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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
------------------------------------x
SARAH EDMONDSON, TONI NATALIE,
JESSICA JOAN SALAZAR, SOUKIANA
MEHDAOUI, NICOLE, DANIELA, et al., MEMORANDUM & ORDER
20-CV-485 (EK)(CLP)
Plaintiffs,
-against-
KEITH RANIERE, CLARE BRONFMAN, SARA
BRONFMAN, ALLISON MACK, KATHY
RUSSELL, et al.,
Defendants.
------------------------------------x
ERIC KOMITEE, United States District Judge:
Background................................................ 6
A. NXIVM’s Founding & Growth ............................... 7
B. NXIVM’s Leadership ...................................... 8
C. Criminal Prosecutions .................................. 10
Legal Standard........................................... 11
Discussion ............................................. 11
A. RICO (Count I) ......................................... 11
1. The Alleged RICO Enterprise ........................... 12
2. Effect on Interstate or Foreign Commerce .............. 14
3. Pattern of Racketeering Activity ...................... 15
a. Clare Bronfman’s Alleged Predicate Acts ............. 16
i. Immigration Fraud .................................. 16
ii. Witness Tampering ................................ 28
iii. Forced Labor, Sex Trafficking, and Human
Trafficking ...................................... 34
iv. Mail and Wire Fraud .............................. 35
v. State Law Extortion ................................ 41
b. Sara Bronfman’s Alleged Predicate Acts .............. 46
i. Immigration Fraud .................................. 46
ii. Witness Tampering ................................ 47
iii. Forced Labor, Sex Trafficking, and Human
Trafficking ...................................... 48
iv. Mail and Wire Fraud .............................. 48
4. RICO Standing ......................................... 49
i. Clare Bronfman ..................................... 51
ii. Sara Bronfman .................................... 55
B. RICO Conspiracy (Count II) ............................. 55
1. Clare Bronfman ........................................ 57
2. Sara Bronfman ......................................... 58
3. Brandon Porter ........................................ 59
4. Danielle Roberts ...................................... 60
C. Human Trafficking Under the TVPRA (Count III) .......... 62
1. The Alleged Venture ................................... 63
2. Count 3(A): Sex Trafficking and Attempted Sex
Trafficking ........................................... 64
i. Clare Bronfman ..................................... 67
ii. Danielle Roberts ................................. 72
3. Count 3(B): Conspiracy to Commit Sex Trafficking ...... 74
i. Clare Bronfman ..................................... 75
ii. Danielle Roberts ................................. 76
4. Count 3(C): Forced Labor and Human Trafficking, and
Attempted Forced Labor and Human Trafficking .......... 77
i. Clare Bronfman ..................................... 79
ii. Sara Bronfman .................................... 86
iii. Brandon Porter ................................... 87
iv. Danielle Roberts ................................. 89
5. Count 3(D): Conspiracy to Commit Forced Labor and Human
Trafficking ........................................... 90
6. Count 3(E): Document Confiscation in Furtherance of
Trafficking or Forced Labor ........................... 92
7. Count 3(F): Conspiracy to Engage in Unlawful Conduct with
Respect to Documents in Furtherance of Trafficking or
Forced Labor .......................................... 94
F. Malicious Prosecution & Abuse of Process (Count IV) .... 94
2. Abuse of Process ...................................... 96
E. Battery (Count V) ...................................... 98
H. Gross Negligence and Recklessness (Count VII) .......... 99
1. Brandon Porter ....................................... 100
2. Clare and Sara Bronfman .............................. 102
Conclusion.............................................. 102
This case concerns an Albany, New York-based
organization that billed itself as an educational enterprise.
Founded by Keith Raniere, who touted himself as a scientist,
philosopher, and humanitarian, the organization — named NXIVM —
offered courses ostensibly designed to help people reach their
full “human potential” by overcoming psychological and emotional
pitfalls. Many of its members paid thousands of dollars to
attend self-help workshops.
Some women in the NXIVM community also became involved
in a group called “DOS” — an acronym for “Dominus Obsequious
Sororium,” which the complaint in this case translates from
Latin as “lord (or master) of the obedient female companions.”
DOS was also led by Raniere, with “first-line masters” below him
and “slaves” at the bottom. When recruiting new members,
masters advertised that DOS was a women-only group — a private
sorority — and concealed Raniere’s role as its leader. To join
DOS, recruits had to provide “collateral,” which ranged from
sexually explicit photographs to letters containing damaging
accusations (whether true or false) about family members and
friends. New members also received a brand, applied with an
electrocautery device, as part of their initiation. They allege
that the brand contained Raniere’s initials, though they did not
know that prior to initiation and branding. Ultimately, DOS
members began to leave the organization and speak out.
In July of 2018, a grand jury sitting in this District
indicted Raniere and many of the other defendants to this suit,
alleging that they comprised a racketeering enterprise in
connection with NXIVM (including DOS and other affiliated
entities). Following the indictment, each of Raniere’s co-
defendants — but not Raniere himself — pleaded guilty. After a
six-week trial in 2019, a jury convicted Raniere on numerous
counts, including racketeering and racketeering conspiracy under
the Racketeer Influenced and Corrupt Organizations Act (“RICO”).
Seventy plaintiffs — all former members of NXIVM
(several of whom were also part of DOS) — now seek civil damages
for injuries that they allegedly sustained in connection with
the affairs of NXIVM. They assert claims against Raniere, Clare
Bronfman, Sara Bronfman, Allison Mack, Brandon Porter, Danielle
Roberts, Kathy Russell, and several corporate entities: NXIVM
Corporation, Executive Success Programs, Inc. (“ESP”); Ethical
Science Foundation (“ESF”); and First Principles, Inc.
(collectively, the “Entity Defendants”).1 The plaintiffs’ claims
come in two broad categories of misconduct — sex trafficking and
forced labor, on the one hand, and consumer fraud, on the other.
1 In earlier iterations of the complaint, the plaintiffs also asserted
claims against other individuals including Lauren and Nancy Salzman, but they
later dismissed those claims. Nicki Clyne is the only individual named in
the third amended complaint who has been voluntarily dismissed subsequent to
the most recent amendment. Notice of Voluntary Dismissal, ECF No. 233.
All plaintiffs assert claims for substantive and
conspiracy violations of RICO, which authorizes private civil
actions to recoup economic injuries sustained by victims of
criminal racketeering activity, against Raniere, Clare, Sara,
Mack, Russell, and the Entity Defendants.2 Nearly twenty
plaintiffs also assert claims under the Trafficking Victims
Protection Reauthorization Act (“TVPRA”) against Raniere, Clare,
Sara Bronfman, Mack, Roberts, and Russell. Further, several
plaintiffs assert New York state-law claims including battery,
malicious prosecution, and negligence.
Four individual defendants — Clare, Sara, Porter, and
Roberts — now move to dismiss the claims against them.
Meanwhile, Raniere, Mack, Russell, and the Entity Defendants,
have failed to appear. For the reasons set out below, Porter’s
motion to dismiss is granted in full, while Clare’s, Sara’s and
Roberts’s motions are granted in part and denied in part.
Background
Except as noted, the following facts (and those laid
out above) are taken from the third amended complaint (the
“complaint” or “Compl.”), ECF No. 215. When considering a
motion to dismiss, courts “must take the facts alleged in the
complaint as true.” In re NYSE Specialists Sec. Litig.,
2 To avoid confusion, this order refers to Clare and Sara Bronfman by
their first names.
503 F.3d 89
, 91 (2d Cir. 2007).3 In addition, the Court takes
judicial notice of certain filings in the criminal case — United
States v. Raniere, et al., No. 18-CR-204 (NGG) (E.D.N.Y.). See
Kramer v. Time Warner Inc.,
937 F.2d 767, 774
(2d Cir. 1991).
A. NXIVM’s Founding & Growth
In 1998, Keith Raniere and Nancy Salzman founded the
NXIVM organization in Albany, New York. Compl. ¶¶ 1, 24. NXIVM
sold a self-help curriculum called “Rational Inquiry,” which was
“a synthesis of psychotherapy and the teachings, methods, and
practices of the human potential movement.” Id. ¶ 25. Those
who enrolled in NXIVM’s courses were encouraged to sell the
program (books and classes setting out NXIVM’s core tenets) and
recruit new members. Id. ¶ 24. The curriculum encouraged new
members “to completely immerse themselves in the NXIVM system
and move to Albany.” Id. ¶ 27. More than 16,000 individuals
enrolled in NXIVM’s courses, id. ¶ 40; hundreds of them also
3 The second amended complaint, which was more than 200 pages and 830
paragraphs, provided virtually no indication of which facts were proffered in
support of which causes of action, and asserted several claims “against All
Defendants on behalf of all [seventy-six] Plaintiffs” with no specific
allegations as to each defendant’s role. See, e.g., Second Am. Compl. ¶ 790,
ECF No. 159 (“The Individual Defendants participated in the scheme or
artifice to defraud knowingly, willfully, and with the specific intent to
deceive and/or defraud Plaintiffs into paying for NXIVM programs.”). During
oral argument in February of 2023, the Court invited the plaintiffs to
streamline the complaint, following which they submitted a third amended
complaint comprising 111 pages and 332 numbered paragraphs (substantially
shorter, but still sprawling). Though marginally more manageable than its
predecessor, the new complaint still required the Court to engage in
painstaking efforts to identify the facts alleged in support of each claim,
often hundreds of paragraphs apart from each other.
moved to Albany to live among fellow “Nxians,” as members called
themselves. Id. ¶ 27.
Over time, NXVIM grew into a multi-pronged umbrella
organization. It contained several legal entities, including
the NXIVM Corporation, the various Entity Defendants, see supra,
and Rainbow Cultural Garden (“RCG”), purportedly a childcare
program. Id. ¶¶ 2, 15, 30. It was also comprised of several
internally named organizations and groups with no separate legal
status; these included DOS as well as “exo / eso” (a “bodywork
program marketed to athletes, fitness enthusiasts, and yoga
practitioners”) and “Ultima” (which subsumed other groups
including “The Knife,” a “purported news outlet”). Id. ¶¶ 2,
93, 94, 102.
B. NXIVM’s Leadership
Raniere and Nancy Salzman worked closely with a group
of individuals — referred to in the complaint as Raniere’s
“inner circle” — to manage NXIVM’s affairs. Id. ¶ 3. In
addition to Nancy Salzman, the inner circle consisted of Clare
Bronfman, Sara Bronfman, Nicki Clyne, Allison Mack, Kathy
Russell, and Lauren Salzman (Nancy’s daughter). Id.
Sara joined NXIVM in 2001 and later served on its
Executive Board. Id. ¶¶ 28, 30. She also served as Senior
Executive of Executive Success Programs, head of RCG, and co-
founded the Ethical Science Foundation (“ESF”). Id. ¶ 30.
Further, she founded NXIVM’s so-called “VIP Programs,” which
recruited powerful and prominent individuals, including the
Dalai Lama, to appear at NXIVM events. Id. ¶¶ 30, 33. For a
time, she detailed her extensive involvement in NXIVM’s affairs
on her personal blog. See id. ¶ 30 (quoting
www.sarabronfman.com).
At Sara’s urging, her sister Clare joined NXIVM in
2004. Id. ¶ 29. Clare, too, eventually became a member of
NXIVM’s Executive Board. She also served as Vice President of
Operations and Board Member of Executive Success Programs, and
as Trustee and Chief Operating Officer of the Ethical Science
Foundation, which she co-founded. Id. ¶ 31. Clare “directed
and ran virtually every aspect of the NXIVM operation, including
overseeing its financial, legal, administrative, and accounting
operations.” Id. While serving in these leadership roles, she
maintained a “close relationship” with Raniere. Id. ¶ 34.
Together, Clare and Sara Bronfman provided NXIVM and
its related entities with more than $100 million in funding.
Id. The complaint characterizes them as “Raniere’s primary
backers and funders and his most trusted advisors and
confidants.” Id. ¶ 36.
Allison Mack was a senior leader of DOS, serving as a
so-called “first-line master.” Id. ¶ 12. As set forth in more
detail below, she is alleged to have extorted several plaintiffs
and to have participated in sex trafficking and forced-labor
violations.
Finally, Kathy Russell served as NXIVM’s bookkeeper
for more than a decade. Id. ¶ 14. She “worked directly with
Raniere and other NXIVM leaders.” Id. She is alleged to have
aided and abetted immigration fraud, id. ¶ 229, and to have
committed forced labor, sex trafficking, and human trafficking,
id. ¶ 266, and visa fraud. Id. ¶ 228.
C. Criminal Prosecutions
Following the 2018 indictment, each of Raniere’s co-
defendants entered guilty pleas, as discussed above. Clare
pleaded guilty to identity theft and immigration fraud
conspiracy. She was sentenced to eighty-one months’
incarceration. See Judgment as to Clare, United States v.
Raniere, No. 18-CR-204 (NGG), ECF No. 946 (E.D.N.Y. Oct. 7,
2020). Mack pleaded guilty to racketeering and racketeering
conspiracy. She received a thirty-six-month sentence. See
Judgment as to Allison Mack, United States v. Raniere, id., ECF
No. 1086 (E.D.N.Y. July 28, 2021). Finally, Russell pleaded
guilty to visa fraud and received two years’ probation. See
Judgment as to Kathy Russell, id., ECF No. 1153 (E.D.N.Y. Nov.
5, 2021). Sara Bronfman was not charged.
Raniere himself was convicted after trial on all
counts on which he was indicted, including racketeering and
racketeering conspiracy, forced labor conspiracy, wire fraud
conspiracy, sex trafficking conspiracy, sex trafficking, and
attempted sex trafficking. He was sentenced to 120 years in
prison. See Judgment as to Keith Raniere, United States v.
Raniere, No. 18-CR-204 (NGG), ECF No. 969 (E.D.N.Y. 2020).
Legal Standard
On a motion to dismiss under Rule 12(b)(6), “the
court’s task is to assess the legal feasibility of the
complaint.” Lynch v. City of New York,
952 F.3d 67, 75
(2d Cir.
2020).4 To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to “state a claim
to relief that is plausible on its face.” Ashcroft v. Iqbal,
556 U.S. 662, 678
(2009). Courts “are not bound to accept as
true a legal conclusion couched as a factual allegation,” and
“[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.”
Id.
Discussion
A. RICO (Count I)
All plaintiffs assert civil claims under the RICO
statute,
18 U.S.C. § 1964
(c), against Raniere, Clare, Sara,
Mack, Russell, and the Entity Defendants. To prevail on a civil
RICO claim, “plaintiffs must show (1) a substantive RICO
4 Unless otherwise noted, when quoting judicial decisions this order
accepts all alterations and omits all citations, footnotes, and internal
quotation marks.
violation under
18 U.S.C. § 1962
, (2) injury to the plaintiff’s
business or property, and (3) that such injury was by reason of
the substantive RICO violation.” Sykes v. Mel S. Harris &
Assocs. LLC,
780 F.3d 70, 83
(2d Cir. 2015).
To establish that first element — the substantive RICO
violation — under Section 1962(c), as the plaintiffs attempt to
do here, the complaint “must allege the existence of seven
constituent elements: (1) that the defendant (2) through the
commission of two or more acts (3) constituting a pattern (4) of
racketeering activity (5) directly or indirectly invests in, or
maintains an interest in, or participates in (6) an enterprise
(7) the activities of which affect interstate or foreign
commerce.” Moss v. Morgan Stanley Inc.,
719 F.2d 5, 17
(2d Cir.
1983). A plaintiff must establish each of these elements “as to
each individual defendant.” DeFalco v. Bernas,
244 F.3d 286
,
306 (2d Cir. 2001).
1. The Alleged RICO Enterprise
A RICO “enterprise” under
18 U.S.C. § 1961
can be “any
union or group of individuals associated in fact although not a
legal entity.” The plaintiffs assert that Raniere and his
so-called “inner circle” operated such an “association-in-fact”
RICO enterprise in conducting the affairs of NXIVM. See Compl.
¶¶ 198-99. Per the Supreme Court, “an association-in-fact
enterprise is simply a continuing unit that functions with a
common purpose.” Boyle v. United States,
556 U.S. 938, 948
(2009).
The alleged enterprise must therefore have “at least
three structural features: a purpose, relationships among those
associated with the enterprise, and longevity sufficient to
permit these associates to pursue the enterprise’s purpose.”
Id. at 946
. But it “need not have a hierarchical structure or a
chain of command,” and “[m]embers of the group need not have
fixed roles.”
Id. at 948
. Nor must it have “regular meetings,
dues, established rules and regulations, disciplinary
procedures, or induction or initiation ceremonies.” Id.5
The complaint adequately alleges that Raniere and his
so-called inner circle — also referred to as “NXIVM’s
leadership” — operated as an association-in-fact. First, the
plaintiffs have adequately alleged that this group — comprising
the individual defendants and Lauren and Nancy Salzman —
maintained relationships with one another, as Boyle requires.
The complaint recites that these individuals “knew each other
personally and were intimately involved in all aspects of” the
enterprise, id. ¶ 3, and it identifies the roles that each
served therein. See, e.g., id. ¶¶ 10-14, 30-31, 168. Second,
5 As the Supreme Court noted in Boyle, the RICO statute is, by its own
terms, to be “liberally construed to effectuate its remedial purposes.” 556
U.S. at 944 (citing the Organized Crime Control Act of 1970, Pub. L. No. 91–
452, § 904(a),
84 Stat. 941
, 947 (1970)).
the complaint sufficiently alleges a number of common purposes
among NXIVM’s senior leadership.6 These purposes include: “to
enrich Raniere and themselves with money and social power by
expanding and strengthening the NXIVM community to, among other
things, sell curricul[a], cultivate a pool of foreign laborers
to support the Enterprise, and groom women for sexual conduct
with and for Raniere.”
