[Editor’s note: Last month Frank Report broke the news that Keith Raniere’s attorneys filed a brief contesting the Department of Justice’s recommendations for victim restitution. It was accidentally published on the US Courts’ website PACER.gov., though it was supposed to be filed under seal. The Raniere filing does not identify a single female victim by her full name. But some attached exhibits do. Frank Report will NOT publish any woman’s name whose identity was shielded by the court unless the woman herself chose to identify herself publicly.]
The public has a right to know how the prosecution in USA v Raniere [the NXIVM case] wants the judge to divide up some $6 million they got from Clare Bronfman to pay restitution to Keith Raniere’s 117 alleged victims.
The prosecution – the Office of the US Attorney for the Eastern District of New York – wants more than $2.8 million of the total $6 million to go to one family – and it is not the family of Camila, Daniela, Adrian and Adriana.
It is the Sutton family, none of whose family members were alleged to have been sexually abused by Raniere.
At first blush, it seems outlandish that the Department of Justice is asking the judge to give almost half of the victims’ restitution fund to a family worth, according to at least one source, an estimated $100 million.
The Suttons are kingpins in the garment industry and their alleged victimization comes from the fact that they spent money on lawyers in defense of a lengthy civil lawsuit.
That’s right – you read it correctly – there is $6 million in restitution money available for all victims combined, and $2.8 million is to go to the wealthiest of the alleged victims – if the government gets its way.
The other 116 victims are to split the rest.
The next highest sum the government is recommending for any victim is $500,000 – the sum recommended for Camila, a Mexican woman, who, as a child of 15, was alleged to have been a victim of statutory rape by Raniere in New York State where the age of consent is 17.
A jury found that racketeering acts of possession of child pornography and exploitation of a minor were proven in the case against Raniere based on nude photos of Camila, allegedly taken when she was 15, and found on an electronic device seized from a townhouse where Raniere had possession.
In the government’s view, the Suttons deserve more than five times the amount of restitution than Camila deserves.
All told, there were 117 individuals who made a request for victim restitution. Only five testified at trial. Most of the alleged victims are going to get zero, based on the prosecution’s recommendation to Judge Nicholas G. Garaufis.
The judge makes the final decisions on victim restitution. He is not bound to follow the prosecution’s recommendations.
Joseph Sutton is the executor of the estate of the late Morris and Rochelle Sutton. He is asking for $2,854,572.26. The government supports his request.
Sutton’s company, Lollytogs, according to a promotional description of their company, “outfits the best-dressed boys and girls in school. The company, doing business as LT Apparel Group, designs and manufactures children’s fashion apparel and school uniforms under brand names French Toast, Healthtex, Detour, and @School. It also produces licensed clothing under the adidas, Carhartt, Lee School, and Pelle Pelle brands. Lollytogs’ clothing collection includes activewear, denim, outerwear, sportswear, and swimwear. The company targets a variety of distribution outlets, selling its products in department stores and discount retailers, as well as through independent fashion outlets. The business was launched in 1958 by Sam Gindi and Morris and Alfred Sutton.”
Information is scant about the Sutton’s actual net worth but one source states their founding partner Gindi had an estate in the billions. Linked-in lists the Lollytogs company as having 331 employees with profiles on Linked-in.
The company is a big-time player in the garment industry and is well known for its children’s wear. The company also claims a number of firsts: the first company to successfully bring fashion-coordinate groupings to the mass market, the first to produce and mass-market a school uniform line for public schools, and the first to offer guaranteed next-day UPS shipping.
How is this wealthy family entitled to more money than anyone else?
In his victim impact statement, Sutton states his victimization came from legal fees his father [and after he died, his estate] paid in defense of a federal civil case in the United States District Court for the District of New Jersey after NXIVM sued.
It is the famous case of Nxivm Corporation, et. Al., v. Morris Sutton, Rochelle Sutton, the Ross Institute, Rick Ross, Stephanie Franco, Paul Martin and Wellspring Retreat, Inc.
Morris and Rochelle died before the case concluded in 2018 following an agreement by all parties that the case should be dismissed. NXIVM withdrew their claims against the defendants and Franco [the daughter of Morris and Rochelle Sutton, one of the heirs] dismissed her counterclaims against NXIVM.
The basis of the lawsuit, which lingered before the courts for 15 years, was Breach of Contract, Misappropriate of Trade Secrets, Product Disparagement, Interference with Contractual Relations, and Copyright Infringement claims.
The theory that the legal fees they paid in conjunction with the lawsuit make Suttons victims is based on the fact that Raniere was found guilty of, among other charges, Racketeering Conspiracy and that Racketeering Act 6 involved this lawsuit. Act 6 was “Conspiracy to Alter Records for Use in an Official Proceeding.”
A video was altered by NXIVM that was used in the civil case. Ironically, the government is recommending zero in restitution for Rick Ross.
The Case Against Franco and Rick Ross
In 2003, Nxivm filed suit against Stephanie Franco, a former Nxivm student, and Rick Ross, a so-called cult deprogrammer. The lawsuit alleged copyright infringement and centered on a claim that Franco violated a non-disclosure agreement by providing Nxivm course materials to Ross, who published them on his website.
Franco was trying to persuade her brother, Michael, to leave Nxivm and contacted Ross for help.
In 2008, Franco’s attorneys requested Nxivm produce certain videotapes in discovery to support their claim that the Nxivm curriculum contained false statements and violated state consumer protection laws. In June 2008, Raniere told Mark Vicente, a high-level Nxivm member, and several other Nxivm members, to alter videotapes and to remove certain segments from them without having the videotapes appear altered.
Clare Bronfman helped Vicente alter the videotapes to remove content, including segments in which Nancy Salzman made unsubstantiated health claims about Nxivm’s curriculum. These altered videotapes were produced in discovery by Nxivm’s attorneys with the false claim that they were provided in “unedited fashion.”
Why Not Help the Suttons?
In arguing against giving the Suttons almost $3 million, Raniere’s lawyers wrote, “The foundation of the civil case is wholly separate and distinct from the government’s case in this [Raniere criminal] matter… Valid civil claims about the ESP [Executive Success Programs AKA NXIVM] course material being distributed online does not create a nexus for J.S. [Sutton] to be a victim, who can recover restitution to the tune of 2.8 million dollars in this matter.
“… the [civil] case was dismissed pursuant to … an agreement between all the parties. The nexus of these allegations that tapes had ‘remove[d] content, including segments in which Nancy Salzman made unsubstantiated health claims about Nxivm’s curriculum, does not rise to the level of deeming J.S. a ‘victim’… The allegations set forth do not establish that Defendant Raniere caused J.S. any losses, and that such losses were in any way related to the charged offense conduct. There are thousands of other factors that must be considered when a fifteen-year litigation is stipulated among the parties to be dismissed. There are appropriate civil rules and procedure in place for this alleged behavior…
“Respectfully, J.S., as an individual or entity, is one whom the Government has not established that the individual’s loss or damage was the direct and proximate result of the defendant’s criminal conduct convicted of to support an order of restitution…
“Simply put, the Sutton losses were not caused (1) by the specific conduct that is the basis of the offense of conviction in this case, and (2) by conduct committed during an offense that involves as an element a scheme, conspiracy, or pattern, in this case.”
Well, that’s what Raniere’s lawyers say – that the Sutton family does not deserve millions in restitution – but the prosecution disagrees.
Now it is up to the judge.