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Liquor heiress pleads guilty to crimes related to New York sex cult, pyramid scheme case

CNN logo CNN 2019-04-20 By Amir Vera and Sonia Moghe, CNN
Clare Bronfman et al. in glasses looking at the camera: Clare Bronfman, left, and Kathy Russell entered guilty pleas on Friday. © Mark Lennihan/AP Clare Bronfman, left, and Kathy Russell entered guilty pleas on Friday.

Two women who were part of an alleged pyramid scheme that involved sex trafficking and racketeering each pleaded guilty to related charges Friday in a New York federal court.

Clare Bronfman, an heiress to the Seagram's liquor fortune, pleaded guilty to conspiracy to conceal and harbor people who were not in the United States legally for financial gain and fraudulent use of identification.

Kathy Russell pleaded guilty to one charge of visa fraud.

Bronfman and Russell were indicted in March on racketeering and racketeering conspiracy charges as part of the cult-like organization known as Nxivm, founded by Keith Raniere, who also was indicted and is now in federal custody. He faces sex trafficking and forced labor charges.

Bronfman was a member of the Nxivm executive board, according to a US Justice Department news release, and faces between 21 and 27 months in prison. Russell is Nxivm's former bookkeeper and faces between six and 12 months in prison.

Bronfman and Raniere were accused of committing identity theft by allegedly stealing the email user names and passwords of "perceived enemies" to monitor their electronic communications, according to a US Justice Department news release.

Russell and Raniere, the Justice Department said, tried to smuggle a person into the US through Canada after the person was denied entry. The Justice Department says Russell gave the person an identification card with the last name and birthday of a dead woman.

Bronfman, who will be sentenced July 25, tearfully read a statement in court during her plea hearing.

Keith Raniere smiling for the camera: Keith Raniere, founder of Nxivm © Cathy Pinsky/First Principals, Inc/Nxivm.com Keith Raniere, founder of Nxivm

"Your honor, I was afforded a great gift by my grandfather and father. With the gift comes immense privilege, and more importantly, tremendous responsibility," Bronfman said. "It does not come with an ability to break the law, it comes with a greater responsibility to uphold it. I failed to uphold the following laws set forth by this country, and for that I am truly remorseful."

Russell, who will be sentenced July 31, said in court that she knowingly provided visa documents with false information in order to bring a woman into the US for work.

"I know what I did was wrong and I am very sorry for the trouble that I've caused," Russell said, tearfully.

Five Nxivm members were indicted and charged last year for crimes that included identity theft, extortion, forced labor, sex trafficking, money laundering, wire fraud and obstruction of justice. Bronfman, Russell and actress Allison Mack were among the five indicted and charged last year. 

Nxivm touted itself as a professional organization

Prosecutors allege Raniere created the organization Nxivm (pronounced NEX-ium), which touted itself as a professional business providing coaching and educational services to "corporations and people of all walks of life." 

The organization, prosecutors say, actually operated like a multi-level marketing pyramid scheme, and encouraged its members to continue taking pricey classes and recruiting other members in order to rise in the ranks of the organization.

The organization also acted as an umbrella for other groups like "The Source," described as a private arts academy, and the secret society DOS, which was founded in 2015 and is the subgroup where sex trafficking activities allegedly took place.

Under the sub-group DOS, prosecutors allege. women were designated as "slaves" until successfully recruiting others, at which time they became "masters." All so-called slaves were at the service of their own masters as well as those above them in the pyramid.

The indictment claims many so-called slaves were branded on their pelvic areas with a symbol which, unbeknownst to them, incorporated Raniere's initials.

Documents describe "branding ceremonies," in which women were held down by others while naked and filmed as they were branded with a cauterizing pen.

Raniere was the only male in DOS and the leader, according to court filings.

Prosecutors believe Mack, known for her 10-season run on the television series "Smallville," was near the top of the pyramid with Raniere and "directly or implicitly required" her slaves to engage in sexual activity with Raniere. She also allegedly received financial and other benefits from Raniere in exchange for the women's cooperation with their demands.

Mack was released from jail on $5 million bond after being indicted last week. She pleaded guilty to racketeering conspiracy and racketeering relating to her alleged role in a sex trafficking case.

Raniere remains in federal custody in Brooklyn.

If convicted, Raniere and Mack each face mandatory minimum sentences of 15 years imprisonment, and up to life imprisonment.

His attorney, Marc Agnifilo, had no comment on the remaining co-defendants.

"We're going to trial," Agnifilo said. The trial begins May 7.

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