Seagram Heiress Gets Bail in Probe of Alleged New York Sex Cult

(Bloomberg) -- An heiress to the Seagram Co. fortune was released on a $100 million bond following her arrest in a widening probe of a self-help organization that prosecutors say was a secretive cult that branded its victims and forced them to participate in sexual acts.

Clare Bronfman, the daughter of former Seagram chairman Edgar M. Bronfman, was one of four women charged Tuesday in connection with the investigation of Nxivm, an Albany, New York-based multilevel marketing company founded by Keith Raniere.

The new charges add a bizarre twist to a sensational case that generated headlines with the April arrest of Allison Mack, 35, an actress who allegedly recruited slaves for Raniere. A month earlier, Raniere, 57, was apprehended in Mexico and accused of sex trafficking and forced labor. He’s being held without bail. Both deny wrongdoing.

Dressed in a light, short-sleeved shirt, jeans and flip flops, Bronfman, 39, pleaded not guilty to a charge of identity theft. She’s not accused of sex trafficking or forced labor crimes. She faces a maximum sentence of five years in prison.

Prosecutors said she was likely to flee and asked for a sizable bond to ensure her appearance for trial. She has a private jet and a stake in a private island in Fiji, they said in a court filing. In the last three years she traveled to Paris, Mexico City, Toluca, Guadalajara, Monterrey, Vancouver, Toronto, Israel, Fiji and Havana.

Bronfman Surrendered

Bronfman’s lawyer Susan Necheles argued for a lower bail, saying her client surrendered and had been in constant contact with prosecutors. She had been in Mexico with Raniere when he was arrested and flew back immediately, Necheles said.

“She is a very wealthy woman,” Necheles told the judge. “But even wealthy people should get bail.”

Bronfman has more than $98 million under her direct control and another $100 million in two trusts, according to her lawyer. But U.S. District Judge Nicholas Garaufis in Brooklyn balked at the idea of releasing her on a $25 million bond.

He said she could use her money “to get on a plane in Teterboro airport and fly off somewhere.” In addition to the bond, Garaufis put Bronfman under house arrest and ordered her to wear a monitor on her ankle. She’s due back in court Wednesday for a status conference, along with her co-defendants.

Bronfman is one of seven children, the daughter of a second-generation heir who captained Seagram’s expansion during his years leading the company. She, Kathy Russell, 60, Lauren Salzman, 42, and Nancy Salzman, 64, were allegedly members of Raniere’s inner circle that recruited and groomed sexual partners for him.

U.S. Magistrate Judge Daniel Stewart in Albany agreed to release Russell on a $25,000 bond, and Lauren and Nancy Salzman each on a $5 million bond. Russell and Lauren Salzman haven’t met all the conditions of their bonds and may not be released Tuesday, according to prosecutors.

Pyramid Scheme

Prosecutors said Nxivm operated like a pyramid scheme, charging participants thousands of dollars for courses while encouraging them to sign up for more and recruit others. Raniere created a "secret society" within the organization in 2015, known as DOS, with women serving as "slaves" overseen by "masters," according to prosecutors.

Recruits were expected to provide "collateral" before joining -- including damaging information about friends and family, nude photographs and rights to assets -- that could be used against them if they revealed the existence of the organization or tried to leave, prosecutors said. Many "slaves" were branded on their pelvic areas with a cauterizing gun with a symbol that incorporated Raniere’s initials, according to prosecutors.

Using trust funds established by her grandfather, Clare Bronfman loaned $65 million to Raniere, which he lost trading in commodities markets, prosecutors said in a court filing.

Clare Bronfman served on Nxivm’s executive board from 2009 until this year, prosecutors said. They said she and Raniere conspired to steal email user names and passwords to spy on his critics.

In a 2010 article, Vanity Fair painted Clare’s sister Sara as the more outgoing of the pair and the first to join Nxivm, "desperately looking for some purpose in her life," according to a family friend. She urged Clare, then 23 and a competitive equestrian jumper who trained horses and owned her own company, to attend a workshop. Clare showed up in a dirty T-shirt and, an unnamed female Nxivm trainer recalled, "She would tell people that she had decided to spend the rest of her life with horses, because she didn’t like human beings."

Horses Sold

Raniere’s influence over Clare led her to sell most of her horses, put her $7 million New Hope, Pennsylvania, estate on the market, and throw herself into managing Raniere-inspired projects, according to the article.

Sara and Clare Bronfman declined to comment for the Vanity Fair story. A call to a foundation tied to Sara Bronfman wasn’t immediately returned.

Nxivm said on its website that it has suspended events until further notice.

The case is U.S. v. Raniere, 18-cr-204, U.S. District Court, Eastern District of New York (Brooklyn).

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