Trust Fund Thieves Sentenced: $6.3M Restitution Collected

Trust Fund Thieves Sentenced: $6.3M Restitution Collected

In a major victory for justice, the U.S. Attorney’s Office and the New York State Attorney General’s Office have collected $6.3 million in restitution from the estates of Richard J. Sherwood and Thomas K. Lagan, two men who were sentenced to federal and state prison for stealing approximately $11.8 million from the estates of three deceased sisters.

According to the U.S. Attorney’s Office, nearly $5 million of the restitution came from criminally derived assets that were forfeited to the United States and then approved by the Department of Justice to be directly applied to victim restitution. Of the funds restored to the victims, $3,559,426.90 was forfeited by Sherwood and $1,391,322.08 was forfeited by Lagan.

The victims, which have received restitution distributions, include churches, Ukrainian-American civic organizations, a local hospital and a local university scholarship fund. The United States Attorney’s Office’s Asset Recovery Unit is still working to recover the remainder of the restitution owed, approximately $5.5 million.

Sherwood, a 65-year-old attorney from Guilderland, New York, was sentenced to 7 years in federal prison and 3 years in state prison for his role in the scheme. Lagan, a 74-year-old investment advisor from Cooperstown, New York, was sentenced to 5 years in federal prison and 3 years in state prison.

The scheme began in 2006, when 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. 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.

Sherwood and Lagan each 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.

U.S. Attorney Carla B. Freedman stated, “This substantial recovery is the result of our efforts to make sure that crime does not pay. 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.”

New York State Attorney General Letitia James stated, “New Yorkers should be able to trust that their financial advisors and attorneys are looking out for their best interests—not stealing their hard-earned money. Sherwood and Lagan defrauded a well-meaning family, and in the process, cheated local nonprofit organizations out of funds intended to support their missions.”