodities losses.
And if Plyam had cheated Raniere on the commodities trades – as Raniere was now claiming – then he was likely cheating Clare and Sara on the real estate deal.
Frank Parlato was already working as a publicist for NXIVM – and he went out to Los Angeles to sort things out. What he found is that Keith had bungled the real estate investment much like he bungled the commodities investment.
And so it was that Frank became involved in the real estate development project in Los Angeles.
Per the agreed-upon terms of his arrangement with the Bronfman sisters, Frank was to receive one-third of the “net profits” of the project (It was estimated that when the project was completed, it would generate $10-$15 million of profits).
In anticipation of that outcome, the Bronfman sisters made an “advance payment” of $1 million to Frank (That payment was to be credited against his future one-third interest in the “net profits” of the project).
As stated in the 21-page document, “Approximately one month after Mr. Parlato began working for the Bronfmans, he and his attorney Paul Grenga negotiated a Letter of Intent with the Bronfmans’ [representative] Kristin Keeffe [and Keith Raniere]…. The Letter of Intent included a provision paying Mr. Parlato $1 million in advance against compensation Mr. Parlato would earn in the future” (Keeffe served as the “Legal Liaison” for the company – and, in that capacity, supervised all the attorneys who worked for the company).
Despite the fact that he succeeded in documenting the Bronfman sisters’ ownership interest in the Los Angeles properties [$26 million in assets] and eliminated Nancy Salzman’s ownership – bringing the Bronfman’s up to a two-thirds interest – instead of one third – a gain for them of more than $8 million – Raniere ordered them to fire him after Frank started asking questions about the $65 million they had lost in the commodities market.
Frank intended to find out the details of how and where the commodities money had been invested. No one who raised such questions was welcomed in Raniereland.
Raniere convinced Clare and Sara that Frank had claimed expenses that he had not actually incurred – and that he should be fired as the Manager of the Precision Development real estate project. He also convinced them that they should demand that Frank repay the entire $1 million that they had originally advanced to him as part of the funds he would earn when the Los Angeles properties were sold.
Frank responded by providing an accounting of every dime of the Bronfmans’ money that he had spent to secure their $26 million investment.
But that was not enough to get him back in their good graces.
The Master had spoken – and the servants were required to obey.
Frank’s Attorneys Offered Conclusive Proof That He Did Not Defraud the Bronfmans
In the March 17, 2015 document, Frank’s attorneys provided a copy of his November 10, 2008 email to his accountant. In that email, Frank explained that although he believed that the $1 million should be rightfully deemed “earned income”, the Bronfman sisters were now claiming it was a “loan” – and he asked Aloian how he should treat it on his income tax return for 2008.
Frank’s attorneys also provided evidence that Frank had asked his attorneys to prepare a lawsuit against the Bronfman sisters to settle the dispute regarding the $1 million and other monies that he was owed by them.
They had, after all, breached the contract.
Before Frank could file his lawsuit, the Bronfmans had William F. Savino filed a lawsuit against him.
Savino then worked with Anthony M. Bruce to bring criminal charges against Frank – and as part of that arrangement, Clare perjured herself before a grand jury (For some inexplicable reason, Clare has never been charged with that crime).
Assistant US Attorney Anthony M. Bruce was given unequivocal evidence that Clare perjured herself in the grand jury (She had sworn under oath exactly the opposite of what she had sworn in the Savino-led civil suit) – but Bruce suborned her perjury and refused to correct the record with the grand jury.
Despite the evidence that Frank’s attorneys offered, Bruce pushed full steam ahead with his indictment of Frank based, in large part, of Frank’s alleged defrauding of the Bronfman sisters.
Having promised to indict Frank on charges that he defrauded the Bronfman sisters, Bruce was committed to following through on that promise even though he knew Frank never did that – and even though he knew that the dispute was already being handled via a civil lawsuit.
If nothing else, Anthony M. Bruce is a man of his word.
Next Post Will Look at Charges That Frank Intended to Defraud the IRS
In the next post, I will delve into Anthony M. Bruce’s contention that Frank intended to defraud the IRS – and the refutational evidence that Frank’s attorneys provided to Bruce in their March 17, 2015 document.
After that, we’ll take a look at the events that took place over the next eight months as Bruce continued to try and find a basis for indicting Frank.
What bothers me most about this case is not the fact that Bruce eventually indicted Frank even though he had been provided clear and convincing evidence that Frank had not committed any crime.
When a person has been sufficiently motivated to do bad things, bad things get done.
What really bothers me about this case is that even after Bruce retired from the U.S. Attorney’s Office for the Western District of New York, his successors have allowed this travesty to continue.
Previous posts in this series can be accessed at: