Date: December 19, 2019
ALBANY, NEW YORK – Richard J. Sherwood, age 59, of Guilderland, New York, was sentenced today to 54 months in federal prison for conspiring to steal approximately $11.8 million from estates for which he served as an attorney and fiduciary.
The announcement was made by:
- Jonathan D. Larsen, Special Agent in Charge of the New York Field Office of IRS-Criminal Investigation;
- United States Attorney Grant C. Jaquith;
- New York Attorney General Letitia James; and
- James N. Hendricks, Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation (FBI).
Senior United States District Judge Lawrence E. Kahn also ordered Sherwood to serve a 1-year term of supervised release, to pay $5,560,505 in restitution, and to forfeit the following as proceeds of his crimes: 12 bank and brokerage accounts, and a house overlooking Galway Lake in Saratoga County.
In a related case prosecuted by the New York Attorney General's Office, Sherwood pled guilty, in Albany County Court, to grand larceny in the first degree, and is scheduled to be sentenced this afternoon to a concurrent term of 3 to 10 years in state prison.
Sherwood's co-conspirator, Thomas K. Lagan of Cooperstown, New York, was sentenced on December 11 to 78 months in federal prison, to run concurrent with a state sentence of 4 to 12 years in prison.
IRS-CI Special Agent in Charge Jonathan D. Larsen stated: "As demonstrated by the sentencing of co-conspirator Thomas Lagan last week and now Mr. Sherwood's sentence today, IRS-Criminal Investigation continues to make tax law enforcement a key priority. Protecting victims is also one of our most important objectives. The sentences imposed in these cases illustrate the consequences of lying and stealing from the federal government and innocent taxpayers. They also underscore the government's commitment to prosecuting tax fraud. Today's sentence should serve as a warning and deterrent to others."
United States Attorney Grant C. Jaquith stated: "Our society depends on attorneys to be honest and ethical. Richard Sherwood desecrated that trust when he stole millions of dollars from clients who relied on him to transfer their money to churches and other beneficiaries after they died. His seven-year criminal conspiracy is all the more disturbing because Sherwood was also Guilderland Town Justice at the time. Today's sentence punishes Sherwood for his despicable conduct and requires him to repay every last dime that he stole."
FBI Special Agent in Charge James N. Hendricks stated: "Richard Sherwood stole millions of dollars from estates meant for charities, churches, and civic organizations, while at the same time serving as an elected judge. Today's sentencing affirms that the FBI has zero tolerance for attorneys who exploit their clients, and we will continue to work with our partners to make sure these criminals are brought to face justice."
Sherwood practiced primarily in the area of trusts and estates. Starting in about 2006, he provided estate planning and related legal services to Capital Region philanthropists Warren and Pauline Bruggeman, and to Pauline's sister, Anne Urban, all of Niskayuna, New York. Sherwood was advising the Bruggemans when, in 2006, they signed wills directing that all their assets go to charities, churches and civic organizations, aside from bequests to Anne Urban and Julia Rentz, Pauline's other sister.
Warren Bruggeman died in April 2009, and Pauline died in August 2011. At the time of her death, Pauline had personal and trust assets valued at approximately $20 million.
In pleading guilty to charges of money laundering conspiracy and filing a false tax return, Sherwood admitted that after Pauline Bruggeman's death, he and Lagan conspired to steal millions of dollars from her estate as well as from Anne Urban, who died in 2013. Their conspiracy came to include the diversion and transfer to themselves of several million dollars belonging to Julia Rentz, a resident of Ohio, who was suffering from dementia at the time of the thefts and died in 2013.
Sherwood admitted that he and Lagan stole $11,831,563, and that nearly $3.6 million was transferred outright to him, with an additional $1.96 million transferred to an entity, Empire Capital Trust, LLC, that he and Lagan controlled. Sherwood also admitted that he transferred to himself the Bruggeman family camp located on Galway Lake.
Sherwood admitted that he and Lagan induced Anne Urban to create a trust whose purpose, unknown to her, was to allow him and Lagan to transfer Bruggeman/Urban assets to themselves. Sherwood and Lagan also set up more than 10 bank accounts, and created a limited liability company (Empire Capital Trust, LLC), to first conceal the theft of the money and then transfer the money to themselves.
Sherwood pled guilty to filing false federal tax returns in 2013 and 2015. These returns were false because he did not report, as other income, about $4.7 million that he received from the fraudulent scheme.
Sherwood served as Guilderland Town Justice from 2014 until his arrest on February 23, 2018. He resigned his position on March 5, 2018. He was disbarred on September 13, 2018.
The federal case was investigated by the FBI and IRS-CI, and was prosecuted by Assistant U.S. Attorney Michael Barnett. Assistant U.S. Attorneys Adam J. Katz and Alicia G. Suarez prosecuted the asset forfeiture aspects of the case.
The state case was prosecuted by Assistant Attorneys General Christopher Baynes and Matthew Peluso of the Attorney General's Public Integrity Bureau, under the supervision of Bureau Chief Travis Hill. The Criminal Justice Division is led by Chief Deputy Attorney General Jose Maldonado. The investigation was led by Investigator Mark Spencer of the Attorney General's Investigations Bureau, under the supervision of Deputy Chief Investigator Antoine Karam. The Investigations Bureau is led by Acting Chief John Reidy. Financial analysis was provided by Principal Auditor Investigator Meaghan Scotellaro of the Forensic Audit Section under the supervision of Deputy Chief Auditor Sandy Bizzarro and Chief Auditor Edward J. Keegan, Jr. Senior Analyst Sara Pogorzelski assisted in the investigation.