MAR 29, 2010
The Bronfmans and The ‘Cult’
Nathan Vardi,Forbes Staff
Last Friday the New York Post ran an article claiming that billionaire Edgar Bronfman Sr. is “‘considering legal action’” to stop his two daughters, Clare and Sara, from using their trust to fund NXIVM, an executive training firm run by Keith Raniere.
The Post piece is just the latest in a slew of skeptical coverage of NXIVM, which the upstate New York group has tried unsuccessfully to stop.
Forbes noted that Raniere had “shrewdly cashed in on the high-profit fad of executive coaching,” attracting high-profile enrollees.
Raniere, who preferred to be called “Vanguard,” denied his operation resembled a cult.
After Forbes published the article, he hired Sitrick and Company, a firm run by crisis communications expert Michael Sitrick, to refute it, as well as coverage in the Albany Times Union.
Sitrick and Company billed $236,000 for the work.
But Sitrick’s efforts were complicated by Executive Success Programs’ failure to address major parts of the Forbes article, including assertions regarding Raniere’s previous business efforts.
With its client no longer cooperative, Sitrick mostly ceased working on the account. Eventually the relationship devolved into an arbitration claim by Sitrick and Company against NXIVM for unpaid bills, which Sitrick mostly won and was awarded all fees and expenses plus interest.
A subsequent lawsuit by Sitrick to collect the award was settled.
And the press coverage kept coming. Forbes followed up in 2006 with an item stating that the Bronfman sisters’ financial backing of NXIVM had been increasing.
In January the Times Union reported on litigation in California state court that claimed the Bronfman sisters had suffered losses from a $65 million failed commodities scheme and $26 million real estate deal gone awry.
According to court documents both investment failures were connected to Raniere.
The New York Post claims the financial blowup has marked the “the last straw” for Edgar, however, his advisor released a statement saying: “There has been no change in the excellent relations between Edgar M. Bronfman and his daughters, Clare and Sara.”