ALBANY, NEW YORK – Richard J. Sherwood, age 58, of Guilderland, New York, pled guilty today to money laundering and tax crimes, and admitted his role in stealing approximately $11.8 million from estates for which he served as an attorney and fiduciary.
The announcement was made by United States Attorney Grant C. Jaquith; New York Attorney General Barbara D. Underwood; Janelle M. Miller, Acting Special Agent in Charge of the Albany Field Office of the Federal Bureau of Investigation; and James D. Robnett, Special Agent in Charge of the New York Field Office of IRS-Criminal Investigation.
Sherwood also pled guilty today, in Albany County Court, to grand larceny in the second degree, in a case brought by the New York Attorney General’s Office.
United States Attorney Grant C. Jaquith stated: “Richard Sherwood betrayed his clients and his profession when he stole $11.8 million from their estates. His elderly clients, including one who suffered from dementia, planned to continue their philanthropy after their deaths by using their estates to support churches, charities, and civil organizations. Instead of carrying out their wishes, as he was required to do by both legal and ethical obligations, Sherwood used his legal skills to divert and steal their money. Any lawyer preying on elders should take notice that criminal conduct by attorneys will be aggressively investigated and prosecuted to the fullest extent of the law.”
New York Attorney General Barbara D. Underwood said: “New Yorkers should be able to trust that their financial advisors will make sound decisions – not scheme to line their own pockets. We will continue to hold accountable those that try to game the system and violate the public trust.”
Sherwood, an attorney since 1988, 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, Sherwood admitted that after Pauline Bruggeman’s death, he and another person 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.
FBI Acting Special Agent in Charge Janelle M. Miller stated: “Richard Sherwood abused his position and defrauded clients who trusted him with their life savings. This is a case about greed and abuse of trust. The FBI will continue to work with our partners to ensure this kind of malicious behavior is investigated and prosecuted. Mr. Sherwood will now face serious consequences for his fraudulent actions.”
IRS-CI Special Agent in Charge James D. Robnett stated: “Richard Sherwood was entrusted to ensure the financial security of these innocent victims but instead chose to utilize his profession to unjustly enrich himself. Attorneys who abuse their fiduciary responsibilities and commit their own financial crimes must be held responsible.”
Sherwood admitted that he and a co-conspirator 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 the conspirator controlled. Sherwood also admitted that he transferred to himself the Bruggeman family camp located on Galway Lake in Galway, New York.
Sherwood’s co-conspirator is presumed innocent unless and until proven guilty.
Sherwood admitted that he and the co-conspirator induced Anne Urban to create a trust whose purpose, unknown to her, was to allow him and the co-conspirator to transfer Bruggeman/Urban assets to themselves. Sherwood and his co-conspirator 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 also 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 faces up to 20 years in prison, a maximum fine of $250,000, and up to 3 years of post-imprisonment supervised release when he is sentenced by Senior United States District Judge Lawrence E. Kahn. A defendant’s sentence is imposed by a judge based on the particular statute the defendant is charged with violating, the U.S. Sentencing Guidelines and other factors.
Sherwood has agreed to forfeit $3,742,211.65 that the United States Attorney’s Office and FBI have already seized from him, as well as the residence on Galway Lake that had previously belonged to the Bruggemans.
Sherwood served as Guilderland Town Justice from 2014 until his arrest, on state charges, on February 23, 2018. He resigned his position on March 5.
The federal case is being investigated by the FBI and IRS-CI, and is being prosecuted by Assistant U.S. Attorney Michael Barnett. Assistant U.S. Attorney Tamara B. Thompson is prosecuting the forfeiture aspects of this case.
The state case is being prosecuted by Assistant Attorneys General Christopher Baynes and Matthew Peluso of the Attorney General’s Public Integrity Bureau, under the supervision of Bureau Chief Daniel G. Cort and Deputy Bureau Chief Stacy Aronowitz. The Criminal Justice Division is led by Executive Deputy Attorney General Margaret Garnett.
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 Chief Dominick Zarrella. Meaghan Scovello, Associate Forensic Auditor, provided the financial analysis. The Forensic Audit Section is supervised by Edward Keegan. Senior Analyst Sara Pogorzelski assisted in the investigation.