Judge Nicholas Garaufis

Court Hearing: Trust fund almost out of money – attorneys questioned by judge – what will they do when trust fund runs out?

A hearing was held today in Brooklyn federal court in the Nxivm case – called for by Judge Nicholas Garaufis – on the status of the Bronfman-funded trust fund that has been paying lawyers for the Nxivm defendants, except Clare Bronfman.

During the hearing, the public learned that the Nxivm trust fund was almost out of money.  In fact, 75 percent of the money has been spent on attorneys – and the case is months away from trial.

Judge Garaufis told the attorneys that, given that there will likely not be enough money to pay them through trial, they must inform him about what they planned to do.

Keith Raniere’s attorney, Marc Agnifilo rose and said he was in it for the long haul and, speaking for the others, he believed they were in it till the end as well.

The judge asked how he knew that? and ordered each attorney to submit an ex-parte letter to indicate what their plans are from now until the end of trial.

Ex -parte means that their letter will be sealed and seen only  by the judge and not shared with the prosecutor, the public or the other defendants’ attorneys.

The judge reminded Agnifilo that he was in a different position than the other lawyers in the case. Agnifilo received a large retainer when he was first engaged. Such retainers, paid in advance, are  usually replenished monthly.  I estimate Agnifilo’s initial retainer was between $1 and $3 million, which gives him a cushion against the day when the trust runs dry.

The other Nxivm attorneys are billing as they go, presumably on a monthly basis.

Aginfilo acknowledged he was paid an advance retainer, but said that by the time the trial was concluded he would have to work many hours unpaid.  He said he would still represent Raniere through trial and suggested the other lawyers would also.

The judge, unwilling to take the verbal assurance of any of the lawyers, asked each, including Agnifilo, to put in writing their position as to whether going forward, when they are no longer getting paid, they would continue to represent their clients.

Clare’s attorneys will not be required to put in writing their position since they are being paid directly by Clare.

While the Nxivm defense trust fund could be replenished, it appears Clare does not have the ability to use her personal trust fund money to replenish the trust for the Nxivm defendants. Shortly before she was indicted, she set up a personal trust fund to protect her assets.

At the same time, she also set up the Nxvm defense trust to pay for Raniere and Allison Mack, and other defendants’ that she anticipated might be indicted.

The terms of Clare’s personal trust forbid her trustees to use the money to pay for anything other than her expenses. They cannot use her personal trust to replenish the Nxivm defense trust.

Based on a number of factors, I estimate Clare put in from $5 to $10 million in the Nxivm defense trust. It is not known if other people contributed to the trust.

So here is where we stand: 75 percent of the defense trust fund is gone and we are only in January. Clearly there will be no money by the time trial begins  – which is currently scheduled for April 29th, but is likely to be postponed if there is a new superseding indictment.

My prediction is that Agnifilo, as he promised, will stay in through trial.  Most of the other attorneys will stay in for a while at least.  But if the superseding indictment comes in and there are new charges and new defendants, there will no money to pay for those who are newly indicted, some of whom have already retained attorneys.

As for the present defendants, suppose, for example, Lauren Salzman and Allison Mack get charged with 10 more counts. Will their attorneys hang in there?

This is why the judge needs a plan from each of them.

Overall, this matter is of deep concern for the judge. If the defendants are running out of money, he has to protect his trial. He has to get through this trial and it has to withstand appeal.

If there is going to be a transition of lawyers, he wants it to be an orderly transition.

Unless Sara Bronfman-Igtet, or Carlos Salinas – or others – put up some money, I suspect the Nxivm defendants are going to wind up with taxpayer-funded assigned counsel.

In fact, I would not be surprised if the judge assigns these high-priced attorneys to be the assigned counsel for their clients. They will get paid at assigned counsel rates when the trust fund is depleted which is a quarter [a tenth for Agnifilo] of their normal rates.

This might be the best solution. The attorneys will get something, instead of working for free, and remain in the case.

Since they already are familiar with the case, it might offer the best possible solution to what has become what some might call an Executive Success conundrum.




About the author

Frank Parlato


Click here to post a comment

Leave a Reply

  • The thing is Clare, could have done some real good with her fortune if she didn’t ever get involved with that ass Keith. Damn shame.

  • You gotta LOVE Gaurufis. “Letters of Intent” — brilliant and fair!

    …What I wouldn’t give to be a fly on a computer screen and witness the looks on the faces of these humble servants of justice as they compose their noble missives extolling their undying commitment to their clients’ welfare. …Until Aggie’s retainer is spent, at least.

    Perhaps they’ll voluntarily put up some “collateral” to back their vows to labor without pay? Or be permitted to indulge in the fruits of Raniere’s Garden of Eden and have sex with him, forsaking all others unless he orders it? Or trade billable hours for a free “KAR” empowerment branding?

    Just too bad we don’t get to hear from Burke & Sandweg on this matter. Except anonymously on FR.

%d bloggers like this: