Nearly $6.3 million in restitution has been collected and distributed to the victims of two attorneys — Richard J. Sherwood, a former Guilderland town judge, and Thomas K. Lagan, an investment advisor from Cooperstown — both of whom were sentenced to federal and state prison for stealing about $11.8 million from the estates of three deceased sisters.

The announcement of the restitution was made on May 1 by Carla B. Freedman, United States Attorney for the Northern District of New York, and Letitia James, the state’s attorney general.

Most of the restitution, nearly $5 million, came from criminally derived assets that were forfeited to the United States, and then approved by the Department of Justice to go to the victims, which include churches, Ukrainian-American civic organizations, a local hospital, and a local university scholarship fund.

Sherwood forfeited about $3.6 million and Lagan forfeited about $1.4 million, the announcement said. 

Sherwood had been Guilderland’s town attorney for 14 years and a prosecutor for the Guilderland traffic court for about seven years and was elected on the Democratic ticket in 2013 to be town justice.

After he was arrested in February 2018, he stepped down from the bench and was disbarred on Sept. 13, 2018.

About $5.5 million has yet to be recovered, the release said, which the Asset Recovery Unit of the United States Attorney’s Office is working on.

“We will continue to use every available tool to enforce restitution judgments against Sherwood and Lagan and return as much money as possible to the victims of their fraudulent scheme,” said Freedman in the release.

Sherwood and Lagan’s elderly clients were Capital Region philanthropists Warren and Pauline Bruggeman, who had intended part of the assets for the lifelong care of her sisters, also elderly; remaining funds were to go to charity once all the family members had died. All four had eventually died, and none of them had any children. 

Assistant United States Attorney Michael Barnett told federal judge Lawrence Kahn, at Lagan’s sentencing in 2019, that the pair of financial advisors had made such a mess of the books that investigators had not yet sorted everything out.

William Dreyer, Sherwood’s attorney, told the federal judge at Sherwood’s sentencing on Dec. 19, 2019 that Sherwood had admitted guilt right away when first approached by agents from the Federal Bureau of Investigation in February 2018.

The agents had visited both Sherwood and his co-conspirator Lagan at the same time and, while Sherwood was explaining to them how the trust had been set up as a fraud, Lagan was apparently telling them that the trust was legitimate and reflected their elderly client’s wishes for Lagan and Sherwood to have the money. 

Lagan then spent a year denying everything, Dreyer said, while Sherwood explained how the pair’s financial crimes had worked and helped the officers track the funds. Sherwood had agreed to testify against Lagan.

The amount of restitution due from Sherwood, Kahn said at the sentencing, was the total amount Sherwood stole, $5,560,505. 

Barnett told The Enterprise after the sentencing that Sherwood had at that point “satisfied a substantial amount of his restitution obligation.” 

During his Dec. 19 sentencing, Sherwood told Judge Kahn, “I just want to express my sincere remorse for the horrible thing I have done.” He added, “I sincerely apologize to anyone I have hurt or disappointed or embarrassed, including the bar and the judiciary, by what I have done.” 

At the sentencing, Kahn said he had considered Sherwood’s overall conduct, lack of criminal history, and his long-standing prior work as “a respected attorney and as a judge.” Kahn took into account, he said, Sherwood’s immediate admission and his ongoing cooperation, his truthfulness throughout the investigation, his help in tracking the assets involved, and his demonstrated remorse. 

The judge noted that Sherwood had indicated during the investigation that he had stolen to “make up for lost income from sloppy billing practices in his law firm over the years.” Kahn noted that this was not an excuse, but said that Sherwood’s co-defendant, Lagan, had never offered any reason whatsoever for his actions. 

Khan said he was also factoring in the substantial loss, and Sherwood’s abuse of trust. 

“As a former judge, Mr. Sherwood knows more than most defendants that no one is above the law,” Kahn said. 

After announcing Sherwood’s sentence, Kahn told him, “I'm sure once this is behind you, you will have, hopefully, many years of a good life with your family again that still supports you.”

On Dec. 11, 2019, Lagan, at age 61, was sentenced to 78 months in federal prison and to also serve 4 to 12 years in state prison. Eight days later, Sherwood, at age 59, was sentenced to 54 months in federal prison, and to also serve 3 to 9 years concurrently in state prison; he was released in 2022.

Official narrative

The May 1 announcement from Freedman and James described events unfolding this way.

​​Starting in 2006, Sherwood and Lagan 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.

They were advising the Bruggemans when, in 2006, the Bruggemans signed wills directing that all their assets go to churches, civic organizations, a local hospital, and a local university scholarship fund, aside from bequests to Urban and Julia Rentz, Pauline’s sisters.

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 each pleading guilty, Sherwood and Lagan admitted that they conspired to steal, and did steal, millions of dollars from Pauline Bruggeman’s estate as well as from the estate of Urban, who died in 2013.

Their conspiracy included the diversion and transfer to themselves of several million dollars belonging to Rentz, a resident of Ohio, who was suffering from dementia at the time of the thefts and died in 2013.

Sherwood and Lagan each admitted that they induced Urban to create a trust whose purpose, unknown to her, was to allow them to transfer Bruggeman/Urban assets to themselves. They also set up more than 10 bank accounts, and created a limited liability company, Capital Trust, LLC, to first conceal the theft of the money and then transfer the money to themselves.

The co-conspirators admitted that they stole $11,831,563, with Lagan admitting that nearly $6.3 million was transferred outright to him. Sherwood admitted that nearly $3.6 million was transferred to him, with an additional $1.96 million transferred to Empire Capital Trust, LLC, an entity controlled by the co-conspirators.

Sherwood also admitted that he transferred to himself the Bruggeman family camp located on Galway Lake, in Saratoga County.

From prison, Lagan, notwithstanding his prior guilty pleas in federal and state court, objected in New York State Surrogate’s Court to a petition filed by the New York Attorney General’s Office’s Charities Bureau to restore the appropriate trusts created by Anne Urban before Lagan and Sherwood defrauded her.

The Surrogate’s Court ultimately rejected Lagan’s challenge and granted summary judgment to the Charities Bureau, a decision that was affirmed on appeal.