Sherwood pleads guilty to scheme of stealing more than $11 million

Enterprise file photo — Elizabeth Floyd Mair

Richard Sherwood, shown here on the evening of his re-election in the fall of 2017, served as a town justice from 2013 until his arrest in February 2018.

ALBANY — Former Guilderland judge Richard Sherwood pleaded guilty in two courts on Monday. He pleaded guilty to second-degree grand larceny, a felony, in Albany County Court, for which he faces up to three to 10 years in prison. He also pleaded guilty in federal court hours later to charges of money-laundering and filing false income tax returns; he faces a maximum of 20 years on those charges.

His sentencing in federal court is scheduled for Oct. 11.

Sherwood and a co-conspirator stole over $11 million in family trusts they oversaw for  philanthropists Warren and Pauline Bruggeman, as well as for Pauline’s sisters, Anne Urban and Julia Rentz — none of them had living children — diverting the money from charities to themselves, according to releases from the state’s attorney general, Barbara D. Underwood, and from Michael Barnett, assistant United States attorney.

Warren Bruggeman died in 2009 and his wife died two years later with personal and trust assets of about $20 million, according to the federal plea agreement; Urban died in February 2013 and Rentz, who suffered from dementia at the time of the thefts, died seven months later.

Sherwood was arrested on Feb. 23 and the town suspended him as a judge that same day and barred him from private areas of the court. He was suspended by the Court of Appeals, the state’s highest court, a few days later and resigned about a week-and-a-half after his arrest.

The amount that Sherwood and financial advisor Thomas Lagan were accused of stealing was previously said to be more than $4 million. Monday’s releases said that Sherwood and Lagan worked together to steal more than $11 million.

Sherwood, 58, has agreed, the releases said, to forfeit $3.7 million that has already been seized from him as well as a residence on Galway Lake that Sherwood and Lagan transferred from the ownership of their clients.

Asked why Sherwood had decided to plead guilty now, his attorney, William J. Dreyer of Dreyer Boyajian in Albany, said on Monday that Sherwood didn’t wish to comment at this point, although he probably would later, at the close of the legal proceeding.

Dreyer thinks his client is “holding up just fine,” he said, adding, “It was a big step for him, appearing in court.”  Sherwood made his grand-larceny plea before Albany County Court Judge Peter A. Lynch.

Sherwood, a Democrat, was elected in 2013 to fill a new, third justice post in Guilderland Town Court. He bested two Republican opponents, and had previously been the town’s attorney for 14 years.

Guilderland Democratic Committee Chairman Jacob Crawford said Monday, “I’m still shocked by the whole thing. I’m relieved to see that he has admitted what has happened and is accepting that, and is moving forward with the process, and that he’s not dragging it out in a trial.”

After Sherwood resigned on March 5, fourteen candidates applied to fill his vacant seat. The town board, which has four Democrats and one Republican, unanimously appointed Christine Napierski, a Democrat, in April as justice, a post that paid $51,170 in 2017.

The Guilderland Democratic Committee decided this week to back in November not Napierski, but Albany County Legislator Bryan Clenahan, who had been one of the 14 candidates who sought the position in April. (See related story.)

Federal case

The federal plea agreement describes the transfer of the Galway Lake camp unfolding this way: In 2012, Sherwood and Lagan commissioned and paid for about $40,000 worth of repairs and renovations to the camp, paid from Pauline Bruggeman’s estate. In December of that year, Lagan transferred the camp from Urban to a limited liability company that Sherwood had organized and owned.

“On February 28, 2013, the defendant,” says the plea agreement, referring to Sherwood, “deposited a $100,000 check from his personal Trustco account into Anne Urban’s Pioneer Bank account, bearing the memo line: ‘Galway Lake’; the check was dated December 29, 2012. However, the defendant wrote out the check after Anne Urban died on February 20, 2013, and backdated it in an attempt to make the payment appear to have been made prior to her death.”

Sherwood also under-reported his income on his income tax in two years: under-reporting it by $56,000 in 2013 and by $4.7 million in 2015, according to the plea agreement.

Following Pauline Bruggman’s death, the complaint says, Sherwood convinced Julia Rentz’s attorney in Ohio, where she lived, to transfer the $3 million she had received to an account under his control “purportedly so they could avoid the money going to the State of Ohio upon Julia’s death, and instead distribute it to the charities and institutions identified … ,” the plea agreement says, adding that Sherwood “made this representation knowing it was false and intending to gain control over Julia Rentz’s $3 million so that he and Lagan could split it between themselves.”

Sherwood and Lagan also wrote a total of eight checks, for $14,000 each to one another and to one another’s family members; $14,000 is the cut-off point under which donations don’t have to be reported to the Internal Revenue Service.

Also, the plea agreement says, on Feb. 12, 2013, Sherwood and Lagan did an interstate wire transfer of $50,000 from Urban’s account to the University of Richmond in Virginia, for tuition and fees for Lagan’s daughter. The next day, a similar wire transfer was made, for close to $40,000 to the University of Richmond.

Barnett said that, in keeping with U.S. Attorney’s Office policy, he could not comment on whether charges would be brought against any family members. He said that, in general, a person’s mere receipt of fraud proceeds does not make them a participant in the fraud.

State case

Sherwood, as part of his private practice, and Lagan provided estate planning and related legal and financial services to the Bruggemans and to Pauline Bruggeman’s sisters since at least 2006, as detailed in the original complaint. The attorney general’s release explains events unfolding this way:

“In 2011, Sherwood and Lagan created the Anne S. Urban Irrevocable Trust (AUIT) using some of the funds from the Bruggeman trusts with Sherwood named Trustee and Lagan named Successor Trustee.

“In the specific instance to which Sherwood pleaded guilty, a sub-trust with approximately $2 million was to be returned to the Pauline Bruggeman Revocable Trust for distribution to six named charities upon Anne Urban’s death. Rather than returning those funds after Urban died in 2013, the funds were disposed of through the AUIT — primarily for the benefit of Sherwood and Lagan.

“In another part of the alleged scheme, Sherwood conspired with Lagan to deceive an Ohio attorney into sending over $2 million of Julia Rentz’s money to the AUIT under the premise that it would be sent to charity, when in fact Sherwood and Lagan allegedly shared those proceeds.

“Sherwood and Lagan allegedly formed the Empire Capital Trust to benefit themselves and funded it with over $1 million in stolen money. In January 2015, they allegedly transferred $3.6 million from AUIT to a Trustco Bank account in Sherwood’s name and $2.7 million from the AUIT to a Trustco Bank account in Lagan’s name.”

Lagan, whose charges are still unresolved, is represented by E. Stewart Jones, according to Barnett.

Updated on June 12, 2018: Information on the federal plea agreement was added.

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