Id. ¶ 199
. At this stage, those
purposes (and the complaint’s factual content pled in support)
suffice for this element.7 Finally, the plaintiffs have
adequately alleged that the enterprise existed for a sufficient
duration. Specifically, they allege that the enterprise
operated from its founding in 1998 to approximately 2017, when
it “began to collapse.”
Id. ¶¶ 2, 6, 199
.8
2. Effect on Interstate or Foreign Commerce
The complaint also adequately alleges that the
enterprise engaged in, or that its activities affected,
interstate or foreign commerce. “[C]onduct having even a de
6 RICO does not require this shared purpose to be an “economic motive.”
National Organization for Women, Inc. v. Scheidler,
510 U.S. 249, 252
(1994)
(permitting civil RICO claims aimed at an enterprise whose “aim [was] to shut
down [abortion] clinics and persuade women not to have abortions”).
7 See, e.g., United States v. Raniere,
2022 WL 17544087
, *4 (2d Cir.
Dec. 9, 2022) (summary order) (holding that Raniere’s “‘inner circle’ was an
enterprise for the purposes of the RICO statute” and that it had a common
purpose that included recruiting victims into DOS and thereby garnering for
its members “increased power and status within the Enterprise”).
8 It is not required that all members of a RICO enterprise became
members at its inception; they can join the enterprise alone the way. United
States v. Gershman,
31 F.4th 80
, 98-99 (2d Cir. 2022) (a RICO “enterprise may
continue to exist even though it undergoes changes in membership” and it
“therefore does not matter” that a key member of an enterprise joined “after
other members had already begun associating with each other”).
minimis effect on interstate commerce suffices” to satisfy this
element. United States v. Mejia,
545 F.3d 179, 203
(2d Cir.
2008). The plaintiffs allege that “[t]he Enterprise engaged in,
and conducted activities which affected, interstate and foreign
commerce, including operating NXIVM and [Rainbow Cultural
Garden] centers in several states across the country, Canada,
and Mexico, as well as enticing American recruits and foreigners
to travel across state and international borders to New York.”
Compl. ¶ 200. Considering these allegations, and the
allegations regarding the sale of NXIVM’s curriculum, see id.
¶¶ 4, 26, the complaint adequately pleads this element.
3. Pattern of Racketeering Activity
To satisfy the pleading requirement that a defendant
engaged in a “pattern of racketeering activity,” a plaintiff
must allege that each defendant “personally committed” two or
more predicate acts of “racketeering activity.” McLaughlin v.
Anderson,
962 F.2d 187, 192
(2d Cir. 1992); see also
18 U.S.C.
§ 1961
(5). The RICO statute “broadly define[s]” racketeering
activity to encompass a variety of state and federal offenses,
including mail and wire fraud and extortion. DeFalco v. Bernas,
244 F.3d 286
, 306, 308 (2d Cir. 2001). The predicate acts “must
be related to each other (‘horizontal’ relatedness), and they
must be related to the enterprise (‘vertical’ relatedness).”
United States v. Daidone,
471 F.3d 371, 375
(2d Cir. 2006). Yet
“proof of these separate elements need not be distinct and
independent, as long as the proof offered is sufficient to
satisfy both elements.”
Id. at 376
. Such proof may include
that the predicate acts shared “common goals” and “common
victims,” and involved “participants from the same pool of
associates (who are members and associates of the enterprise).”
Id.
As set forth below, the complaint adequately alleges
that both Clare and Sara committed two predicate acts.
a. Clare Bronfman’s Alleged Predicate Acts
The plaintiffs allege that Clare committed predicate
acts in five categories: (1) immigration fraud; (2) witness
tampering; (3) forced labor, sex trafficking, and human
trafficking; (4) mail and wire fraud; and (5) extortion under
New York law. The plaintiffs have adequately alleged that Clare
committed one act of immigration fraud and one act of mail and
wire fraud. They have failed, however, to plead the other
alleged predicates sufficiently.
i. Immigration Fraud
The plaintiffs contend that Clare committed several
violations of
8 U.S.C. § 1324
(a)(1)(A)(iii)-(v) to obtain
financial gain in connection with plaintiffs Lindsay MacInnis,
Adrian, Camila, Daniela, and Maja Miljkovich. Compl. ¶¶ 205-06.9
Under Section 1324(a)(1)(A)(iii), it is a crime to conceal,
harbor, or shield from detection an alien, “knowing or in
reckless disregard of the fact that [such] alien has come to,
entered, or remains in the United States in violation of law.”
The Second Circuit has held that to constitute “harboring” under
Section 1324, “a defendant’s action must be intended (1)
substantially to facilitate an illegal alien’s remaining in the
United States” — e.g., by providing “shelter, money, or other
material comfort” — and “(2) to prevent the alien’s detection by
immigration authorities.” United States v. George,
779 F.3d
113, 118
(2d Cir. 2015).
Section 1324(a)(1)(A)(iv), for its part, establishes
criminal liability for any person who “encourages or induces an
alien to come to, enter, or reside in the United States, knowing
or in reckless disregard of the fact that such coming to, entry,
or residence is or will be in violation of law.” In rejecting a
First Amendment overbreadth challenge to this provision, the
Supreme Court read “encourages or induces” in the phrase’s
“specialized, criminal-law sense — that is, as incorporating
common-law liability for solicitation and facilitation.” United
9 Several plaintiffs, including Adrian, Camila, and Daniela, are
identified only by their first names for the reasons set forth in this
Court’s order of February 11, 2022. See Prelim. Order of Protection, ECF No.
141.
States v. Hansen,
599 U.S. 762
, 774 (2023). “Criminal
solicitation is the intentional encouragement of an unlawful
act,” and “[f]acilitation — also called aiding and abetting — is
the provision of assistance to a wrongdoer with the intent to
further an offense’s commission.” Id. at 771. But neither
solicitation nor facilitation “require[] lending physical aid;
for both, words may be enough,” so long as they are driven by
the “intent to bring about a particular unlawful act.” Id.
A violation of either subsection qualifies as a RICO
predicate if the offense “was committed for the purpose of
financial gain.”
18 U.S.C. § 1961
(1)(F). In the context of
Section 1324 itself, which establishes higher penalties for
violations “done for the purpose of commercial advantage or
financial gain,”
id.
§ 1324(a)(1)(B)(i), the Second Circuit has
suggested that the phrase “financial gain” should be given its
ordinary meaning. See United States v. Kim,
193 F.3d 567
, 576–
77 (2d Cir. 1999) (“The phrases ‘commercial advantage’ and
‘financial gain’ are not defined in the statute or the
Application Notes, but their meanings are hardly arcane.”).
While the Circuit did not further define financial gain —
perhaps believing it self-explanatory — it discussed the “usual
meaning” of the words “commercial” (“relating to commerce” or
“having profit as the primary aim”) and “advantage” (“a benefit,
profit, or gain of any kind”).
Id.
at 577 (quoting Webster’s
Third New International Dictionary, 456 (1976)). The court
later explained — again with respect to Section 1324 — that no
actual gain or advantage need be obtained; the statute “merely
requires that the defendant acted for the purpose of financial
gain.” United States v. Kim,
435 F.3d 182, 185
(2d Cir. 2006).
While it is a close call, the complaint adequately
alleges that Clare committed such offenses with respect to one
of the five plaintiffs: Adrian. It fails to plead sufficient
facts to suggest Section 1324 violations involving the other
four: Lindsay MacInnis,10 Maja Miljkovic, Camila, and Daniela.11
Adrian. First, the plaintiffs adequately allege that
Clare solicited Adrian to continue residing in the United States
“with the intent to further” his illegal residence, Hansen, 599
U.S. at 771, in violation of Section 1324(a)(1)(A)(iv). They
further allege that Clare did so for the purpose of financial
gain.
According to the complaint, Adrian was a “foreign
national who lived and worked in the NXIVM community.” Compl.
¶ 68. The complaint indicates that Adrian had a valid visa for
10 Clare Bronfman’s supplemental memorandum in support of her motion to
dismiss spells Lindsay’s last name “MakInnis.” Clare’s Supp. Mem. at 16, ECF
No. 226. This order adopts the spelling used by the plaintiffs throughout
their complaint, “MacInnis.” E.g., Compl. ¶ 57.
11 Clare Bronfman pled guilty to one count of conspiracy to violate
Section 1324 with respect to a “Jane Doe 12,” whose name was not revealed
publicly. Case No. 18-CR-204, ECF No. 936 at 2 (E.D.N.Y. 2020). The
complaint in this case does not purport to identify Jane Doe 12.
legal residence in the United States, although it does not
specify when that visa took effect. See id. ¶¶ 68-69.
Initially, Adrian performed manual labor for Clare in her barn,
for which he was “rarely compensated.” Id. ¶ 68. Eventually,
he “complained that he was unable to support himself” and that
he therefore “planned to leave NXIVM and return to Mexico.” Id.
When Raniere heard that Adrian planned to return to
Mexico because he “was unable to support himself,” he “told
Adrian that Adrian could build a company” with him and Clare.
Id. Adrian accepted the offer, working “tirelessly” to build a
profitable company, including by investing his own money into
it. Id. When Adrian’s visa was expiring, he informed Raniere
and Clare “that he was returning to Mexico, to wait the
requisite period, and apply to renew his visa.” Id. ¶ 69. They
“persuaded him not to leave the U.S. because their lawyers could
resolve the immigration issue.” Id. Relying on that assurance,
Adrian continued to reside in the United States and to work on
the t-shirt business without pay. Id. ¶¶ 68-69. But the
assurance never bore fruit, and Adrian eventually “los[t] his
lawful immigration status.” Id. When the Albany Times Union
published articles about NXIVM, Clare — worried about the
negative press — “told Adrian to go into hiding so that he would
not be discovered by reporters or immigration authorities.” Id.
¶ 70.
The complaint does not provide further detail on what,
precisely, Clare actually said about going “into hiding.” At
the pleading stage, however, this claim is sufficiently well-
defined to proceed. See generally Woodhull Freedom Found. v.
United States,
72 F.4th 1286
, 1301 & n.5 (D.C. Cir. 2023)
(citing Model Penal Code § 5.02(1)).
Lindsay MacInnis. The complaint alleges that Clare
also induced MacInnis — a Canadian national — to come to the
United States, and then encouraged her to remain here, despite
knowing that such residence would be unlawful. This predicate
act is inadequately pleaded because the complaint does not
assert plausibly (or at all, really) that MacInnis’s residence
was or would be unlawful.
The complaint alleges that “Raniere and Clare lured”
MacInnis to the United States by “assuring her that she would
receive gainful employment in the NXIVM community.” Id. ¶ 76.
The complaint acknowledges that MacInnis entered the United
States with a valid visa. Id. To facilitate MacInnis’s
residence in the United States, “Clare sent letters to
immigration authorities on NXIVM’s behalf representing that
Linday [] would work for NXIVM as [a] ‘business consultant[]’
and would be given a salary satisfying the requirements for a
visa.” Id. But when MacInnis arrived and began work “as
Clare’s ‘personal assistant’ she was not paid what she had been
promised or a salary sufficient to satisfy the requirements of
her visa.” Id. Clare told her that to make more money “she
needed to take more curriculum.” Id. For a time, “Lindsay was
forced to comply with Clare’s demands because of her immigration
status.” Id. Eventually, in response to the lack of pay,
“Lindsay fled to Canada.” Id. ¶ 77.
These allegations fail to address a crucial element of
Section 1324 — that MacInnis’s residence in the United States be
“in violation of law.”
8 U.S.C. § 1324
(a)(1)(A). Nor,
consequently, does the complaint allege that Clare knew, or
acted in reckless disregard of the fact that, MacInnis would be
residing in the country illegally.
Id.
Instead, plaintiffs
suggest (obliquely) that Clare resorted to fraud to obtain
continued lawful immigration status for MacInnis.12 But the
complaint does not explain when or how MacInnis’s residence in
the United States would have been unlawful — the plaintiffs do
not allege, for example, that MacInnis’s work visa had expired
or become invalid, or that Clare told her to stay on even after
it did.13 Compl. ¶ 77. In the absence such allegations, the
12 Such an act might constitute visa fraud under
18 U.S.C. § 1546
, but
while the complaint alleges that Kathy Russell committed visa fraud as one of
her predicate acts, see Compl. ¶ 226, it fails to make such an allegation
against Clare, see
id. ¶¶ 203-212
.
13 A visa holder in H1-B status may lose that status if they are
terminated from a job, but only after a grace period. Plaintiffs do not
allege that MacInnis lost her job — only that it did not meet her
compensation expectations. The complaint does not allege any specific
immigration implications of these allegations. Indeed, the complaint does
not say what type of work visa MacInnis held.
complaint fails to adequately allege of violation of Section
1324 as to MacInnis.
Maja Miljkovic. The allegation that Clare harbored
Maja Miljkovic in violation of Section 1324(a)(1)(A)(iii) for
the purpose of financial gain is likewise inadequately pleaded.
“Maja entered the U.S. on a visitor visa” and joined
the NXIVM community. Compl. ¶ 78. Although “Raniere and Clare
told her that she would create and own a NXIVM company from
which she would earn income . . . she was never compensated for
her work” for the “Knife of Aristotle,” a “purported news
outlet” under the NXIVM umbrella.
Id. ¶¶ 79, 102
. The
complaint does not expand on Miljkovic’s role at the Knife of
Aristotle, whether her promised ownership stake ever came into
fruition, or her precise employment relationship with the
company, other than to say that she was “recruited to develop”
it and that she was never paid for doing so.
Id. ¶ 79
.14
Instead, “to cover her living expenses and because Maja was
unable to work anywhere else because of her visa status,”
Bronfman “paid Maja to work as a waitress at a cafe” that
Bronfman owned; the pay was “meager.”
Id.
14 People who “own” companies, as Miljkovic was allegedly promised she
would, typically expect to earn money through the company’s profits, rather
than a fixed income. This basic tenet is at odds (or at least in tension)
with the complaint’s bare assertion that Clare’s promise of income was false
when made.
According to the complaint, when Miljkovic eventually
announced that she was “leaving the NXIVM community” to
“return[] to Canada,” “Raniere and Clare then pressured Maja to
marry Marc Elliot so Maja could remain in the U.S. and Maja
agreed.”
Id.
But the complaint proffers no details on how
Clare “pressured” her. It merely alleges that Raniere (not
Bronfman) “told [Miljkovic] that many people in the NXIVM
community had entered into sham marriages” in order to stay in
the United States.
Id.
Allegations of sham marriage can be sufficient to
state a claim for harboring. The Second Circuit has held that
the “arrangement of sham marriage ceremonies to United States
citizens for the purpose of enabling the aliens to claim
citizenship” sufficed (with other evidence) to prove “harboring”
under Section 1324. United States v. Lopez,
521 F.2d 437, 441
(2d Cir. 1975); see also Hansen, 599 U.S. at 782 (identifying
“arranging fraudulent marriages” as an example of the statute’s
“plainly legitimate sweep”).
Here, however, the complaint sets forth insufficient
factual content to support the inference that Miljkovic’s
marriage was a sham and that Clare knew as much. The vague
allegation that Raniere and Bronfman “pressured” Miljkovic to
marry Marc Elliot does not suffice. Cf., e.g., Kassner v. 2nd
Avenue Delicatessen Inc.,
496 F.3d 229, 241
(2d Cir. 2007) (in
employment case, allegation “that defendants pressured
plaintiffs to retire” was insufficient to state a claim absent
“specific facts as to what was done to pressure [plaintiffs] to
retire”). Absent plausible factual content, this predicate act
allegation cannot suffice.
Camila. The complaint also charges Clare with two
immigration predicates relating to Camila: first, that Clare
concealed or harbored Camila in violation of Section
1324(a)(1)(A)(iv); and second, and that she aided and abetted an
“encouragement” or “inducement” violation of Section
1324(a)(1)(A)(iii), or conspired with others to commit that
offense. Compl. ¶¶ 206-07. These allegations, too, however,
are inadequately pleaded.
At some time, “Raniere informed Camila that she no
longer needed to return to Mexico to renew her visa because
Clare Bronfman’s immigration lawyers had a better way for her to
remain in the U.S. Camila followed that advice and overstayed
her visa, losing her lawful immigration status.” Id. at ¶ 72.
Further, the plaintiffs allege that Camila “repeatedly asked
members of the Inner Circle about her status, but they did
nothing but string her along, assuring her that Clare Bronfman
was handling it.” Id. “Clare knew of Camila’s immigration
status,” they submit, because “she had orchestrated immigration
fraud for NXIVM, including as to Adrian (Camila’s brother);
members of the Inner Circle and the legal team were aware of
Camila’s immigration status; and Clare was personally familiar
with Camila, who worked for RCG.” Id. The complaint alleges
that Clare (along with Sara Bronfman) “operated and financed
RCG,” “which was used as a vehicle . . . to fraudulently obtain
foreign labor.” Id. ¶ 215.
These conclusory allegations fail to raise a plausible
inference that Clare encouraged or induced Camila to reside in
the United States despite knowing that such residence would be
unlawful (or that she aided and abetted, or conspired with,
others to do so). While the complaint alleges that Clare knew
Camila, it proffers no facts that would satisfy the actus reus
element of these violations — that is, it does not say that
Clare did anything at all in respect of these allegations.
The allegation that other individuals told Camila that
Clare was “handling” the issue of her immigration status does
support an inference of Clare’s action (or agreement to act).
Moreover, the complaint suggests a fairly strained basis for
inferring Clare’s knowledge of Camila’s immigration status:
because she knew Camila, and had “orchestrated” Camila’s
brother’s immigration fraud. These allegations, taken together,
are insufficient to support the plausible inference that Clare
committed, aided and abetted, or conspired to commit a violation
of Section 1324 in Camila’s case. See United States v. Pipola,
83 F.3d 556, 562
(2d Cir. 1996) (aiding and abetting requires
“the specific intent of advancing the commission of the
underlying crime”); United States v. Mahaffy,
693 F.3d 113, 123
(2d Cir. 2012) (conspiracy requires showing, among other things,
that the defendant “knowingly engaged in the conspiracy with the
specific intent to commit the offenses that were the objects of
the conspiracy”).
Daniela. Finally, the complaint asserts that Clare
committed a direct violation of Section 1324(a)(1)(A)(iv) with
respect to plaintiff Daniela — and that she aided and abetted,
and conspired with, Raniere, Sara Bronfman, and Russell to
violate Section 1324(a)(1)(A)(iii) in Daniela’s case. Compl.
¶¶ 206-07. The complaint proffers no facts to support these
claims. While it alleges that at some point, “Daniela asked
Raniere for help from Clare’s attorneys regarding her
immigration status; she was ignored,” id. ¶ 75, that allegation
provides no basis to conclude that Clare herself knew that
Daniela was residing in the United States illegally.
The complaint also alleges — again without factual
support — that Clare served as Raniere’s “agent” in the
confiscation of Daniela’s immigration papers (specifically, “her
passport and other documents that proved her identity and
country of origin”), see id. ¶¶ 75, 293-94, as discussed in
Section III.C.6, infra. But the plaintiffs set forth no facts
about Bronfman’s alleged role in, or even knowledge of, that
document confiscation. Nor do they make any non-conclusory
allegations suggesting that Clare knew about Daniela’s unlawful
status. In fact, the complaint specifically alleges that
Raniere alone confiscated Daniela’s documents: “Raniere confined
her to a room and confiscated her passport and other documents
that proved her identity and country of origin.” Id. ¶ 75. The
allegation that Clare was Raniere’s “agent” in this regard is a
legal conclusion. See Ashcroft,
556 U.S. at 678
(“[W]e must
take all the factual allegations in the complaint as true, [but]
we are not bound to accept as true a legal conclusion couched as
a factual allegation.”). In any event, principals are
responsible for the acts of their agents, but the reverse is not
also true.
Accordingly, the complaint fails to raise a plausible
inference that Clare committed, aided and abetted, or conspired
to commit a violation of Section 1324 with respect to Daniela.
ii. Witness Tampering
The plaintiffs also allege that Clare committed
witness tampering, in violation of
18 U.S.C. § 1512
(b), with
respect to Jessica Salazar, Soukiana Medhaoui, Sarah Edmondson,
and Camila. Section 1512(b) makes criminally liable any person
who:
knowingly uses intimidation, threatens, or corruptly
persuades another person, or attempts to do so, or
engages in misleading conduct toward another person,
with intent to: (1) influence, delay, or prevent the
testimony of any person in an official proceeding; (2)
cause or induce any person to (A) withhold testimony,
or withhold a record, document, or other object, from
an official proceeding; . . . or (3) hinder, delay, or
prevent the communication to a law enforcement officer
. . . of information relating to the commission or
possible commission of a Federal offense.
Id.
An act of persuasion is “corrupt[]” when it is “motivated
by an improper purpose” — that is, when it is done in
furtherance of some “constitutionally unprotected and
purportedly illicit activity,” such as “preventing through
violence [a person’s] cooperation with law enforcement.” United
States v. Veliz,
800 F.3d 63, 70
(2d Cir. 2015). However,
neither “threats of future litigation, [n]or the initiation of
actual litigation, constitute witness tampering.” G-I Holdings,
Inc. v. Baron & Budd,
179 F. Supp. 2d 233, 266
(2d Cir. 2001).
Jessica Salazar & Soukiana Medhaoui. The plaintiffs
allege that “Clare . . . retained two attorneys” who “sent
letters — written by Raniere and Clare and transposed on law
firm letterhead — to victim-witnesses, threatening them with
legal action and arrest on criminal charges if they did not
remain silent about DOS and NXIVM.” Compl. ¶ 171. Further,
they allege that “[m]etadata recovered by the government
established that at least one of the threatening, extortive
letters sent to a DOS victim came from a document created by
Clare,” and that “[a]mong the recipients of these threatening
letters were Plaintiffs Salazar and Medhaoui.” Id. ¶ 173.
One such threatening letter allegedly suggested,
albeit confusingly, that it came from a prosecutor. The letter
was written on a law firm’s letterhead — that of “Olmeda Gaxiola
& Abogados, S.C.” — but also described the writer as the “chief
attorney of a criminal investigation in Mexico.” United States
v. Raniere, Case No. 18-CR-204 (NGG), ECF No. 922-1, at 4. It
stated that the addressees — including Salazar and Medhaoui,
Compl. ¶ 173 — were “currently connected to several criminal
investigations involving fraud, coercion, extortion,
harassment,” and a slew of other crimes. United States v.
Raniere, Case No. 18-CR-204 (NGG), ECF No. 922-1, at 4.
The complaint does not adequately allege a violation
of Section 1512(b) by Clare against either Salazar or Medhaoui
because it fails to allege the “official proceeding” element of
subsections (b)(1) and (b)(2). To violate Section 1512(b), the
defendant must “have in contemplation [some] particular official
proceeding” towards which the obstructive act is directed, even
if that particular proceeding is not yet pending. Arthur
Andersen LLP v. United States,
544 U.S. 696, 708
(2005). In the
Andersen case, the Supreme Court held that jury instructions on
the “corruptly persuades” element of Section 1512 must “convey
the requisite consciousness of wrongdoing.”
Id.
The section
cannot apply to “someone who persuades others to shred documents
under a document retention policy when he does not have in
contemplation any particular official proceeding in which those
documents might be material.”
Id. at 707-8
(emphasis added).15
Neither the complaint nor the letter itself identify
any particular official proceeding as to which Clare was
attempting to hinder Salazar’s or Medhaoui’s participation. The
complaint does not, for example, allege that she was attempting
to prevent their testimony before the grand jury that ultimately
returned an indictment against her, or even that she was
attempting to prevent their cooperation with an ongoing or
foreseeable law enforcement investigation.
The “criminal investigation” referred to in the
Abogados’ letter does not qualify. For starters, the complaint
does not allege that any such investigation actually existed.
Moreover, the definition of “official proceeding” under Section
1512 is not limitless. An “official proceeding” is “a
proceeding before a judge or court of the United States”
(including non-Article III courts), “a Federal grand jury,” “a
proceeding before the Congress, a proceeding before a Federal
Government agency which is authorized by law,” or proceedings
“involving the business of insurance.”
18 U.S.C. § 1515
(a)(1);
15 Plaintiffs do not invoke
18 U.S.C. § 1512
(c) in support of this
claim.
see also United States v. Ermoian,
752 F.3d 1165, 1170
(9th Cir.
2013) (holding that “a criminal investigation is not an
‘official proceeding’ under the obstruction of justice statute,”
as the term “connotes some type of formal hearing”). Foreign
proceedings do not qualify, either. El Omari v. Buchanan, No.
22-55,
2022 WL 4454536
, at *1-2 (2d Cir. 2022) (“For purposes of
this statute, an ‘official proceeding’ is defined to include
only specified domestic proceedings.”).
Indeed, the letter at issue is primarily directed at
minimizing media exposure, rather than witness testimony. It
“strongly suggest[s] that [the recipients] cease and desist,
undo, reverse, cancel, and retract, participation in all past,
present, and future, conversation, conference calls, meetings,
news media, social media, blogs, or websites.” United States v.
Raniere, Case No. 18-CR-204 (NGG), ECF No. 922-1, at 4. It
recommends that “[y]our best course of action is to minimize
your exposure.”
Id.
But rather recommending the same course of
action as to any law enforcement inquiry, the letter advises
recipients to “fully cooperat[e] with the criminal
investigations.”
Id.
Sarah Edmondson. The complaint also fails to
adequately allege that Clare committed witness tampering with
respect to Sarah Edmondson. The plaintiffs allege the same
facts that Judge Garaufis found at Clare’s sentencing — that
Clare “pursu[ed] false criminal charges against Plaintiffs
Edmondson and Kobelt in Vancouver” “in response to the
forthcoming New York Times exposé” of NXIVM. Compl. ¶ 175.
Section 1515’s definition of “official proceeding”
refers only to proceedings in the United States; Canadian
proceedings do not suffice. See
18 U.S.C. § 1515
(a)(1)(A)
(referring to proceedings before courts “of the United States”).
But in any event, as with Salazar and Medhaoui above, the
complaint alleges no nexus between Clare’s false complaint and
“any particular proceeding,” let alone a domestic one. Arthur
Andersen,
544 U.S. at 707
.
Camila. The complaint alleges that when the FBI
contacted Camila in March 2019, Camila reached out to “an
associate of Clare Bronfman who told her not to speak with the
FBI.” Compl. ¶ 179. It alleges that “Clare Bronfman arranged
for Camila to hire an attorney” from a list provided, who would
be paid by Clare.
Id.
Once hired, that attorney “instructed
Camila not to speak to the FBI or a victim specialist.”
Id.
When Camila told the attorney that she wanted to speak with the
FBI, the attorney initially responded that “she (the attorney)
would confer with prosecutors and ascertain whether they viewed
Camila as a perpetrator or a victim.”
Id.
But the attorney
never actually contacted the FBI, and later told Camila that she
would not do so “because the FBI would use its resources to
locate Camila and charge her with crimes.”
Id.
Here, too, the complaint fails to allege the
foreseeability of any “official proceeding,” invoking instead
only the prospect of Camila “speak[ing] to the FBI.” Again,
however, ”a criminal investigation is not an ‘official
proceeding’ under the obstruction of justice statute” because
the term specifically “connotes some type of formal hearing.”
Ermoian,
752 F.3d at 1170
; see Fischer v. United States,
144
S.Ct. 2176
, 2200 (2024) (Barrett, J., dissenting) (citing
appellate decisions to this effect). And beyond that, the
plaintiffs fail to allege that Clare herself engaged in
obstructive conduct, or even that she directed the attorney she
allegedly paid for to do so. The complaint thus fails to state
a claim under Section 1512(b) as to Camila.
iii. Forced Labor, Sex Trafficking, and Human
Trafficking
The plaintiffs have not adequately alleged that Clare
has committed any forced labor, sex trafficking, or human
trafficking offense. This is true for the reasons set forth in
Section III.C.1, infra — generally, that they insufficiently
allege Clare’s actual knowledge of Raniere’s conduct.
Therefore, those alleged offenses cannot serve as a predicate
act for purposes of this RICO claim.
iv. Mail and Wire Fraud
For their next predicate acts, the plaintiffs allege
that “Clare committed directly, aided and abetted the commission
of, and conspired to commit multiple acts of mail and wire fraud
in violation of
18 U.S.C. §§ 1341
, 1343.” Compl. ¶ 210. These
allegations relate primarily to the sale of NXIVM courses.
“The elements of mail or wire fraud are (i) a scheme
to defraud (ii) to get money or property (iii) furthered by the
use of interstate mail or wires.” Williams v. Affinion Grp.,
LLC,
889 F.3d 116, 124
(2d Cir. 2018). “A scheme to defraud is
a plan to deprive a person of something of value by trick,
deceit, chicane or overreaching,” and requires “a material
misrepresentation” made by the defendant. Id.16 A
misrepresentation is material if it is “likely to be deemed
significant to a reasonable person considering whether to enter
into the transaction” — that is, if it misstates the “economic
value” of the bargain. Moore v. PaineWebber, Inc.,
189 F.3d
165, 170
(2d Cir. 1999).
Pursuant to Federal Rule of Civil Procedure 9(b), a
plaintiff must plead each element of fraud “with particularity”
— that is, “detail the specific statements that are false or
16 “[T]he mail or wire communications themselves need not contain a
false statement,” but such a statement must be “part of the defendants’
scheme to [de]fraud.” Id. at 125. In effect, there must be “an underlying
‘scheme to defraud’ animated by a material misrepresentation,” and
identifying that misrepresentation is a core element of the claim. Id.
fraudulent, identify the speaker, state when and where the
statements were made, and explain why the statements were
fraudulent.” Williams,
889 F.3d at 124
.17 In Moore, the Second
Circuit held that the plaintiff met the particularity
requirement with “a chart listing twelve different mailings said
to contain fraudulent representations, along with the dates of
these mailings and cross-references to the paragraphs in the
complaint in which the mailings [were] further discussed.”
189
F.3d at 173
. Where, on the other hand, a complaint failed to
include “statements setting forth the content, date, or place of
any alleged misrepresentations, and the identity of the persons
making them,” a court in this district held that it failed to
meet Rule 9(b)’s particularity requirement. Colony at Holbrook,
Inc. v. Strata G.C., Inc.,
928 F. Supp. 1224, 1232
(E.D.N.Y.
1996); see also Flexborrow LLC v. TD Auto Finance LLC,
255 F.
Supp. 3d 406, 422
(E.D.N.Y. 2017).
Certain of the plaintiffs’ allegations satisfy this
rigorous standard, and thus the plaintiffs can proceed (at this
stage) on their assertion that Clare committed a predicate act
of mail and wire fraud. However, as discussed below in the
17 This requirement applies to theories of both direct liability and
aiding and abetting. See Morrow v. Black,
742 F. Supp. 1199, 1204
(E.D.N.Y.
1990) (holding that “the complaint will need to meet the standards of Rule
9(b) with regard to the circumstances of the predicate acts of fraud whether
or not they were committed with the aid and abetment of other defendants who
did not personally commit the act”).
standalone RICO standing section, infra Section III.A.4, each
plaintiff has not adequately pled (as they must) a clear and
definite injury to business or property, proximately caused by
this fraud.
I. Actionable Allegations of Fraud
The complaint alleges a straightforward consumer fraud
in the sale of NXIVM’s educational program. Plaintiffs — all
seventy of them — allege that “NXIVM materials continuously made
several false and materially misleading assertions of fact.”
Compl. ¶ 211. These alleged misrepresentations related
primarily to the manner in which participants could obtain
promotion through the NXIVM curriculum and ultimately complete
it. NXIVM represented, among other things, that “promotion in
the NXIVM community depended on completing NXIVM courses.”
Id.
This was false, plaintiffs allege: “In fact recruiting (which
generated revenue) rather than completing the [stated
curriculum] actually drove an enrollee’s advancement in the
NXIVM system.” Id. ¶ 42. The plaintiffs attribute
responsibility for those misrepresentations to Clare because she
was a “leader[] and chief financier[] of NXIVM,” which conveyed
“influence and control over the content of NXIVM’s doctrines,
curricula, sales materials, and practices.” Id. ¶ 38.
As to completion, “NXIVM materials” stated that
“NXIVM’s curriculum could be completed by the taking of
courses.” Id. ¶ 211. In truth, NXIVM is alleged to have run a
Hotel California of personal improvement: a “never-ending
program” that “trapped” participants in a “circle of
indebtedness and [uncompensated] labor.” Id. ¶ 57. In the end,
because new courses were “continuously added,” “no enrollee ever
did, or could, complete the NXIVM program.” Id. ¶ 40.
The complaint does not tell us precisely when or where
each of these claims appeared. Still, the complaint’s
allegations are specific enough — and plausible enough — to
allege a scheme to defraud at this stage. In the end, the
plaintiffs plausibly allege that the NXIVM curriculum was a
“pyramid scheme,” id. ¶ 4 — a well-established type of fraud in
which upfront payments are demanded of enrollees, goal posts are
regularly moved, and (among other things) promised rewards turn
out to be conditioned on recruiting other participants into the
program. See, e.g., United States v. Gold Unlimited, Inc.,
177
F.3d 472, 478-79, 481
(6th Cir. 1999) (describing the mechanics
of pyramid schemes). And the plaintiffs need not allege that
Clare “actually mailed [or wired] . . . anything” herself.”
Pereira v. United States,
347 U.S. 1, 8
(1954). Allegations
that she “controlled” the enterprise and “caused false
statements to be made in the name of” NXIVM is sufficient. 4K&D
Corp. v. Concierge Auctions, LLC,
2 F. Supp. 3d 525, 538-39
(S.D.N.Y. 2014). Accordingly, the plaintiffs may proceed to
assert mail and wire fraud as a predicate act in service of
their RICO claim against Clare.
II. Other Allegations of Fraud
Notwithstanding the discussion above, the Court notes
that several of the plaintiffs’ allegations in support of their
fraud claims would not be actionable on a standalone basis.
This is true for a variety of reasons, as discussed below. The
Court takes this step in the interest of explaining the RICO
standing analysis below, as well as providing guidance for the
discovery process.
