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I Was Almost Seduced by the NXIVM Cult’s Weird Media-Watchdog Group. Here’s What I Learned About Not Getting Conned.

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September 23, 2020 9 min read

In mid-October 2016, I’d been let go from a job as Digital Managing Editor with a prominent regional publisher. It was the third full-time, online position I’d held that decade, each one of them lasting less than half a year. This was hard to square with the long tenures I’d spent in three different print newsrooms throughout the aughts. I’d gotten stuck in the gears of a sea change in how content was manufactured and consumed. Even a website I’d created with a friend to critique contemporary media couldn’t quite keep pace with contemporary media itself.

My goal at that point became the pursuit of something pure and essential — that was truly in the public interest and animated by a kind of scrappy entrepreneurialism. That’s when I saw a provocative ad on generally trustworthy job-postings site Mediabistro for something called The Knife, or The Knife of Aristotle. (Or, depending on whom I was eventually emailing and which of its web and touchpoints I consulted, The Knife Media.) The listing described a kind of fellowship opportunity with an independent journalism startup overseen by radical thinkers. Its Twitter bio proclaimed, “The Knife Media strips of spin so it’s just the news. We rate sources so you know what to believe. Finally, we show media distortion so you’re not misled.”

The ad is no longer archived, nor is the Knife’s landing page. Its social-media channels, which announced the Knife’s abrupt closure in August 2018, are still viewable. Not coincidentally, they ceased posting a few weeks after news broke that an Albany, -based self-help organization named NXIVM — which has since been outed as a cult outfit engaged in all manner of fraud, conspiracy and even sex trafficking — halted its recruitment and membership activity. That’s because the Knife was one of many NXIVM spinoffs funded by its wealthy benefactors and envisioned by founder Keith Raniere (who will be sentenced on racketeering and sex-trafficking convictions on October 27) as a way to round out its member retention. It was also a primary focus of a recent episode of HBO’s docuseries The Vow, which tells the story of NXIVM from the perspective of those who escaped it, including Mark Vicente, who describes having spearheaded the Knife.

So if you’re wondering whether I became a disciple of NXIVM and the Knife, the answer is no.

But I did respond to the Mediabistro ad, and was elevated to the next steps of the application process. I had email exchanges with individuals integral to the operation. However, I became very skeptical very fast. I began connecting the dots between the Knife and NXIVM. I spoke at length with a blogger named Frank Parlato who’d been trying to expose NXIVM for years and is cited often in The Vow. I even made a half-hearted attempt to ingratiate myself with them undercover. 

Alas, my correspondence with the Knife concluded sharply when I started asking some tough questions before buying a train ticket up to Albany for its introductory seminar. My cover was effectively blown. In successive messages in late October ’16 from “Knife Scholarship Coordinator” Analea Holland (nee Analea De La Fuente, whose Facebook profile and praise for NXIVM leaders like disgraced actress Allison Mack are still viewable), I was reprimanded as follows: “It appears that you believe what the internet reports on us is true. If that is the case, and you are not willing to question what the media reports in general, then yes, it’s best that you not pursue this opportunity. We seek people who are able to sort through dishonorable information and distinguish that from ethical reporting.” I was ultimately told: “It doesn’t seem that you are serious about considering this as a career opportunity so, it’s best we leave it at that.”

As it turns out, and as Vicente details in The Vow, the Knife was specifically created to discredit media that were reporting factually on NXIVM’s sordid dealings — and that was before more serious discoveries of enslaving, sexually assaulting and branding female subjects. 

So what did I learn from all this about my career path and when to spot a bill of goods (or in NXIVM’s case, something far more sinister)? A few things….

Location, location, location

I love Albany. I graduated from University at Albany. But it seemed unlikely that an insurgent news organization with the Knife’s raison d’etre and subversive messaging would coalesce around New York’s modest capital city, three hours north of Manhattan. As it turns out, Albany and its adjacent suburb, Clifton Park, were merely where Raniere — who grew up in Brooklyn and upstate Rockland County — settled so he could somewhat fly under the radar while he lured folks in from Hollywood and other metropolises to enrich his organization and embolden his messianiac fantasies. So the next time you’re enticed by an entity or recruiter with a lofty mission statement but conspicuously unassuming base of operations, it might be worth considering whether you’re about to get derailed.

Related: The 6 Scary Truths About Becoming an Entrepreneur

Beware gaslighting

Per Psychology Today, “gaslighting” is summed up as “a tactic in which a person or entity, in order to gain more power, makes a victim question their reality.” In the past few years, the term has evolved from a relatively obscure shorthand for manipulation into quite the bipartisan buzzword. But when, as in my interaction with Ms. Holland, an affable recruiter snaps back questions about their organization by implying that you’re intellectually inferior, there’s no other term that fits. You are entitled to perform due diligence on any organization before doing business with or for them, no different than your right to vet a romantic partner before committing to more than casual flirtation. If the appointed representative for that organization strikes a defenisve, “It’s not me, it’s you” posture before you even get into formal negotiations, it’s probably a sign that your counterpart isn’t a match, and possibly unstable.

Related: It’s Time to Talk About Startup Scam Artists

Google is your friend

The Knife’s unstated purpose was to water down defamatory search results about NXIVM, but the internet is like an MRI of an organization’s soul. While NXIVM had yet to be investigated by the New York Times, it had been the subject of concerned reporting by Albany Times-Union going back to the early 2000s. That, coupled with my efforts to contact Frank Parlato, required the bare minimum of my time before taking anything else Ms. Holland or her employer had to say at face value. We’re all in search of innovators and leaders who can inspire us to engage in something meaningful, but you can’t suspend diseblief, and there’s no excuse for not digging beneath the topsoil of whatever seems too good to be true. 

Don’t follow Elon Musk’s advice on everything

Guess who loved The Knife because it loved him first?

Save and record everything

If a strange new partnership feels funny in your gut, but curiosity still compels you to see where it leads, at least preserve all correspondence. You never know when you might need it in court, or to step back and assess a situation once you’re in the weeds, or to write an article several years later about how you weighed the veracity of an ostensible startup that turned out to be the conspiratorial arm of a deluded psychopath’s criminal cult. 

Read the Bold Print

One of the Knife’s undoings — and, ultimately, NXIVM’s — was there was no “there” there. The Knife’s earliest messaging was sensational enough to bring in what I assume was a wide range informational inquiries. But once I started seeking out any kind of nuance beyond broad sloganeering, it was clear that their rhetoric was a smokescreen. (Plus, Ms. Holland’s persistence in putting off any further debriefing until I could make myself available on Skype video, and presumably be recorded, wasn’t exactly discreet.) The moral? Don’t be duped by slick presentation and fortune-teller misdirection. If an entity withers under the slightest cross-examination and your search for substance turns up pablum, then it’s probably a front.

Get a second opinion

Two heads are emphatically better than one when it comes to any life decision, particularly if you’re struggling to distinguish between justified reservations about an endeavor and a tendency toward timidness or reluctance. When I asked my wife for her thoughts on whether the Knife’s original Mediabistro ad scanned as above board or bottom-feeding, her notion was it couldn’t hurt to apply in the event that, worst case, their motives wound up being a story worth covering in itself. (Whoulda thunk?) You needn’t twist yourself into knots, privately deliberating over something’s surface virtues or second-guessing what you’ve discovered on the internet, when you can bounce all those questions and information off someone who understands what drives you. Hell, ask your therapist if necessary. Just don’t ask me, because clearly I have terrible judgment. 

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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