NXIVM President Nancy Salzman to plead guilty Unclear if she will cooperate with federal prosecutors

Nancy Salzman, a defendant in a case against an upstate New York group called NXIVM, accused of branding some of its female followers and forcing them into unwanted sex, leaves federal court in Brooklyn, Wednesday July 25, 2018, in New York. less Nancy Salzman, a defendant in a case against an upstate New York group called NXIVM, accused of branding some of its female followers and forcing them into unwanted sex, leaves federal court in Brooklyn, ... more Photo: Bebeto Matthews, AP Photo: Bebeto Matthews, AP Image 1 of / 42 Caption Close NXIVM President Nancy Salzman to plead guilty 1 / 42 Back to Gallery

ALBANY — NXIVM President Nancy Salzman is scheduled to plead guilty to an undisclosed felony crime on Wednesday afternoon in U.S. District Court in Brooklyn, signaling a major victory in the Justice Department's criminal prosecution of the organization's leaders.

Salzman, who is suffering from health problems, would become the first person convicted in the case. She was indicted last year along with NXIVM co-founder Keith Raniere; television actress Allison Mack; Salzman's daughter, Lauren; Clare Bronfman, the organization's operations director and an heiress of the Seagram's liquor empire; and Kathy Russell, a longtime bookkeeper for NXIVM.

Last July, federal agents in Albany arrested Salzman and her daughter along with Russell. Bronfman was taken into custody that same day by federal agents in New York City.

Raniere and Mack were arrested a year ago. A criminal trial is scheduled to begin April 29 in Brooklyn.

A seven-count superseding indictment, unsealed last summer, charged the six defendants with a multitude of crimes including money laundering, extortion, identity theft, harboring of aliens for financial gain, forced labor, sex trafficking and wire fraud.

It's unclear whether Salzman has negotiated to cooperate with the Justice Department in exchange for leniency. If she pleads to the indictment, which charges her with racketeering conspiracy, it's possible she could do so without a cooperation agreement.

Salzman's attorney, Robert Soloway, did not respond to a request for comment. He did not inform Raniere's attorneys that Salzman would be pleading guilty, according to a person familiar with the case.

The charges allege some of the defendants took part in recruiting and grooming sexual partners for Raniere, and of using "harassment, coercion and abusive litigation to intimidate and attack perceived enemies and critics of Raniere."

In a court filing on Tuesday, federal prosecutors pushed back against attempts by the defendants to preclude the government from using evidence to support its racketeering allegations, including the contention that the organization was a criminal enterprise, and that NXIVM's leaders had facilitated Raniere's sexual encounters with women and underage girls.

Among the revelations in the court filing are that NXIVM's leaders allegedly took elaborate steps to have criminal charges filed against their perceived adversaries.

"The government intends to introduce evidence that the defendants relied on political strategists and lobbyists to illegally gain political influence (such as through bundled campaign contributions) and in connection with their attempt to have perceived enemies of the enterprise and/or the pyramid organizations indicted for crimes they did not commit or on the basis of false or misleading information," the Justice Department wrote in the filing.

In 2015, the Times Union reported that attorneys for NXIVM were heavily involved in a State Police investigation that resulted in criminal charges against four people accused of hacking into the organization's computer system.

Records from the two-year investigation, which began in April 2012, indicated the State Police's lead investigator in the case had contact dozens of times with NXIVM's attorneys, who pressured him to file criminal charges. The records showed that NXIVM officials also provided much of the evidence used to build the unusual criminal case against the four defendants, all of whom were considered adversaries of NXIVM.

The federal prosecutors' court filing on Tuesday also outlined how Salzman and other co-defendants "were aware of and facilitated Raniere’s sexual relationships with two underage victims ... (including) a 15-year-old girl who was employed by Nancy Salzman and who — 10 years later — became Raniere’s first-line 'slave'" in a secret club he had created to groom women to have sex with him.

Prosecutors contend Raniere formed the club, known as "Dominus Obsequious Sororium," which means "Master Over the Slave Women." The women in the group, they said, were lured into the club by other female NXIVM members — including Mack, who considered Raniere her "grand master."

According to the charges, the women were required to provide "collateral" — sometimes damaging information about family members or close-up photographs of their genitalia — in order to join. If they tried to leave, they were threatened that their collateral would be released.

While Raniere's attorneys have characterized the allegations of his sexual relations with the 15-year-old girl as “inadmissible, unreliable, rank hearsay,” prosecutors countered that their evidence includes "dated images of the victim, constituting child pornography, that were created and possessed by Raniere and electronic communications between the victim and Raniere reflecting their sexual relationship and indicating that it began when she was 15 years old."

"As to Raniere’s relationship with the second victim, the evidence demonstrates how members and associates of the enterprise were directed and expected to recruit and groom sexual partners for him ... (and) the government intends to introduce direct evidence, including witness testimony," the filing states.

The indictment, which describes NXIVM as having been run as a type of pyramid scheme, alleges the organization's leaders encouraged "associates and others to take expensive NXIVM courses, and incur debt to do so, as a means of exerting control over them and to obtain financial benefits for the members of the enterprise."

The indictment was a crippling blow to an organization, which took shape in the Capital Region in the late 1990s. Under the direction of Raniere and Salzman, who had touted NXIVM's training curricula as a way for participants to improve their lives, the organization quietly built a following that included actors as well as the wealthy and politically powerful.

NXIVM, which has been described by some experts as a cult, also developed a reputation for aggressively pursuing critics and defectors who broke from its ranks. The organization has been accused of using litigation to punish defectors who have criticized Raniere, the organization, or its training methods. NXIVM required its employees and devotees to sign non-disclosure agreements that were often used as weapons in their litigation against defectors or critics.

Raniere remains in custody at a federal detention facility without bond. The other defendants have all been released on conditions that include home confinement.