First, the complaint challenges Clare’s statement
(on her blog) that the Rational Inquiry method was “patent-
pending.” Compl. ¶ 51. Given that Raniere had by that time
successfully obtained several patents,18 plaintiffs have not
adequately alleged that this statement is materially false, let
alone that Clare knew as much. See Flexborrow LLC v. TD Auto
Finance LLC,
255 F. Supp. 3d 406, 420
(E.D.N.Y. 2017) (RICO
plaintiff bears the burden of “explain[ing] why the statements
were fraudulent”). The plaintiffs also see fraud in NXIVM’s
18 See, e.g.,
U.S. Patent No. 9646311
-B2 (issued May 9, 2017)
(“Electronic course evaluation”);
U.S. Patent No. 9421447
-B2 (issued Aug. 23,
2016) (“Method and apparatus for improving performance”);
U.S. Patent No.
9100904
-B2 (issued Aug. 4, 2015) (“Data stream division to increase data
transmission rates”). This court “may properly take judicial notice of
official records of the United States Patent and Trademark Office.”
Telebrands Corp. v. Del Labs, Inc.,
719 F. Supp. 2d 283
, 287 n.3 (S.D.N.Y.
2010).
claim that Raniere was “an ascetic who had eschewed possessions
and wealth.” Id. at ¶ 45. This assertion is conclusory, in
that the complaint provides no contrary factual allegations
concerning Raniere’s actual possessions and wealth. But beyond
that, the plaintiffs do not connect this allegation to the
benefit of the bargain between NXIVM and the plaintiffs who
enrolled in its curriculum. See United States v. Regent Office
Supply Co.,
421 F.2d 1174, 1180
(2d Cir. 1970) (holding that
fraudulent intent — a “critical element in a scheme to defraud”
— requires “an attempt to deceive the[] prospective customers
with respect to the bargain [the defendants] were offering”).
Similarly, statements that Raniere was “a celibate,”
Compl. ¶ 45, have not been connected the economic value of the
NXIVM curriculum. Moore,
189 F.3d at 170
. Such statements thus
would not plausibly be “deemed significant” to a reasonable
person considering whether to purchase NXIVM course materials.
Id. at 170
; see also United States v. Shellef,
507 F.3d 82, 108
(2d Cir. 2007) (mail and wire fraud statutes reach “schemes that
depend for their completion on a misrepresentation of an
essential element of the bargain”). And finally, statements
that Raniere was the “‘world’s smartest man’ with an IQ of 240,”
id. at ¶ 45, are a classic example of “blustering” — a statement
“upon which no reasonable buyer would be justified in relying.”
United States v. Weaver, No. 13-CR-120,
2016 WL 3906494
, at *15
n.11 (E.D.N.Y. June 10, 2016); cf. United States v. Litvak,
808
F.3d 160, 175
(2d Cir. 2015) (“Where the misstatements are so
obviously unimportant to a reasonable investor that reasonable
minds could not differ on the question of their importance, we
may find the misstatements immaterial as a matter of law.”).
Whether these statements would be actionable on a
standalone basis, however, is a different question from whether
they have evidentiary relevance to the broader scheme alleged.
That question is for another day.
v. State Law Extortion
In the final predicate act asserted against Clare, the
plaintiffs allege that Raniere and Allison Mack committed “state
law extortion” against the twelve DOS plaintiffs to obtain
uncompensated labor, and that Clare “aided and abetted or
conspired” to commit that extortion. Compl. ¶ 213.19
The plaintiffs allege that Mack and Nikki Clyne (who
is no longer a defendant in this case) recruited female NXIVM
recruits to what they described as a “woman-centered” subgroup
of NXIVM. Id. ¶ 111. To join DOS, the recruits had to provide
“collateral” — some type of private material they would not want
19 “[R]acketeering activity” is defined by statute to include “any act
or threat involving” (among other things) “extortion . . . which is
chargeable under State law and punishable by imprisonment for more than one
year.”
18 U.S.C. § 1961
(1). As a result, “[s]tate law crimes such as
extortion can constitute racketeering acts under RICO.” United States v.
Ivezaj,
568 F.3d 88
, 91 n.2 (2d Cir. 2009).
released publicly. Id. ¶ 112. Mack and Clyne would then
threaten to release that initial material if the recruits did
not provide more collateral. Id. ¶ 115. “Once recruits were
trapped by their collateral, their masters forced the recruits
to perform labor for the masters and (secretly) Raniere,
including but not limited to transcribing video and audio
recordings.” Id.20
The complaint does not allege that Clare was a DOS
“master” or that she participated directly in this scheme.
Instead, it alleges that she “aided and abetted or conspired” to
extort the plaintiffs, “as evidenced by all the facts and
circumstances, including her longtime leadership roles in NXIVM
and closeness with Defendant Raniere.” Id. ¶ 213. Beyond guilt
by association, the plaintiffs argue that Clare is liable for
her efforts to cover up the extortion after the fact: she sent
“threatening letters she drafted to attorneys she had hired to
send to people trying to escape DOS after it came to light in
order to intimidate them from disclosing what Raniere and other
DOS masters had done to them.” Id.
20 Plaintiffs also allege that the various participants leveraged DOS
members’ collateral to extort sexual favors for Raniere. Compl. ¶ 109. But
the RICO statute provides a private right of action only for a “person
injured in his business or property” by the racketeering violation,
18 U.S.C.
§ 1964
(c); personal injuries are not covered. Bascunan v. Elsaca,
874 F.3d
806, 817
(2d Cir. 2017).
Assuming that aiding and abetting a state-law
predicate act can itself constitute a predicate act,21 the DOS
plaintiffs have still failed to adequately allege Clare’s
involvement in the alleged extortion. Under New York law, a
person is liable as an aider and abettor “when, acting with the
mental culpability required for the commission” of the criminal
conduct, she “intentionally aids [a principal] to engage in such
conduct.”
N.Y. Penal Law § 20.00
. “An aider and abettor must
share the intent or purpose of the principal actor, and there
can be no partnership in an act where there is no community of
purpose.” People v. La Belle,
18 N.Y.2d 405, 412
(1966).
This definition has been held to exclude a defendant
whose only contribution to a crime comes in the effort to
conceal it after the fact. Evidence that a defendant “helped
his brother to remove traces” of a murder, for example, was
insufficient to support the defendant’s conviction for aiding
and abetting the brother’s crime.
Id. at 413
. The evidence did
not “exclude the hypothesis that he was unaware before the
murder of his brother’s intention to kill the girl.”
Id.
Of
course, such a defendant may be prosecuted for “acting as an
accessory after the fact, now known as hindering prosecution.”
21 The Second Circuit said in First Capital Asset Management, Inc. v.
Satinwood,
385 F.3d 159, 178
(2d Cir. 2004), that “one who assists in the
fraud also conducts or participates in the affairs of the enterprise.” This
statement is, of course, somewhat orthogonal to the question posed above.
Regardless, the Court need not resolve this question.
People v. Bacote,
107 A.D.3d 641, 641
(1st Dep’t 2013). But
hindering a prosecution is a separate state offense, see
N.Y.
Penal Law § 205.65
, and is not a RICO predicate. See
18 U.S.C.
§ 1961
(1).
The DOS plaintiffs may (or may not) have alleged facts
sufficient to establish that Clare hindered the investigation or
prosecution of extortionate conduct. But they have not
adequately alleged that she aided and abetted Raniere, Mack or
others in the commission of that offense. The complaint’s only
nonconclusory allegation regarding Clare’s involvement is that
she drafted threatening letters (sent by her attorneys) to the
plaintiffs “after [the extortion] came to light.” Compl. ¶ 213.
As in La Belle, this indicates nothing as to whether she was
aware of the extortion prior to or during its occurrence, or
that she shared a “community of purpose” with the principals.
In the absence of any factual allegations indicating that Clare
knew of, agreed to, or intentionally aided in the extortionate
conduct, the DOS plaintiffs have failed to adequately allege
this predicate act.
As to the allegation that Clare entered into a
conspiracy to commit extortion in violation of Section 105 of
the New York Penal law, that fails because the plaintiffs fail
to allege any “overt act” Clare committed “in furtherance of the
conspiracy.”
N.Y. Pen. Law § 105.20
. As with the aiding and
abetting theory, the letter Clare is alleged to have drafted
comes too late to serve as the overt act. As with aiders and
abettors, New York law provides “that the acts and statements”
of a conspirator made “subsequent to” the “achievement of the
common purpose” of the conspiracy “are not performed or made in
the furtherance of said conspiracy,” because the conspiracy has
already ended. People v. Wisan,
505 N.Y.S.2d 361, 363
(N.Y.
Sup. Ct. July 14, 1986) (citing cases); but cf. People v.
Ribowsky,
77 N.Y.2d 284, 293
(1991) (“Acts of concealment
occurring . . . in some cases, after the conspiratorial
objective is achieved may constitute overt acts in furtherance
of an ongoing conspiracy.”) (emphasis added). Thus, acts
“performed by the co-conspirators” after the extortion was
already accomplished “are not overt acts performed in
furtherance of the conspiracy” within the meaning of Section
105.20 of the Penal Law.
Id.
(emphasis added). The only
non-conclusory act Clare is alleged to have performed is that
she drafted threatening letters to the plaintiffs after they
left NXIVM “to intimidate them from disclosing what Raniere and
other DOS masters had done to them.” Compl. ¶ 213 (emphasis
added). Those acts occurred subsequent to the completion of the
extortion, and are thus insufficient under New York law to
support the plaintiffs’ allegations.
b. Sara Bronfman’s Alleged Predicate Acts
The plaintiffs allege that Sara committed four types
of predicate acts: (1) immigration fraud; (2) witness tampering;
(3) forced labor, sex trafficking, and human trafficking; and
(4) mail and wire fraud. The complaint adequately alleges two
of these: witness tampering (as to Adrian) and mail and wire
fraud. Thus the RICO claims against her will proceed.
i. Immigration Fraud
Plaintiffs allege that “Sara Bronfman aided and
abetted and conspired to commit the immigration fraud
violations” committed by her sister Clare. As noted above, five
plaintiffs are alleged to have suffered injury from this
conduct: Adrian, Lindsay MacInnis, Maja Miljkovic, Camila, and
Daniela. Compl. ¶ 232. Sara is alleged to have furthered the
immigration violations “by establishing, operating, and
financing” an entity known as RCG. Id. ¶ 215.
RCG “purported” to function as a “school and daycare
for children” that would “improve child development and teach
the children several languages.” Id. ¶ 59. In reality,
plaintiffs claim, it “was a front for a trafficking
organization.” Id. The “specialists” who staffed its
(unlicensed) daycare centers were actually brought to the United
States to provide “uncompensated or under-compensated labor, and
to sexually gratify Raniere.” Id. ¶ 58.
Plaintiffs allege that Sara instructed Loretta Garza —
a Mexican national who, as the “titular head” of RCG, answered
directly to Sara and Raniere — “to maintain multiple sets of
accounting books to hide the existence of foreign nationals and
mask RCG’s finances.” Id. ¶¶ 60, 61. But of MacInnis, Camila,
Adrian, Daniela, and Miljkovic, the complaint alleges only that
Camila worked for RCG. See id. ¶ 278 (Camila’s uncompensated
labor consisted of “babysitting and teaching in RCG”).
And in respect of Camila, as discussed above, the
complaint does not adequately allege that Clare violated Section
1324. Thus, the plaintiffs’ allegation that “Sara Bronfman
specifically intended to facilitate Clare’s immigration fraud”
fails; the plaintiffs cannot establish aiding and abetting of an
underlying offense that is itself not plausibly alleged. See
Pipola,
83 F.3d at 562
(an aiding-and-abetting charge requires
proof that “the underlying crime was committed by someone other
than the defendant and that the defendant himself either acted
or failed to act with the specific intent of advancing the
commission of the underlying crime”).
ii. Witness Tampering
The complaint does plausibly allege that Sara
committed witness tampering in violation of
18 U.S.C. § 1512
(b)
with respect to Adrian. She “offered Adrian a substantial sum
of money” to travel to and remain in France “during Raniere’s
trial,” with the purpose of “render[ing] him unavailable” to
testify in that proceeding. Compl. ¶ 180. The complaint
plausibly suggests that Sara sought to persuade Adrian to leave
the country with the intent, and the corrupt purpose, of
preventing him from testifying in an official proceeding. See
United States v. Gotti,
459 F.3d 296, 343
(2d Cir. 2006)
(affirming Section 1512(b) conviction over defendant’s argument
that he had “merely suggest[ed]” that a key witness invoke the
Fifth Amendment).
iii. Forced Labor, Sex Trafficking, and Human
Trafficking
The plaintiffs have not adequately alleged that Sara
has committed any forced labor, sex trafficking, or human
trafficking offense. This is for the same reason discussed
above with respect to Clare — that they insufficiently allege
Sara’s actual knowledge of Raniere’s conduct. See infra Section
III.C.2. Therefore, those alleged offenses cannot serve as a
predicate act for purposes of this RICO claim.
iv. Mail and Wire Fraud
The complaint attributes the same mail and wire fraud
to Sara as it does to Clare, on an identical theory: “[B]oth
Clare and Sara Bronfman, as leaders and chief financiers of
NXIVM, had knowledge of and influence and control over the
content of NXIVM’s doctrines, curricula, sales materials and
practices.” Compl. ¶ 38. As discussed above, see Section
III.A.3.a.iv, this allegation suffices (at this stage) to
establish Sara’s responsibility for the fraud scheme, and the
complaint adequately alleges that predicate.
4. RICO Standing
Lastly, Section 1964 requires each plaintiff asserting
a civil RICO claim to have suffered an “injur[y] in his business
or property by reason of a violation of section 1962.”
18
U.S.C. § 1964
. This requirement is known as “RICO standing,”
and each plaintiff must establish it as to each defendant.
Denney v. Deutsche Bank AG,
443 F.3d 253, 266
(2d Cir. 2006).
RICO standing is not jurisdictional, but it is “a more rigorous
matter than standing under Article III.”
Id.
“A RICO plaintiff
only has standing if, and can only recover to the extent that,
he has been injured in his business or property by the conduct
constituting the RICO violation, and only when his or her actual
loss becomes clear and definite.” Id.; see also Brookhaven Town
Conserv. Comm. v. Walsh,
258 F. Supp. 3d 277, 284
(E.D.N.Y.
2017) (addressing RICO standing at the motion to dismiss stage
as a pleading requirement).
RICO standing requires each plaintiff to demonstrate
that the defendant’s predicate act “not only was a ‘but for’
cause of his injury, but was the proximate cause as well.”
Holmes v. Secs. Investor Protection Corp.,
503 U.S. 258, 268
(1992). To satisfy the proximate cause requirement, each
plaintiff must allege “a direct relationship between the
plaintiff’s injury and the defendant’s injurious conduct.”
DeFalco v. Bernas,
244 F.3d 286
, 329 (2d Cir. 2001). This
“directness” requirement is designed to mitigate “the difficulty
that can arise when a court attempts to ascertain the damages
caused by some remote action.” Anza v. Ideal Steel Supply
Corp.,
547 U.S. 451, 458
(2006). “[T]he less direct the injury
is, the more difficult it becomes to ascertain the amount of a
plaintiff’s damages attributable to the violation, as distinct
from other, independent factors.” Holmes,
503 U.S. at 269
.
The seventy plaintiffs who assert civil RICO claims
against both Clare and Sara Bronfman attempt to meet this
standard, both in the body of the complaint, see Compl. ¶ 231,
and in “Schedule A” thereto, added at the Court’s request, which
purports to set forth the ”Injury Type” suffered by each
plaintiff. Schedule A at 1, ECF No. 215-1. As to both Clare
and Sara, those attempts are insufficient at this stage for the
reasons explained below. The plaintiffs are directed to file a
revised Schedule A remedying those insufficiencies within 60
days of the date this order issues (if they can do so in good
faith).
i. Clare Bronfman
As discussed above, the plaintiffs adequately allege
that Clare committed two RICO predicate acts: mail and wire
fraud,22 and immigration fraud (in relation to Adrian), supra
Section III.A.3.a.i. But Adrian — the only plaintiff who could
plausibly have been injured by the immigration offense — has
failed to allege an injury proximately caused by that act. And
none of the plaintiffs have adequately alleged an injury
proximately caused by the NXIVM curriculum scheme to defraud.
In Anza, the Supreme Court held that the plaintiff
corporation had inadequately alleged injuries proximately caused
by a Section 1962 violation.
547 U.S. at 451
. The plaintiff
and defendant were competitors, and the plaintiff’s theory was
that the defendants harmed it by “defrauding the New York tax
authority and using the proceeds from the fraud to offer lower
prices designed to attract more customers.”
Id. at 457-58
.
22 This is one predicate act, rather than two, for purposes of the RICO
statute because “it is not proper under RICO to charge two predicate acts
where one action violates two statutes.” Polycast Tech. Corp. v. Uniroyal,
Inc.,
728 F. Supp. 926, 945
(S.D.N.Y. 1989); see United States v. Indelicato,
865 F.2d 1370, 1383
(2d Cir. 1989) (en banc) (warning that the court would
“disapprove any attempt by the government or a private plaintiff to go beyond
Congress’ intent and fragment an act that is plainly unitary into multiple
acts in order to invoke RICO”); see also United States v. Biaggi,
909 F.2d
662, 685-86
(2d Cir. 1990) (bribery and accepting a gratuity, though two
separate criminal offenses, constituted one predicate act because they were
both based on the same conduct: a promise of future employment), cert.
denied,
499 U.S. 904
(1991); United States v. Kragness,
830 F.2d 842
(8th
Cir. 1987); United States v. Walgren,
885 F.2d 1417
(9th Cir. 1989). The
plaintiffs rely on the same act — distributing curricula and promotional
materials — for the scheme to defraud as to both mail and wire fraud, which
thus constitute a single predicate act.
