ALBANY – A federal judge denied a motion on Monday by Nxivm Corp. to freeze the assets of Albany businessman Joe O’Hara, and the company withdrew its lawsuit against him and submitted it in state Supreme Court in Manhattan. Nxivm and 11 staffers alleged in a suit filed in August in U.S. District Court in Albany that O’Hara, the former owner of sports teams in Albany, unlawfully acted as their attorney, and used the position to improperly acquire $317,000 in payments and $2 million in loans from them between 2003 and 2005.

O’Hara argued in legal responses last week that Nxivm’s claims were incorrect and dishonest, and accused the company, founded by Keith Raniere and Nancy Salzman of Halfmoon, of tax fraud.

On Monday, U.S. District Court Judge Gary L. Sharpe rejected the suit’s restraining order and injunction request seeking to put O’Hara’s assets on hold.

“I’m pleased with the outcome, and it’s not unexpected given the facts in this matter,” O’Hara said. “My concern, of course, is that Keith Raniere and Nancy Salzman will pursue this matter the same way they are pursuing (other legal cases), and that they’ll appeal today’s denials up to and including the U.S. Supreme Court.”

Nxivm (pronounced “NEX-ee-um”) already has a few cases pending before federal district courts in Albany, including a bankruptcy case against Raniere’s ex-girlfriend, and an attempt to knock criticism of it off a critic’s Web site.

Nxivm will not appeal Monday’s rulings, its attorney, Judd Burstein, said. It withdrew the suit from federal court in Albany and immediately submitted it in the state Supreme Court in Manhattan, he said.

“We think the judge’s decision is as wrong as it can be, but we’re not going to waste time fighting over that,” said Burstein, who practices law in Manhattan.

The goal now is to get the case to trial as soon as possible, he said. Nxivm prefers to litigate in New York City, where one of the 11 plaintiffs resides, Burstein said.

“I have an overwhelming case supported by extraordinary, documented evidence. My dog could try this case against a jury and find this case against Mr. O’Hara,” Burstein said.

Neither O’Hara nor his attorney, William J. Dreyer, responded to the change of venue.

O’Hara is not licensed to practice law in New York, and he denied Nxivm’s charge that he represented himself as an attorney. Rather, Nxivm employed him as a consultant from 2003 until recently, when he resigned based on discomfort with the company, he said.

“I never practiced law in New York state, nor do I intend to,” said O’Hara, former owner of the Capital Region Pontiacs basketball team and former president of Albany Professional Football, which owned the Albany Firebirds.

Nxivm, also called Executive Success Programs, holds self-improvement seminars off New Karner Road in Colonie.

It and 11 employees, including Clare and Sara Bronfman, the daughters of Edgar Bronfman Sr. of the Seagram’s fortune, and Pamela Cafritz, daughter of Washington, D.C., socialites William and Buffy Cafritz, sued O’Hara for allegedly embezzling six-figure sums and lying about collateral for $2 million in loans from the Bronfmans.

It seeks damages and punitive costs.

The suit also names Albany attorney Douglas Rutnik and O’Hara’s ex-wife, Denise Polit, as co-defendants, saying O’Hara received several thousands of dollars in kickbacks from them after Nxivm hired them based upon his advice.

Rutnik and Polit knowingly benefited from O’Hara’s fraudulent activities, the suit claims.

One scheme Nxivm accuses O’Hara of improperly profiting from is the company’s formation of a nonprofit, tax-exempt organization dedicated to scientific advancement called The Ethical Foundation.

It says O’Hara recommended to Nxivm that Polit operate the organization and then received kickbacks.

O’Hara calls the charges false. He responded that the $2 million loans were arranged by Salzman, and payments aren’t due until Dec. 31, 2006.

And, in a legal affidavit submitted last week, he alleges that Nxivm intended to use The Ethical Foundation as a vehicle to perpetrate “a massive tax-fraud scheme” not related to scientific research.

His concerns were exacerbated when he learned that Raniere and Salzman allegedly had convinced Clare and Sara Bronfman to transfer approximately $22 million out of private accounts to the foundation, O’Hara stated.

All Nxivm funds given to him for the foundation have been transferred to the state Attorney General’s Office, O’Hara said. The office did not return a call seeking confirmation of that.

Also, unreachable Monday was Edgar Bronfman Sr., who once took a Nxivm course, but in October 2003 told Forbes Magazine that he thought Nxivm was “a cult” and had stopped speaking with his daughters.

Nxivm applied to build a 65,000-square-foot headquarters in Halfmoon, but the plan hasn’t advanced in years.