This theory had two problems. First, the “direct victim of this
conduct was the State of New York, not Ideal.”
Id.
“The cause
of Ideal’s asserted harms [] is a set of actions (offering lower
prices) entirely distinct from the alleged RICO violation
(defrauding the State).”
Id.
And second, “Ideal’s lost sales
could have resulted from factors other than petitioners’ alleged
acts of fraud,” because “[b]usinesses lose and gain customers
for many reasons, and it would require a complex assessment to
establish what portion of Ideal’s lost sales were the product of
National’s decreased prices.” Id. at 459.
Adrian has not plausibly alleged that Clare’s alleged
immigration violations proximately caused an injury to his
business or property. The predicate violation he describes
consists of Clare’s having “encouraged” or “induced” him to stay
in the United States (and to “go into hiding”) after his visa
expired, in violation of
8 U.S.C. § 1324
(a). Compl. ¶ 70. But
the “harmful” conduct he describes is different: he alleges that
he was injured because he “invest[ed] his own money” (as well as
his labor) in the t-shirt business Clare and Raniere promised to
build with him, and he was never reimbursed. Compl. ¶ 68;
Schedule A at 1. That financial injury does not map neatly onto
Clare’s immigration fraud. The holdings of Holmes and Anza
dictate that Adrian’s injuries do not establish RICO standing
under Section 1964.23
Thus, Adrian — and the remaining sixty-nine plaintiffs
— are left to rely on allegations that they were proximately
harmed by the NXIVM curriculum fraud scheme. As the Second
Circuit has noted, RICO standing effectively injects a reliance
element into mail and wire fraud predicates. “That is because
reliance will typically be a necessary step in the causal chain
linking the defendant’s alleged misrepresentation to the
plaintiffs’ injury: if the person who was allegedly deceived by
the misrepresentation (plaintiff or not) would have acted in the
same way regardless of the misrepresentation, then the
misrepresentation cannot be a but-for, much less proximate,
cause of the plaintiffs’ injury.” Sergeants Benevolent Ass'n
Health & Welfare Fund v. Sanofi-Aventis U.S. LLP,
806 F.3d 71,
87
(2d Cir. 2015).
23 This is not fatal to Adrian’s RICO claim against Clare, as he may
still be able to allege standing as a victim of the mail and wire fraud
scheme. See Gregory P. Joseph, Civil RICO: A Definitive Guide, 75 (5th ed.
2018) (“[T]he [RICO] plaintiff need not suffer injury from each predicate act
comprising the pattern.”). And the “pattern” may include one or more RICO
predicates as to which no plaintiff has RICO standing. See H.J. Inc. v.
Northwestern Bell Telephone Co.,
492 U.S. 229, 242
(1989); Moses v. Martin,
360 F. Supp. 2d 533, 549
(S.D.N.Y. 2004) (a “plaintiff may allege predicate
acts involving others to establish a pattern of racketeering activity”);
Empire Merchants, LLC v. Reliable Churchill, LLLP, No. 16-CV-5226,
2017 WL
5559030
, *6 (E.D.N.Y. March 16, 2017) (“The weight of authority suggests that
a plaintiff need only show that one of defendants’ predicate acts proximately
caused its injury.”).
The plaintiffs have not met that burden, nor have they
alleged “clear and definite” injuries proximately caused by the
curriculum-related fraud scheme. In Schedule A, many of the
plaintiffs rely upon the same conclusory statement of harm:
“Financial harm including, by paying tuition and membership fees
for NXIVM courses, programs and groups.” Schedule A at 3.24
This does not tell us that any plaintiff was
victimized by the fraud scheme that is actually alleged: that
they took extra courses, for example, beyond what they were led
to believe would be required to complete the program in reliance
upon the fraudulent statements. Each plaintiff bears the burden
of alleging not only that they paid tuition and membership fees,
but also that they did so because of the fraud (or would not
have, apart from the fraud). See Motorola Credit Corp. v. Uzan,
322 F.3d 130, 135
(2d Cir. 2003) (“[A RICO] plaintiff must
demonstrate . . . causation of the injury by the violation.”).
Thus, each of the plaintiffs continuing to assert mail
and wire fraud allegations against Clare must supplement his or
her “Injury Type” information on Schedule A to describe fraud-
induced injuries with the “clear and definite” allegations that
RICO standing demands. These plaintiffs should take note first
24 This is true, for example, of Deanne Brunelle, id. at 2, Madeline
Carrier, id. at 3, Tabitha Chapman, id., Owen Giroux, id. at 6, Polly Green,
id. at 6, Rees Alan Haynes, id. at 7, Susan Pratt, id. at 14, Susan Patricia
Vieta, id. at 16, and Susan Wysocki, id. at 17.
of the allegations that this order holds (above) are non-
actionable under the mail and wire fraud statutes. The revised
Schedule A shall be filed within 60 days of the date this order
issues.
ii. Sara Bronfman
As to Sara, too, the plaintiffs adequately allege two
RICO predicate acts: mail and wire fraud, see Section
III.A.3.b.iv, and witness tampering (in relation to Adrian),
Section III.A.3.b.ii. Adrian does not allege (at all, let alone
plausibly) that he was injured in his business or property by
the witness tampering — indeed, his allegations suggest a
financial benefit: that Sara induced him to go to France “in
exchange for substantial sums of money.” Compl. ¶ 214. As to
the curriculum fraud predicate (which is effectively identical
as to both Sara and Clare), the plaintiffs’ allegations of
injury suffer from the same deficiencies described above.
B. RICO Conspiracy (Count II)
“[T]o state a RICO conspiracy, a plaintiff must allege
the existence of an agreement to violate RICO’s substantive
provisions.” Williams v. Affinion Grp., LLC,
889 F.3d 116, 124
(2d Cir. 2018). However, “[t]he RICO conspiracy statute []
broadened conspiracy coverage by omitting the requirement of an
overt act.” Salinas v. United States,
522 U.S. 52, 64
(1997).
Rather, “the core of a RICO civil conspiracy is an agreement to
commit predicate acts,” Hecht v. Commerce Clearing House, Inc.,
897 F.2d 21, 25
(2d Cir. 1990), which is to say that each
defendant “knew about and agreed to facilitate” the pattern of
racketeering activity.” Baisch v. Gallina,
346 F.3d 366, 377
(2d Cir. 2003).
Nonetheless, “injury from an overt act is necessary
and sufficient to establish civil standing for a RICO conspiracy
violation.” Hecht,
897 F.2d at 25
. Accordingly, although the
plaintiffs need not plead that each defendant committed an overt
act in furtherance of the Section 1962 conspiracy, to recover
under Section 1964(c) they still must each allege injury.
So, when the existence of a RICO enterprise has been
established, the only question (prior to the standing analysis)
is whether “the defendant knew of, and agreed to, the general
criminal objective of a jointly undertaken scheme,” i.e. the
enterprise purpose. United States v. Arlington,
941 F.3d 24,
36-37
(2d Cir. 2019). Here, the RICO enterprise is alleged to
have had effectively three intertwined purposes: to accumulate
money and unpaid labor through NXIVM’s fraudulent curriculum
scheme, to “cultivate a pool of foreign laborers to support”
NXIVM, and to “groom women for sexual conduct with and for
Raniere.” Compl. ¶ 199.
Perhaps because Raniere was in fact convicted of RICO
and RICO conspiracy, the moving defendants focus their attention
on the question of whether the plaintiffs have adequately
alleged that each defendant agreed to join in a RICO conspiracy.
1. Clare Bronfman
The plaintiffs adequately allege that Clare agreed to
join the charged conspiracy. The complaint alleges that she
manifested the requisite agreement by her actions — including,
among other things, “accumulating a suite of positions in the
Enterprise that allowed her de facto power to operate and
control various important aspects of the Enterprise,”
“encouraging a sham marriage to facilitate the violation of
immigration law,” and “pressuring witnesses and victims to
retain counsel that she would pay for” so that she and NXIVM
could control them ”to intimidate and silence victims of
Raniere’s brutal campaign of sexual abuse and exploitation.”
Compl. ¶ 240. As discussed above, the complaint also adequately
alleges that Clare committed predicate acts of immigration fraud
and mail and wire fraud.
Considering the full set of allegations against her,
the plaintiffs raise a plausible inference that Clare agreed to
join a racketeering scheme with the intent that its overall
goals be effectuated, and that the scheme involved two or more
predicate acts. See New York Dist. Council of Carpenters
Pension Fund v. Forde,
939 F. Supp. 2d 268, 282
(S.D.N.Y. 2013)
(“[A] defendant’s agreement to join a conspiracy can be inferred
from circumstantial evidence of the defendant’s status in the
enterprise or knowledge of the wrongdoing.”). While the
complaint includes many conclusory allegations against Clare, it
nonetheless pleads specific facts sufficient to support an
inference of such agreement. See U.S. Fire Ins. Co. v. United
Limousine Serv., Inc.,
303 F. Supp. 2d 432, 454
(S.D.N.Y. 2004)
(denying motion to dismiss RICO conspiracy claim where the
complaint’s “conclusory statements [were] buttressed by . . .
more specific allegations”); Bd. of Managers of Trump Tower at
City Ctr. Condo. by Neiditch v. Palazzolo,
346 F. Supp. 3d 432,
464
(S.D.N.Y. 2018) (same). Accordingly, this claim survives
(pending the submission of the revised Schedule A discussed
above to establish RICO standing).
2. Sara Bronfman
The complaint adequately alleges that Sara, too,
manifested her agreement to join the conspiracy. Like Clare,
Sara “accumulate[ed] positions in the Enterprise that were
accompanied by de facto power to operate and control” NXIVM.
Compl. ¶ 241. She “financed the Enterprise,” and “purchas[ed]
multiple properties used as NXIVM’s headquarters” and offices.
Id.
And after the scheme was revealed publicly, she obstructed
prosecution of it by paying “Adrian to travel to France during
Raniere’s trial” rather than testifying.
Id.
As with Clare, the “circumstantial evidence of
[Sara’s] status in the enterprise” is sufficient at this stage
to infer her “agreement to join [the] conspiracy.” New York
Dist. Council of Carpenters Pension Fund,
939 F. Supp. 2d at
282
; see also United States v. Teitler,
802 F.2d 606, 614
(2d
Cir. 1986) (jury could “reasonably infer” defendant’s agreement
to participate in RICO conspiracy from, among other things, his
“status as a partner in the Teitler firm” and “testimony
concerning [his] role in the firm”).
Here, the complaint alleges that Sara obtained senior
positions across the NXIVM entities because she was “funneling
massive amounts of money into NXIVM.” Compl. ¶ 30. She was a
member of NXIVM’s Executive Board, Senior Executive of ESP, Co-
Founder of ESF, head of RCG, and Founder of NXIVM’s VIP
Programs.
Id.
Together with the allegations of her witness
tampering and her knowing participation in RCG’s endeavors,
these allegations are sufficient to overcome the motion to
dismiss the RICO conspiracy count against her (again, pending
the revised Schedule A).
3. Brandon Porter
The plaintiffs also contend that Brandon Porter
conspired to facilitate a racketeering scheme. His agreement to
join the scheme is evidenced, the complaint alleges, by his
having “conduct[ed] unauthorized human experiment[s]” —
“unscientific” treatments for Tourette’s Syndrome and obsessive-
compulsive disorder, Compl. ¶¶ 15, 84 — “to bolster NXIVM’s
scientific credibility and thereby increase its ability to amass
recruits.” Id. ¶ 246. The complaint also alleges that Porter
was “acting as a paid agent or employee of ESF in connection
with [that] experimentation.” Id. Unlike Clare and Sara
Bronfman, the complaint does not allege that Porter held a
prominent role in NXIVM, obtained elevated status within the
organization, or knew of the broader scheme at play. Porter’s
alleged role in the “human experiments,” without more, is
insufficient to show that he had knowledge of the curriculum
fraud scheme or the scheme to extort unpaid labor, or that he
participated in the overall scheme with the intent that its
goals be effectuated. To infer agreement to join a RICO
conspiracy, a defendant must at least “know the general nature
of the enterprise” and “that the enterprise extends beyond his
individual role.” United States v. Viola,
35 F.3d 37, 44
(2d
Cir. 1994). The plaintiffs’ factual allegations do not support
the plausible inference that Porter had such an awareness.
4. Danielle Roberts
Finally, the plaintiffs contend that Danielle Roberts
is liable for RICO conspiracy. In a single paragraph, the
complaint points to Roberts’ role in “branding DOS victims’
pubic regions without their informed consent” and her
“continuing [promotion of] DOS well-after the details of DOS-
related crimes came to light” as evidence of her agreement to
join the racketeering scheme. Compl. ¶ 245. The complaint also
alleges that Roberts admitted to a New York State medical review
board that she “purchased the electrocautery device, that she
knew that the brand was KAR to represent Raniere’s initials, and
that Raniere was the grandmaster to the [DOS] members who were
his slaves.” Id. ¶ 122.
Again, however, it is not sufficient to allege that
Roberts committed some act that furthered the conspiracy.
Plaintiffs must plausibly allege that she joined in the scheme
“with the intent that its overall goals be effectuated.” United
States v. Zemlyansky,
908 F.3d 1, 11
(2d Cir. 2018) (emphasis
added).
Here again, the plaintiffs do not allege that Roberts
knew of the curriculum fraud or any immigration-related
violations. And as discussed above, the civil RICO statute does
not reach personal injuries — only injuries to business or
property. Thus, Roberts’ discrete acts underlying a given
medical procedure — no matter how medically unjustified — do not
suffice. As with Porter, the plaintiffs have failed to allege
facts suggesting Roberts’ knowledge of the “general nature of
the enterprise” and “that the enterprise extend[ed] beyond [her]
individual role.” Viola,
35 F.3d at 44
. The RICO conspiracy
claim against her is therefore dismissed.25
C. Human Trafficking Under the TVPRA (Count III)
Nineteen plaintiffs26 also bring claims pursuant to the
Trafficking Victims Protection Reauthorization Act of 2008
(“TVPRA”) — specifically,
18 U.S.C. § 1595
, which provides a
private civil action for victims. Defendants Clare, Sara,
Porter, and Roberts move to dismiss these claims on the bases
that the complaint does not adequately allege their direct
violation of, participation in, knowledge of, or benefits
received from any Chapter 77 violation, as addressed further
below.
Plaintiffs can, as a general matter, assert a TVPRA
claim in two ways. They can allege a “direct” claim — that is,
that a given defendant was the “perpetrator” of a violation of
any provision in Chapter 77 of Title 18, which covers sex
trafficking, forced labor, and human trafficking.
18 U.S.C.
§ 1595
(a). Or they can allege that a defendant satisfied the
25 Moreover, the plaintiffs allege no specific facts regarding Roberts’
continued “promot[ion]” of DOS, and cite no law for the proposition that one
can agree to join a conspiracy by promoting (or defending) that organization
after its members are charged.
26 All plaintiffs allege these Chapter 77 violations as RICO predicate
acts. The plaintiffs who bring them as standalone claims are the “exo / eso
Plaintiffs,” the “DOS plaintiffs,” Daniela, Camila, and Adrian. The thirteen
DOS Plaintiffs are Sarah Edmonson, Jessica Salazar, India Oxenberg, Soukiana
Mehdaoui, Rachel, Nicole, Valerie, Jane Doe 8, Paloma Pena, Jane Doe 9,
Kristin, Veronica Jaspeado, and Charlotte. The three exo / eso Plaintiffs
are Lindsay MacInnis, Adrienne Stiles, and Bonnie Piese. Compl. ¶¶ 257, 259.
three elements of a “beneficiary” claim — that (a) the defendant
knowingly benefitted, or attempted or conspired to benefit, (b)
from “participation in a venture,” that (c) the defendant “knew
or should have known has engaged in” a Chapter 77 violation.
Id.
A defendant accused of a beneficiary violation does not
need to benefit financially — she can benefit either
“financially or by receiving anything of value.”
Id.
(emphasis
added). Here, the various plaintiffs bring claims for both
direct and beneficiary liability. On the beneficiary liability
claims, the plaintiffs rely substantially on Raniere’s
convictions for forced labor conspiracy, sex trafficking
conspiracy, sex trafficking, and attempted sex trafficking. See
Judgment as to Keith Raniere, No. 18-CR-204, ECF No. 969 at 2.
As set forth below, while the complaint adequately
pleads that NXIVM was a “venture” for purposes of the TVPRA, the
plaintiffs have not sufficiently alleged that any moving
defendant directly violated Chapter 77; they have, however,
sufficiently alleged beneficiary liability for Clare and Sara as
to certain claims.
1. The Alleged Venture
The TVPRA defines a “venture” as “any group of two or
more individuals associated in fact, whether or not a legal
entity.”
18 U.S.C. § 1591
(e)(6). The complaint alleges that
“NXIVM was not only a RICO enterprise, but also a trafficking
‘Venture’ designed to groom and procure women for Defendant
Raniere’s sexual predation and to provide free labor and
services to members of the Venture.” Compl. ¶ 249. “All
Individual Defendants,” the plaintiffs assert, “participated in
the Venture,” which “was led by Defendant Raniere.”
Id.
For
the same reasons that the complaint adequately alleges that
NXIVM’s senior leadership was an association-in-fact enterprise,
see Section III.A.1 above, it also sufficiently pleads that the
group was a venture for purposes of the TVPRA.
2. Count 3(A): Sex Trafficking and Attempted Sex
Trafficking
First, the complaint alleges direct TVPRA claims
against Raniere, Clare, Roberts, Russell, and Mack. These
claims are based on allegations that each of these defendants
committed two Chapter 77 violations — both sex trafficking and
attempted sex trafficking, in violation of
18 U.S.C. §§ 1591
and
1594(a), respectively. Compl. ¶ 250. Only Clare and Roberts
have moved to dismiss these claims.
To plead a direct violation under Section 1591, the
complaint must allege that the defendant:
(1) “in or affecting interstate or foreign commerce”;
(2) recruited, enticed, harbored, transported,
provided, obtained, or maintained by any means a
person;
(3) “knowing, or in reckless disregard of the fact,
that means of force, threats of force, fraud, coercion
. . . or any combination of such means will be used”;
(4) “to cause the person to engage in a commercial sex
act.”
18 U.S.C. § 1591
(a); see also Noble v. Weinstein,
335 F. Supp.
3d 504, 515
(S.D.N.Y. 2018). The modifier “commercial” is
defined broadly to encompass more than the payment of money.27
In the alternative, the complaint asserts beneficiary
claims under Section 1591. These claims require a given
plaintiff to establish that the defendant in question knowingly
benefitted from their participation in NXIVM’s senior
leadership, knowing the organization to have “engaged” in a
violation of Section 1591 (or when they “should have” known as
much). See S.J. v. Choice Hotels Int’l, Inc.,
473 F. Supp. 3d
147
, 152-53 (E.D.N.Y. 2020). Thus, a complaint adequately
pleaded a Section 1591 violation against a priest (Father
Carrier) who “ignored evidence” that Douglas Perlitz, the
founder of a school for poor children in Haiti, was sexually
abusing students. The complaint alleged
that Father Carrier . . . was a frequent visitor to
PPT where he stayed in Perlitz’s home, that he was in
27 As the Second Circuit explained in rejecting Raniere’s criminal
appeal, a “commercial sex act” is “any sex act, on account of which anything
of value is given to or received by person,” where “value” refers to “a
subjective, rather than objective, concept.” United States v. Raniere,
55
F.4th 354, 362
(2d Cir. 2022). As a result, “anything of value” has does not
require a “monetary or financial component,” and a “commercial sex act” is
not just one conducted for profit, but rather for anything of subjective
value.
Id.
It is a deliberately “expansive understanding of the phrase.”
Id. at 361
.
Perlitz’s bedroom when Perlitz showed a pornographic
video to a PPT student, and that he shunned a Haitian
administrator at PPT after she tried to stop Perlitz’s
sexual abuse of PPT students.
Jean-Charles v. Perlitz,
937 F. Supp. 2d 276, 280
(D. Conn.
2013). Carrier also “knew at least one PPT student was living
at Perlitz’s home.”
Id. at 288
. These allegations rendered it
plausible that Carrier’s employer knew or “should have known”
that the school was violating Section 1591.
Id.
On the other hand, allegations that hotel franchisors
“were generally aware that sex trafficking sometimes occurred on
their franchisees’ properties” were insufficient to state a
claim for beneficiary liability absent knowledge (or at least
constructive knowledge) of the particular trafficking scheme at
issue. Choice Hotels, 473 F. Supp. 3d at 154 (describing those
allegations as supporting only a “might have been able to guess”
scienter standard); see also Does 1-6 v. Reddit, Inc.,
51 F.4th
1137
, 1145 (9th Cir. 2022) (“Mere association with sex
traffickers is insufficient absent some knowing participation in
the form of assistance, support, or facilitation.”).
For the reasons that follow, the complaint states a
Section 1595 claim for beneficiary liability against Clare, but
fails to state such a claim against Danielle Roberts.
i. Clare Bronfman
The plaintiffs allege that Clare is liable for sex
trafficking offenses against the “exo / eso Plaintiffs,” the
“DOS Plaintiffs,” Daniela, and Camila.28
exo / eso Plaintiffs. First, the complaint alleges
that “Clare perpetrated sex trafficking offenses against the exo
/ eso Plaintiffs” — Lindsay MacInnis, Adrienne Stiles, and
Bonnie Piese — by “recruit[ing] them to join” that group.
Compl. ¶ 257. Clare did so, Plaintiffs allege,
knowing or in reckless disregard of the fact that she
would use fraud (false promises of a job, salary, and
career advancement) or threats of serious harm
(psychological and verbal abuse and, at times, threats
of deportation) to groom or procure these Plaintiffs
for Defendant Raniere and cause them to engage in
commercial sex acts with him.
Id.
This passage describes a direct claim rather than a
beneficiary claim. And on that claim, the complaint is
razor-thin. The conclusory statement quoted above merely
recites the elements of the offense (excluding the
interstate-commerce element); the complaint proffers no specific
facts to establish those elements. See Iqbal,
556 U.S. at 678
28 The thirteen DOS Plaintiffs are Sarah Edmonson, Jessica Salazar,
India Oxenberg, Soukiana Mehdaoui, Rachel, Nicole, Valerie, Jane Doe 8,
Paloma Pena, Jane Doe 9, Kristin, Veronica Jaspeado, and Charlotte. The
three exo / eso Plaintiffs are Lindsay MacInnis, Adrienne Stiles, and Bonnie
Piese.
(“[A] formulaic recitation of the elements of a cause of action
will not do.”).29 At no point does the complaint directly link
any specific false promise, or any specific threat of serious
harm, made by Clare herself to any commercial sex act involving
MacInnis, Stiles, or Piese. Accordingly, the direct claim
fails.
DOS Plaintiffs. Next, the DOS plaintiffs sufficiently
allege a beneficiary claim against Clare. They allege that “she
knowingly benefited by receiving things of value, including
enhanced status, power, and prestige within NXIVM, from
participation in the Venture, which she knew or should have
known was sex trafficking the DOS Plaintiffs.” Compl. ¶ 259.
This trafficking occurred when the DOS plaintiffs were recruited
(by Raniere, Mack, and Clyne) for the purpose of engaging in a
“commercial sex act.” Id. ¶ 253. As described above, Mack and
Clyne allegedly misrepresented the nature of DOS to induce these
plaintiffs to provide “damaging collateral,” and they and
Raniere would then “threaten explicitly or impliedly to release
that collateral” if the DOS plaintiffs did not “engage in
commercial sex acts with [Raniere] and others.” Id.
29 The complaint also alleges no facts to establish the interstate-
commerce element with respect to Stiles and Piese. Although the burden to
plead this element is “minimal,” United States v. Celaj,
649 F.3d 162, 168
(2d Cir. 2011), the complaint still must offer sufficient facts to meet that
burden. See Noble v. Weinstein,
335 F. Supp. 3d 504, 515
(S.D.N.Y. 2018)
(“To state a claim under
18 U.S.C. § 1591
,” a plaintiff “must adequately
plead,” among other things, that the conduct implicated “interstate or
foreign commerce.”).
The plaintiffs adequately allege that Clare “should
have known” about this coercive recruiting. Constructive
knowledge is an intensely fact-based assessment, and obviously
presents a meaningfully lower hurdle than a requirement to show
actual knowledge. Given the absence of any factual record, the
claim may proceed at this stage. Plaintiffs allege, among other
things, that Raniere and the “DOS First Line Masters (including
Mack and Clyne)” were jointly responsible for the coercive
recruitment of DOS members, and Clare “was a member of the Inner
Circle (which included Mack and Clyne).”
Id. ¶ 259
. Further,
they contend that Clare’s knowledge can be inferred from her
“false campaigns against DOS defectors, who came to her for the
release of their collateral,” and her alleged disclosure to “a
reporter that there was a video of Plaintiff Edmonson’s [sic]
branding, further demonstrates that she knew or should have
known about the sex trafficking offenses within DOS when they
occurred.”
Id. ¶ 259
. At this stage, these allegations suffice
to state a claim for beneficiary liability against Clare
pursuant to Section 1595.
Veronica Jaspeado. Whereas the plaintiffs allege only
beneficiary claims against Clare in connection with the other
DOS Plaintiffs, they allege that Clare also attempted to traffic
Veronica Jaspeado directly. Per the complaint, Clare personally
“funneled Veronica Jaspeado . . . to DOS by encouraging her to
join exo / eso. Although Clare’s attempts were unsuccessful,
Veronica was later recruited into DOS by a First Line DOS
Master.” Compl. ¶ 162. The complaint asserts that
[b]ased on Bronfman’s leadership of exo / eso, her
interactions with Veronica, her proximity to Raniere,
her defense of DOS, and attacks on DOS victims after
DOS was made public . . . , it is reasonable to infer
that when Clare attempted to recruit Veronica into exo
/ eso she intended for Veronica to engage in sex acts
with Raniere and knew that she and members of the
Inner Circle would use extortive means to procure
uncompensated labor and commercial sex acts from her.
Id. ¶ 166
. These unsupported allegations, which sound in guilt
by association, are inadequate to raise a plausible inference
that Clare attempted to sex traffic Jaspeado. See, e.g., United
States v. Zhong,
26 F.4th 536, 558
(2d Cir. 2022) (“Evidence
that demonstrates only guilt by association is irrelevant to the
question of a defendant’s actual guilt.”); De Sole v. Knoedler
Gallery, LLC,
139 F. Supp. 3d 618, 657
(S.D.N.Y. 2015)
(rejecting plaintiffs’ arguments as amounting “to nothing more
than guilt by association”). The complaint proffers no specific
facts describing how Clare supposedly “attempted to recruit
Veronica into exo / eso,” let alone any facts evincing that she
intended to (or knew that others would) “use extortive means” to
compel Veronica to engage in anything, much less commercial sex
acts. See Twombly, 550 U.S. at 555 (“Factual allegations must
be enough to raise a right to relief above the speculative
level.”). For these reasons, this claim must be dismissed.
Camila & Daniela. Finally, the plaintiffs allege that
Clare is liable as a beneficiary for the sex trafficking of both
Camila and Daniela. The complaint states that Clare “knowingly
benefited by receiving things of value, including enhanced
status, power, and prestige within NXIVM, from participation in
the Venture, which she knew or should have known sex trafficked
Camila and Daniela.” Compl. ¶ 260. In particular, the
plaintiffs allege, Raniere “recruited” and “harbored” Daniela
and Camilla by promising them “a job, salary, education, and
legal immigration status” should they “submit to Defendant
Raniere’s demands.” Id. ¶ 255-56. The plaintiffs say that
Clare knew or should have known that Raniere recruited and
harbored Daniela and Camila “to engage in commercial sex acts
with him.” Id. ¶ 260. This knowledge (or constructive
knowledge), the plaintiffs contend, is “evidenced by facts
including her leadership roles and power within NXIVM, her
familiarity with Raniere and NXIVM’s operations and Camila and
Daniela, and that she paid an attorney to direct Camila not to
cooperate with an FBI investigation into NXIVM.” Id.
These allegations, taken as a whole, are sufficient to
state a plausible claim for Section 1595 beneficiary liability
against Clare based upon constructive knowledge of Raniere’s
activities and her role in NXIVM’s operations.
ii. Danielle Roberts
The plaintiffs allege that Danielle Roberts, too, is
liable as a beneficiary for sex trafficking offenses against the
DOS Plaintiffs. The complaint asserts that Roberts “knowingly
benefitted by receiving things of value, including enhanced
status, power, and prestige within NXIVM from participation in
the Venture, which she knew or should have known was engaged in
sex trafficking offenses.” Compl. ¶ 265. But unlike Clare,
Roberts is alleged to have had a relatively narrow role at
NXIVM. The complaint alleges that Roberts had actual or
constructive knowledge of Raniere’s offenses based on the fact
that she “brand[ed] DOS members with [Raniere’s] initials — a
mark of their sexual servitude and Defendant Raniere’s
predation.” Id. “No DOS Slaves,” the plaintiffs claim, “gave
voluntary, informed consent before being branded,” and none
“could have consented under the circumstances because each slave
was branded under threat of the release of their collateral or
punishment.” Id. ¶ 124.
To be sure, these allegations could suggest that
Roberts participated in unlawful conduct — specifically, as
addressed below, the allegedly coercive branding of DOS members
is sufficient to sustain the plaintiffs’ battery claims against
Roberts. See infra Section III.E. But the complaint alleges no
facts to bridge the gap between Roberts’ knowledge of this
malfeasance and an awareness (or even constructive awareness)
that the threats to release any recruit’s “collateral” were
connected to a commercial sex act.
The conclusory allegation that the branding was “a
mark” of the recipients’ sexual servitude says nothing about
whether Roberts knew as much. And while the absence of informed
consent may speak to why Roberts forfeited her medical license,
see Compl. ¶ 120, it does not suggest her knowledge of sexual
assault. (The plaintiffs do not allege that Roberts knew that
the defendants’ receipt of collateral or their threats to
release it were related to a commercial sex act.)
In this regard, the allegations here are even more
limited than those held insufficient in other cases. In Eckhart
v. Fox News Network, LLC, for example, the plaintiff alleged
that Fox News knew or should have known that a former anchor at
the network subjected her to commercial sex acts including
sexual assault and rape. No. 20-CV-5593,
2021 WL 4124616
, at
*11 (S.D.N.Y. Sept. 9, 2021). Fox should have known as much,
she claimed, because it was “well aware” of the anchor’s
“inappropriate sexual misconduct,” knew of his extramarital
affair, and knew that he had “completed a sex addiction
rehabilitation program at its request.”
Id.
The plaintiff also
alleged that it was an “open secret” that the anchor was “a
serial harasser.”
Id.
These allegations were insufficient to
establish that the network knew or should have known of the sex
trafficking at issue.
Id.
Here, too, the plaintiffs have not
adequately alleged defendant Roberts’ knowledge of the alleged
trafficking scheme.
3. Count 3(B): Conspiracy to Commit Sex Trafficking
Certain plaintiffs also bring Section 1595 claims
based on the predicate act of conspiracy to commit sex
trafficking in violation of
18 U.S.C. § 1594
(c), which provides
for criminal liability for anyone “conspir[ing] with another to
violate Section 1591.” As noted above, Raniere was convicted of
sex trafficking conspiracy in violation of Section 1591.
Judgment of Keith Raniere, No. 18-CR-204, ECF No. 969 at 2.
These claims amount to allegations that the defendants here
joined Raniere’s conspiracy. The plaintiffs asserting these
claims are the “exo / eso Plaintiffs,” the “DOS Plaintiffs,”
Daniela, and Camila; they assert the claims against Raniere,
Clare, Mack, Roberts, and Russell. Clare and Roberts have moved
to dismiss the claims against them; Clare’s motion is denied,
but Roberts’s motion is granted.
To state a conspiracy claim, the plaintiffs must plead
that “two or more persons entered into a joint enterprise for an
unlawful purpose, with awareness of its general nature and
extent.” United States v. Torres,
604 F.3d 58, 65
(2d Cir.
2010). “The knowledge of the parties is relevant to a
conspiracy charge to the same extent as it may be for conviction
of the substantive offense.”
Id.
In the context of a TVPRA
claim based on conspiracy to commit sex trafficking, the
plaintiffs must allege “an actual agreement to participate in a
sex-trafficking venture.” Doe 1 v. Deutsche Bank A.G.,
671 F.
Supp. 3d 387
, 412 (S.D.N.Y. 2023). JP Morgan and Deutsche
Bank’s agreement to provide banking services for Jeffrey Epstein
and “affiliated entities,” for example, was insufficient to
support the further inference that they agreed “to participate
in a sex-trafficking venture.”
Id.
That was so despite the
plaintiff’s allegations that the banks “knew, or recklessly
disregarded” that their banking services “would assist” the sex-
trafficking venture because the plaintiffs had inadequately
alleged the banks’ agreement to participate in sex-trafficking.
Id.
i. Clare Bronfman
The plaintiffs do not adequately allege that Clare
agreed to participate in a sex trafficking conspiracy. The
complaint asserts that she “created exo / eso with Raniere to
obtain women for Defendant Raniere in furtherance of the
Venture,” which “evidence[s]” her “larger agreement” with the
other individual defendants “to procure and groom the DOS
Plaintiffs, the exo / eso Plaintiffs, Daniela, and Camila for
commercial sex acts with Defendant Raniere.” Compl. ¶ 267.
But this is a direct claim that Clare conspired to
violate Section 1591, not a Section 1595 beneficiary claim. As
such, the mens rea requirement is higher: the plaintiffs must
allege that Clare actually knew about (and agreed to facilitate)
Raniere’s sex trafficking scheme — not that she merely should
have known. Compare
18 U.S.C. § 1591
with
18 U.S.C. § 1595
.
The complaint proffers no facts to support its bare declaration
that Clare created exo / eso “to obtain women for Raniere.” And
it provides no basis to infer that Clare actually knew Raniere
was coercing plaintiffs to participate in commercial sex acts
with him, let alone that she formed exo / eso for that purpose.
Faced with the higher mental-state requirement in Section 1591,
this claim fails.
ii. Danielle Roberts
The plaintiffs also fail to adequately allege that
Danielle Roberts agreed to participate in a sex trafficking
scheme in violation of Section 1591. The complaint asserts that
“Roberts branded DOS victims at the instruction of Defendant
Raniere in furtherance of the Venture,” and that this alone
shows that she joined the “larger agreement” to commit sex
trafficking. Compl. ¶ 267. As noted above, Roberts’s role in
branding DOS members does not indicate that she had knowledge of
a sex trafficking scheme that victimized those members, or that
she specifically agreed to facilitate such a scheme. As in Doe
1 v. Deutsche Bank A.G., Roberts’ relatively narrow conduct is
insufficient to show that she agreed with Raniere to “assist his
sex-trafficking venture.” 671 F. Supp. 3d at 412. This claim
against her therefore fails.
4. Count 3(C): Forced Labor and Human Trafficking, and
Attempted Forced Labor and Human Trafficking
The TVPRA targets trafficking for forced labor as well
as commercial sex acts. Nineteen plaintiffs30 bring TVPRA claims
against Raniere, Clare, Sara Bronfman, Mack, Porter, Roberts,
and Russell based on the predicate offenses of forced labor and
human trafficking, in violation of
18 U.S.C. §§ 1589
and 1590,
respectively, and attempted forced labor and human trafficking,
in violation of
18 U.S.C. § 1594
(a). Clare, Sara, Porter, and
Roberts have moved to dismiss the claims against them.
Section 1589 reads as follows:
(a) Whoever knowingly provides or obtains the labor
or services of a person by any one of, or by any
combination of, the following means —
(1) by means of force, threats of force,
physical restraint, or threats of physical
restraint to that person or another person;
(2) by means of serious harm or threats of
serious harm to that person or another
person;
30 The DOS plaintiffs, exo / eso plaintiffs, Daniella, Camila, and
Adrian bring this claim against Raniere and Clare. Compl. at 95, 98. Camila
alone brings this claim against Sara and Porter.
Id. at 97, 102
. Plaintiffs
Nicole, Oxenberg, Mehdaoui, Salazar, Rachel, Valerie, and the DOS plaintiffs
bring this claim against Mack.
Id. at 100
. The DOS plaintiffs bring this
claim against Roberts.
Id. at 101
. And Camila and the DOS plaintiffs bring
this claim against Russell.
Id. at 102
.
(3) by means of the abuse or threatened abuse of
law or legal process; or
(4) by means of any scheme, plan, or pattern
intended to cause the person to believe
that, if that person did not perform such
labor or services, that person or another
person would suffer serious harm or physical
restraint,
shall be punished as provided under subsection (d).
18 U.S.C. § 1589
.
A forced labor violation can, in turn, constitute an
element of a human trafficking violation under Section 1590. A
human trafficking claim arises when a defendant “knowingly
recruits, harbors, transports, provides, or obtains by any
means, any person for labor or services,”
18 U.S.C. § 1590
(a),
“in violation of the statutes prohibiting, inter alia, forced
labor.” Adia v. Grandeur Mgmt., Inc.,
933 F.3d 89, 94
(2d Cir.
2019). Thus, when a human trafficking claim is predicated on a
failed forced labor claim, the human trafficking claim will fail
as well.
As set forth below, the plaintiffs do not adequately
plead a forced labor violation against Porter or Roberts;
however, some of the beneficiary claims against Clare and Sara
are adequately pled.
i. Clare Bronfman
The plaintiffs assert TVPRA claims based on predicate
acts of forced labor and human trafficking against Clare on
behalf of the exo / eso Plaintiffs, the DOS Plaintiffs, Adrian,
Camila, and Daniela.
exo / eso Plaintiffs. The complaint first alleges
that Clare is liable for forced labor and human trafficking
violations against the exo / eso Plaintiffs. The plaintiffs
contend that she “provided and obtained” their “uncompensated
labor and services (the establishment of a company,
administrative and menial work, and personal assistant work) by
means of serious harm (sleep deprivation, psychological, and
verbal abuse) and in some cases by means of the abuse or
threatened abuse of law or legal process (the threat of
deportation).” Compl. ¶ 280. They also allege that “Raniere
and Clare told [MacInnis, Piese, and Stiles] that that they
would own and operate exo / eso and divide the profits generated
by the company between themselves,” but “ownership of exo / eso
was not transferred to them, and they never received a share of
the profits.” Id. ¶ 95.
The allegations concerning MacInnis do not make out a
forced-labor claim against Clare. The complaint alleges that
“MacInnis participated in exo / eso only because of her
compromised immigration status, orchestrated by Clare and
Raniere,” and that “[a]s part of her participation in exo / eso,
she performed uncompensated labor, namely participating in
meetings with Raniere, creating the training for exo / eso, and
teaching exo / eso classes, while Clare subjected her to
emotional and verbal abuse.” Id. ¶ 96.
These allegations fail to show that Clare obtained
MacInnis’s labor “by means of” (1) “force [or] threats of force,
(2) “serious harm or threats of serious harm”, (3) “abuse or
threatened abuse” of the legal process, or (4) “any scheme . . .
intended to cause [MacInnis] to believe that” someone would
suffer serious harm or physical restraint if she did not perform
such labor.
18 U.S.C. § 1589
(a). The term “serious harm” in
Section 1589(a)(2) means:
any harm, whether physical or nonphysical, including
psychological, financial, or reputational harm, that
is sufficiently serious, under all the surrounding
circumstances, to compel a reasonable person of the
same background and in the same circumstances to
perform or to continue performing labor or services in
order to avoid incurring that harm.
18 U.S.C. § 1589
(c)(2).
MacInnis makes her allegations under the umbrella of
the “serious harm” prong of Section 1589, pointing both to
“emotional and verbal abuse” and threats of deportation to
fulfill the statute’s requirements. Neither allegation
suffices.
First, the non-specific allegation that Clare
subjected MacInnis to “emotional and verbal abuse” is plainly
insufficient to plead a threat of serious harm; indeed, it does
not even suggest the making of a threat.
And second, while threats of deportation can
constitute serious harm, see Adia,
933 F.3d at 93-94
, the
complaint does not allege sufficient facts to support MacInnis’
claim that Clare made such threats here. See Compl. ¶ 257.
Although the complaint states that Clare “intentionally
compromised” MacInnis’s immigration status by not paying her “a
salary sufficient to satisfy the requirements of her visa,” id.
¶ 76, it does not suggest that Clare threatened — explicitly or
implicitly — to report MacInnis to immigration authorities if
MacInnis failed to perform labor or services. Indeed, the only
alleged threat of legal action — to enforce a “purported
violation of a non-compete clause [MacInnis] had supposedly
signed with NXIVM” — occurred after MacInnis had already “fled
to Canada,” her home country. Id. ¶¶ 76-77. MacInnis’ forced
labor claim therefore fails; as a result, so does her human
trafficking claim.
Plaintiff Piese likewise fails to state a claim for
forced labor or a human trafficking against Clare. The
complaint alleges that “Piese was on call every hour of the day”
while working for exo / eso, that she was “punished by Clare
when she was unavailable,” and that she was “not paid for her
first nine months of work for Ultima.” Id. ¶ 97. The complaint
says nothing about the nature of the alleged “punishment,” and
therefore insufficiently alleges serious harm or the threat
thereof. As a result, Piese’s forced labor claim fails, and her
human trafficking claim necessarily falls with it.
Stiles’ forced labor claim fails for similar reasons.
The complaint alleges only that Stiles “reported directly to
Clare,” that her responsibilities “were so demanding that she
quit her full-time job,” and that she did not receive pay “for
her first year of work.” Id. ¶ 98. It does not allege that
Clare threatened any serious harm or legal action against Stiles
to procure her labor or services. For these reasons, Stiles’
forced labor claim fails; her human trafficking claim
necessarily fails with it.
DOS Plaintiffs. The plaintiffs assert that Clare is
liable as a beneficiary for forced labor and human trafficking
violations against the DOS Plaintiffs. These plaintiffs allege
that “DOS First Line Masters and Defendant Raniere were forcing
the DOS Plaintiffs to perform menial tasks, acts of care, and
commercial sex acts.” Id. ¶ 281. Elsewhere, the complaint
explains that “DOS slaves” were forced to “review and edit NXIVM
course materials and transcribe numerous video presentations
featuring Raniere and other members of the Inner Circle.” Id.
¶ 117. The plaintiffs contend that Clare “knowingly benefited”
from this labor “by receiving things of value, including
enhanced status, power, and prestige within NXIVM, from
participation in the Venture, which she knew or should have
known was engaged in labor trafficking offenses.” Id. ¶ 281.
The plaintiffs submit that Clare had actual or
constructive knowledge of their forced labor “because she was a
member of the Inner Circle who was in close and constant contact
with other members of the Inner Circle, including Defendants
Mack and Clyne and Raniere.” Id. Such knowledge is further
“evidenced by the fact that she launched legal campaigns against
DOS defectors who came to her for the return of their
collateral.” Id. At this stage, these allegations are
sufficient to support the plaintiffs’ claim for beneficiary
liability against Clare for her participation in Raniere’s
forced labor and human trafficking scheme, given the reduced
mental-state requirement.
Adrian. Further, the plaintiffs assert that Clare
directly perpetrated forced labor and human trafficking offenses
against Adrian. They contend that “[s]he obtained his
uncompensated labor and services (the establishment of a t-shirt
company) by means of the abuse or threatened abuse of law or
legal process (threat of deportation),” and “did this by means
of a scheme, pattern, or plan, which caused Adrian to believe he
would be deported to Mexico should he fail to obey her every
command.” Id. ¶ 282.
While the complaint recites the elements of a forced
labor offense, it alleges no specific facts to suggest that
Clare threatened to report Adrian to the immigration authorities
(or caused him to believe that he would be deported) if he
failed to perform labor or services. Although deportation is a
serious harm, see Adia,
933 F.3d at 93-94
, the defendant must
have at least “intended to make [the plaintiff] believe that he
would be deported if he stopped working” for her. Anora v.
Oasia Pro. Mgmt. Grp., Ltd., No. 19-CV-11732,
2021 WL 11114539
,
at *2 (S.D.N.Y. Aug. 31, 2021). Here, however, the complaint
alleges only that “[a]fter the Albany Times Union published a
series of articles about NXIVM, Clare and other members of NXIVM
leadership told Adrian to go into hiding so that he would not be
discovered by reporters or immigration authorities because it
would reflect poorly on Raniere and the NXIVM community if he
were caught.”
Id. ¶ 70
. In other words, the plaintiffs suggest
that Clare encouraged Adrian to avoid deportation because she
worried that his removal would harm NXIVM.
The complaint also asserts that “Clare and Raniere
knew Adrian did not have the immigration status necessary to
operate the [t-shirt] company, and that he would be unable to
demand compensation or seek other employment for fear of
retaliation and deportation or arrest.”
Id. ¶ 68
. Critically,
however, it does not allege that Clare ever invoked that
sentiment to Adrian, explicitly or implicitly. Thus, the
plaintiffs have failed to support the allegation that Clare used
the threat of deportation to compel Adrian to work without pay.
See Anora,
2021 WL 11114539
, at *2 (“[t]ellingly, [the
plaintiff] does not describe any conversation in which [the
defendant] encouraged him to continue working” for his firm to
avoid deportation).
Camila & Daniela. Finally, the plaintiffs assert that
Clare is liable as a beneficiary for forced labor and human
trafficking offenses against Camila and Daniela. The complaint
alleges that “she knowingly benefited by receiving things of
value, including enhanced status, power, and prestige within
NXIVM, from participation in the Venture, which she knew or
should have known labor trafficked Camila and Daniela.” Compl.
¶ 284. “She knew or should have known the Inner Circle and
Defendant Raniere were forcing Plaintiffs Daniela and Camila to
perform menial tasks, administrative work, and commercial sex
acts,” the plaintiffs contend, “because she was a member of the
Inner Circle who conspired to commit forced labor offenses and
because she was in close and constant contact with other members
of the Inner Circle and Raniere.”
Id.
As with the DOS Plaintiffs, Camila and Daniela’s
claims that Clare should have known of Raniere’s forced labor
scheme are plausibly pleaded at this stage and may proceed.
ii. Sara Bronfman
Camila asserts a TVPRA claim against Sara based on
predicate acts of forced labor and human trafficking, again in
violation of Section 1589 and Section 1590(a). She alleges two
bases for liability: direct and beneficiary. First, the
complaint alleges that Sara herself “provided and obtained
Plaintiff Camila’s uncompensated labor and services (babysitting
and teaching in RCG, which Defendant Sara Bronfman created and
funded) by means of a scheme, pattern, or plan, which caused
Plaintiff Camila to believe she would be deported should she
fail to continue providing her uncompensated labor and
services.” Compl. ¶ 278. Second, that Sara “knowingly
benefited financially or by receiving things of value, including
free labor, enhanced status, power, and prestige within NXIVM,
from participation in the Venture, which she knew or should have
known labor trafficked Camila.”
Id. ¶ 279
. Camila asserts that
Sara had actual or constructive knowledge that she was subjected
to forced labor “because [Sara] was the creator and funder of
RCG, where Camila worked, and a member of the Inner Circle, in
close and constant contact with Defendant Raniere and other
members of the Inner Circle.”
Id.
The first basis for liability — that Sara herself
committed forced labor and human trafficking violations as to
Camila — fails because it is pled entirely on a conclusory
basis. Although the complaint alleges that Camila was “caused,”
“by means of a scheme, pattern, or plan,” to “believe she would
be deported should she fail to continue” providing free labor,
it fails to explain what that scheme entailed. The complaint
does not, for example, allege that Sara actually threatened to
have Camila deported if she refused to perform free labor. It
also fails to explain with any specificity what labor Sara
benefitted from obtaining.
The second, beneficiary basis for this claim is,
however, plausibly alleged at this stage and may proceed.
Camila has plausibly pleaded — albeit barely — facts supporting
the inference that Sara should have known Camila was subjected
to forced labor and human trafficking by others, and benefitted
from her work for NXIVM.
iii. Brandon Porter
Further, Camila alleges that Brandon Porter is liable
under the TVPRA as a beneficiary for the alleged forced labor
and human trafficking violations against her in violation of
Sections 1589 and 1590(a). She asserts that Porter “knowingly
benefited financially or by receiving things of value, including
payment, enhanced status, power, and prestige, and free
babysitting services from participation in the Venture.”
Id. ¶
290
. She also contends that “[h]e knew or should have known
that members of the Inner Circle and Defendant Raniere were
forcing Plaintiff Camila to perform menial tasks, commercial sex
acts, administrative work, and babysitting because Camila
provided babysitting services to his family.”
Id.
That “[h]e
was in regular contact with Camila, Raniere, and members of the
Inner Circle and performed unauthorized experiments on Camila,”
also evidences such knowledge, per the complaint.
Id.
But the mere fact that Camila babysat for Porter’s
family does not suggest that Porter knew or should have known
that Camila was subjected to force or the threat of force, as
required by Section 1589. Moreover, although the complaint
elsewhere alleges that Porter conducted “studies for the
treatments of OCD and Tourette’s,” it only alleges that those
studies were performed upon plaintiffs Leviton, Constantino, and
Cottrell — not Camila.
Id. ¶ 84
. Those allegations are not
obviously connected to Camila’s provision of free babysitting
services to Porter, another member of the close-knit NXIVM
community. Without some facts connecting the allegations,
neither the allegation that he conducted unauthorized studies on
other plaintiffs nor that Camila babysat for him suggest that
Porter had actual or constructive knowledge that Camila was a
victim of forced labor and human trafficking offenses. Nor does
the mere fact that he had “regular contact with Camila, Raniere,
and members of the Inner Circle” without some facts providing
context for that “contact.”
Id. ¶ 290
. Unlike Clare and Sara,
for example, it is not alleged that Porter was the head of ESF,
RCG, or some other NXIVM entity through which Raniere conducted
his affairs. Accordingly, the forced labor and human
trafficking claims against Porter fail.
iv. Danielle Roberts
Finally, the DOS Plaintiffs assert that Danielle
Roberts is liable under the TVPRA as a beneficiary of the
alleged forced labor and human trafficking violations against
them. Again, the complaint alleges that “she knowingly
benefited by receiving things of value, including enhanced
status, power, and prestige in NXIVM from participation in the
Venture, which she knew or should have known labor trafficked
the DOS Plaintiffs.”
Id. ¶ 289
. It further alleges that
Roberts “knew or should have known that DOS First Line Masters
and Defendant Raniere were forcing the DOS Plaintiffs to perform
menial tasks, acts of care, and commercial sex acts because she
was a DOS member who was specially deputized by Raniere to brand
DOS members with Keith Raniere’s initials — a mark of their
servitude to DOS and Raniere.”
Id.
As noted above, the
complaint alleges that “[n]o DOS Slaves gave voluntary, informed
consent before being branded,” and that none “could have
consented under the circumstances because each slave was branded
under threat of the release of their collateral or punishment.”
Id. ¶ 124
.
But just as the plaintiffs’ allegation that Roberts
branded DOS members is insufficient to show that she knew or
even should have known that they were coerced for commercial sex
acts, that allegation is also insufficient to show that Roberts
should have known they were being coerced for free labor. The
plaintiffs do not allege, for example, that the DOS Plaintiffs
performed any free labor for Roberts, that Roberts ever
witnessed the plaintiffs perform such labor for others, or that
she was privy to information from which she could have inferred
as much. The branding is undoubtedly salacious. But it does
not support an inference of coercion to engage in forced labor.
Accordingly, the forced labor and trafficking claims against
Roberts must be dismissed.
5. Count 3(D): Conspiracy to Commit Forced Labor and
Human Trafficking
The complaint also asserts claims for conspiracy to
commit forced labor and conspiracy to commit human trafficking
against Raniere, Clare, Sara Bronfman, Mack, Porter and Roberts,
with regard to the DOS Plaintiffs, the exo / eso Plaintiffs,
Adrian, Camila, and Daniela. These plaintiffs contend that the
defendants’ “agreement to perpetuate the forced labor crimes of
the Venture is evidenced by the facts alleged” throughout the
complaint, including:
that the forced labor and human trafficking were
committed as part of a single, cohesive scheme against
similarly situated Plaintiffs (NXIVM recruits); that
each of the DOS masters used the same methods to
commit their violations; that there was a united
attempt to cover up the Venture’s forced labor crimes;
and that all of the violations were committed at
Raniere and his Inner Circle’s direction.
Id. ¶ 292
. Again, there is no dispute that the NXIVM venture
engaged in a forced labor conspiracy, as Raniere was convicted
of participating in such a conspiracy. Judgment of Keith
Raniere, No. 18-CR-204, ECF No. 969 at 2. The issue is whether
the complaint adequately alleges that each defendant agreed to
join that conspiracy in direct violation of Section 1589.
Clare, Sara, Porter, and Roberts have moved to dismiss the
claims against them. Those motions are granted.
As discussed above, however, the plaintiffs fail to
state a direct claim for substantive violations of forced labor
and human trafficking against the moving defendants (Clare,
Sara, Porter, and Roberts) because they do not adequately allege
that any of those defendants had actual knowledge of such
violations. The failure to plead such knowledge is likewise
fatal to the conspiracy claims. See Torres,
604 F.3d at 65
(“The knowledge of the parties is relevant to a conspiracy
charge to the same extent as it may be for conviction of the
substantive offense.”). Furthermore, the complaint does not set
forth allegations sufficient to support the additional inference
that the moving defendants agreed to join a conspiracy to commit
forced labor offenses, or a conspiracy to commit human
trafficking offenses (even if they had knowledge of such
offenses). See Doe 1, 671 F. Supp. 3d at 412. Accordingly, the
conspiracy claims as to those defendants must be dismissed.
6. Count 3(E): Document Confiscation in Furtherance of
Trafficking or Forced Labor
Daniela also alleges claims against Raniere and Clare
based on the predicate act of unlawful conduct with respect to
documents in furtherance of forced labor, in violation of
18
U.S.C. § 1592
. That section creates liability for anyone who
“confiscates” or “possesses” another person’s passport or other
immigration document in the course of, or with intent to
violate, various provisions in Chapter 77, or
to prevent or restrict or to attempt to prevent or
restrict, without lawful authority, the person’s
liberty to move or travel, in order to maintain the
labor or services of that person, when the person is
or has been a victim of a severe form of trafficking
in persons, as defined in section 103 of the
Trafficking Victims Protection Act of 2000.
Id.
§ 1592(a)(3). In support of this allegation, the complaint
recites that “Raniere ordered the confiscation” of “Daniela’s
government identification documents and/or immigration papers”
“and ordered her confinement to a room for two years . . . with
the intention and purpose of forcing her to perform labor,
including secretarial work like writing letters.” Compl. ¶ 293.
The plaintiffs allege that Clare benefited from that conduct “by
receiving things of value, including enhanced status, power, and
prestige within the NXIVM organization from participation in the
Venture, which she knew or should have known was engaged in
unlawful conduct with respect to Daniela’s documents.” Id.
¶ 294. They allege that Clare knew of the document confiscation
“because she was Defendant Raniere’s most trusted advisor,
funder, the head of legal for NXIVM, and because she was a
member of the Inner Circle who was in close and constant contact
with other members of the Inner Circle and Raniere.” Id.
Again, this bare (and generic) reference to Clare’s
relationship with Raniere does not plausibly suggest that Clare
had actual knowledge of Raniere’s actions in respect of
Daniela’s documents. The mere facts of her close relationship
with Raniere and membership in his inner circle are insufficient
to suggest that she knew that he confiscated Daniela’s
immigration papers; the plaintiffs rely exclusively on her close
association with Raniere to import her knowledge. The complaint
alleges no other facts to show that Clare had such knowledge —
that she witnessed, was told of, or assented to Raniere’s
conduct. Accordingly, this claim must be dismissed as against
Clare.
7. Count 3(F): Conspiracy to Engage in Unlawful Conduct
with Respect to Documents in Furtherance of
Trafficking or Forced Labor
Finally, Daniela alleges that Raniere and Clare
conspired to commit an offense under
18 U.S.C. § 1592
, in
violation of Section 1594(b). This, too, is in relation to the
confiscation of Daniela’s immigration documents: the complaint
states that “members of the Inner Circle, including Clare, at
the direction of Raniere agreed and conspired to hold Plaintiff
Daniela captive in a room and confiscate her identification
papers.”
Id. ¶ 295
.
Again, the allegations in support of Clare’s knowledge
are sparse. “Bronfman’s knowledge and participation in this
conspiracy,” the plaintiffs submit, “is evidenced by the facts
alleged herein, including her leadership role in NXIVM’s
immigration fraud schemes.”
Id.
Because this allegation again
relies primarily on a theory of guilty-by-association, it falls
far short of raising a plausible inference that Clare entered an
agreement with Raniere and others to confiscate Daniela’s
immigration papers for the purpose of obtaining forced labor
from her. Thus, this claim as to Clare must be dismissed.
F. Malicious Prosecution & Abuse of Process (Count IV)
Toni Natalie asserts claims of malicious prosecution
and abuse of process against Keith Raniere, Clare, and Sara
Bronfman. For the following reasons, she has not adequately
alleged either claim against any defendant.
1. Malicious Prosecution
Under New York law, to establish a malicious
prosecution claim, “a plaintiff must prove (1) the initiation or
continuation of a criminal proceeding against plaintiff;
(2) termination of the proceeding in plaintiff’s favor; (3) lack
of probable cause for commencing the proceeding; and (4) actual
malice as a motivation for defendant’s actions.” Manganiello v.
City of New York,
612 F.3d 149, 161
(2d Cir. 2010). A plaintiff
must also plead “special damages with specificity.” Coggins v.
Buonora,
776 F.3d 108, 111
(2d Cir. 2015). Special damages must
entail “some concrete harm that is considerably more cumbersome
than the physical, psychological or financial demands of
defending a lawsuit,” Engel v. CBS, Inc.,
711 N.E.2d 626, 631
(N.Y. 1999), and must amount to a “specific and measurable
loss.” Freihofer v. Hearst Corp.,
65 N.Y.2d 135
, 143 (1985).
At the outset, the complaint fails to establish a
central element of malicious prosecution: that a criminal
proceeding was initiated against the plaintiff. See, e.g.,
Thompson v. Clark,
596 U.S. 36, 51
(2022) (Alito, J.,
dissenting) (“[A] malicious-prosecution claim obviously requires
a prosecution.”) (collecting treatises). Similarly, Natalie has
not alleged that such a proceeding was “terminated” in her
favor. Manganiello,
612 F.3d at 161
; see also Bailey v. City of
New York,
79 F. Supp. 3d 424, 447
(E.D.N.Y. 2015) (“A malicious
prosecution claim does not accrue until an underlying criminal
proceeding terminates in plaintiff’s favor.”) (emphasis added).
Natalie’s malicious prosecution claims therefore fail.
Although the complaint alleges that Clare “repeatedly filed
baseless criminal complaints against Natalie,” Compl. ¶ 185, it
does not allege that a single criminal proceeding was initiated
against her, much less one that terminated in Natalie’s favor.31
Moreover, she has identified no “specific and measurable loss”
she suffered. Freihofer, 65 N.Y.2d at 143; see TADCO Const.
Corp. v. Dormitory Auth.,
700 F. Supp. 2d 253, 274
(E.D.N.Y.
2010) (dismissing malicious prosecution and abuse of process
claims because plaintiff omitted to “identify actual losses” in
a specified dollar amount).
2. Abuse of Process
An abuse-of-process claim requires allegations that
the defendant “(1) employ[ed] regularly issued legal process to
compel performance or forbearance of some act (2) with intent to
31 Even if the complaint did allege a specific criminal proceeding
initiated against Natalie, it still fails to demonstrate a lack of probable
cause for Clare’s criminal complaints or that they were motivated by malice.
See Manganiello,
612 F.3d at 163
. Indeed, beyond asserting (conclusorily)
that Clare’s criminal complaints were “baseless,” the complaint does not even
identify the nature of the charges, making it impossible to assess the facts
underlying Natalie’s claim. See Compl. ¶ 185; see Iqbal,
556 U.S. at 678
(“Threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice” to state a claim.).
do harm without excuse of justification, and (3) in order to
obtain a collateral objective that is outside the legitimate
ends of the process.” Savino v. City of New York,
331 F.3d 63,
76
(2d Cir. 2003). As with a malicious prosecution claim, a
plaintiff must also plead special damages — in a specific dollar
amount, and resulting from the conduct alleged to constitute
abuse of process. See Coggins,
776 F.3d at 111
. Here, too, the
complaint fails to plead special damages (in any amount) and
must be dismissed for that independent reason. See, e.g., TADCO
Const. Corp.,
700 F. Supp. 2d at 274
.
Even if the complaint had pleaded special damages, it
would still be dismissed because it relies on conclusory
assertions and lumps the defendants together in “group
pleading.” See Monterey Bay Military Housing, LLC v. Ambac
Assurance Corp.,
531 F. Supp. 3d 673
, 728 (S.D.N.Y. 2021) (“It
is well-established in this Circuit that plaintiffs cannot
simply lump defendants together for pleading purposes.”). The
plaintiffs allege that Raniere, Clare, and Sara Bronfman
“inserted themselves into” Natalie’s bankruptcy proceeding,
“commencing a series of adverse proceedings, each of which was
ultimately dismissed on the merits”; that “Raniere and Clare
directed this abuse of the legal system”; and that “Clare and
Sara Bronfman financed these efforts.” Compl. ¶¶ 297, 299.
These allegations, which treat the defendants as a trio (or
group them in pairs), are inadequate. See, e.g., Breton v. City
of New York,
404 F. Supp. 3d 799
, 812 (S.D.N.Y. 2019) (“It is
not sufficient for a plaintiff to lump the three defendants
together without pleading facts demonstrating what each did that
makes him liable for the plaintiff’s claims.”).
E. Battery (Count V)
Plaintiffs Sarah Edmondson, Nicole, Paloma Pena, and
India Oxenberg assert battery claims against Danielle Roberts.
New York defines battery as “an intentional wrongful physical
contact with another person without consent.” Tardif v. City of
New York,
991 F.3d 394, 410
(2d Cir. 2021). The complaint
alleges that Raniere “specially commissioned Roberts to burn his
initials onto some DOS slaves’ skin with a cauterizing
instrument without informed consent or anesthesia, while the
victims were held down.” Compl. ¶ 119. Roberts branded these
plaintiffs “as part of the DOS ritual.” Id. ¶ 302. The
plaintiffs contend that “[a]s a member of DOS, Roberts knew that
DOS members were not told that they would be branded when they
were recruited into DOS, that they were not told that the brand
was Raniere’s initials, and that all DOS members had provided
collateral and therefore could not consent to the branding.”
Id. ¶ 122.
These allegations are sufficient at this stage. The
complaint raises a plausible inference the plaintiffs underwent
the branding only involuntarily, as they faced the “threat of
the release of their collateral.” Id. ¶ 124. A lack of consent
“can be established” by “actual or implied threats.” Giuffre v.
Andrew,
579 F. Supp. 3d 429
, 455 (S.D.N.Y. 2022). Similarly,
“consent [] obtained by fraud . . . is the equivalent of no
consent at all.” In re Small Smiles Litig.,
109 A.D.3d 1212,
1214
(4th Dep’t 2013). In Raniere’s appeal, the Second Circuit
held that the threatened release of collateral — the same threat
alleged here — constituted “coercion” for purposes of proving a
violation of
18 U.S.C. § 1591
. Raniere,
55 F.4th at 366
.
Even if the plaintiffs have not alleged that Roberts
understood the full structure of the “collateral” scheme, she
did not need to know that these plaintiffs were extorted for sex
to know that they had not freely consented to the branding. The
allegations plausibly suggest that their consent was obtained by
coercion. The allegations on this claim, too, may be relatively
cursory, but they are sufficient at this stage to proceed.
H. Gross Negligence and Recklessness (Count VII)
Finally, three plaintiffs — Margot Leviton, Isabella
Constantino, and Caryssa Cottrell — accuse Clare, Sara, Porter,
and Raniere of gross negligence. These claims arise out of
Porter’s “treatment” of the plaintiffs for OCD and Tourette’s.
Compl. ¶¶ 311-312.
To state a claim for gross negligence, “a plaintiff
must establish four elements: (1) the existence of a duty; (2) a
breach of that duty; (3) injury as a result thereof; and
(4) conduct that evinces a reckless disregard for the rights of
others or smacks of intentional wrongdoing.” Schwartzco
Enterprises LLC v. TMH Mgmt., LLC,
60 F. Supp. 3d 331, 355
(E.D.N.Y. 2014).
As set forth below, the complaint fails to state such
a claim against Porter, Clare, or Sara.
1. Brandon Porter
Leviton, Constantino, and Cottrell allege that Porter
performed “untested, unauthorized, and inherently risky
psychotherapy and so-called studies” on them, ostensibly to
treat their obsessive-compulsive disorder and Tourette’s
Syndrome. Compl. ¶¶ 82, 84, 312. They assert that these
treatments lacked any scientific basis and that Porter failed to
obtain informed consent for any study. Id. ¶¶ 83, 84.
This conduct, the three plaintiffs contend, breached a
duty that Porter owed each of them. “As a medical doctor,
Porter had a duty to uphold the accepted standard of care in his
treatment” of those individuals, and “Porter breached this duty
by failing to provide a standard of care that a reasonably
prudent and careful doctor would provide under similar
circumstances, which caused [them] to suffer injury.” Id. ¶
310. Those injuries including “post-traumatic stress disorder,”
“physical pain,” and “mental anguish.” Id. ¶ 309.
Under New York law, “medical doctors owe a duty of
care to their patients.” Rivera v. New York City Health &
Hosps. Corp.,
191 F. Supp. 2d 412, 418
(S.D.N.Y. 2002). Thus,
to the extent that Porter was treating Leviton, Constantino, and
Cottrell in his capacity as a medical doctor, as the complaint
alleges, he owed them a duty of care.
But the complaint does not adequately allege that
Porter breached his duty of care, or that he acted with reckless
disregard for the rights of others. Indeed, the complaint does
not say anything at all about what Porter’s treatments and
studies actually entailed him doing, or how his conduct caused
those injuries.
Leviton alleges that Porter subjected her to nightly
four-hour “‘EM’ questioning sessions,” Compl. ¶ 84, but it does
not describe what those sessions consisted of, how they involved
reckless conduct by Porter, or how they led to Leviton’s alleged
injuries. And the complaint proffers no specific facts about
Porter’s alleged treatment of Constantino or Cottrell. The bare
allegations that Porter’s methods were “untested, unauthorized,
and inherently risky” and “lacked scientific basis and informed
consent,”
id.,
are insufficient, without supporting factual
content. Iqbal,
556 U.S. at 678
.
2. Clare and Sara Bronfman
Leviton, Constantino, and Cottrell allege that Clare
and Sara “had a duty of care to supervise” Porter because they
controlled the non-profit organization ESF, which employed
Porter. Compl. ¶¶ 82, 86, 311; see Kazanoff v. United States,
945 F.2d 32, 36
(2d Cir. 1991) (defendants may have a “duty to
control the conduct of third persons so as to prevent them from
harming others” in the context of a “special relationship”).
Whether they had this duty or not, this claim fails against both
Bronfmans for the same reason it fails with respect to Porter:
the other elements of the gross-negligence claim are
insufficiently alleged. Accordingly, these claims are
dismissed.
Conclusion
For the foregoing reasons, all claims against Brandon
Porter are dismissed with prejudice. The RICO, RICO conspiracy,
and the TVPRA beneficiary claims against Clare and Sara Bronfman
survive their motions to dismiss, but all other claims against
both Clare and Sara are dismissed with prejudice, given that the
plaintiffs have had two opportunities to amend their complaint
with the benefit of extensive briefing from the defendants on
its deficiencies. Finally, while the battery claim against
Danielle Roberts is sufficiently supported to withstand
dismissal, the remaining claims against her are dismissed with
prejudice. The plaintiffs are directed to file a revised
Schedule A within 60 days of the date this order issues.
A status conference on the remaining claims shall be
held at 11:30 AM on November 7, 2024, in Courtroom 6G North.
SO ORDERED.
/s/ Eric Komitee
ERIC KOMITEE
United States District Judge
Dated: September 27, 2024
Brooklyn, New YorkCase Information
- Court
- E.D.N.Y
- Decision Date
- September 27, 2024
- Status
- Precedential