United States Attorney and New York State Attorney General Announce Substantial Recovery for the Beneficiaries of Defrauded Estates

ALBANY, NEW YORK – United States Attorney Carla B. Freedman and New York State Attorney General Letitia James announced today that nearly $6.3 million in restitution has been collected and distributed to the victims of Richard J. Sherwood and Thomas K. Lagan, who were sentenced to both federal and state prison for stealing approximately $11.8 million from the estates of three deceased sisters.

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.

United States 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. Thank you to U.S. Attorney Freedman for her partnership in rooting out fraud and stopping individuals who abuse the system.”

Lagan of Cooperstown, New York, was an investment advisor and attorney, and Sherwood of Guilderland, New York, was an attorney who served as Guilderland Town Justice, and practiced primarily in trusts and estates. 

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, New York.  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 ten 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.

The co-conspirators admitted that they stole $11,831,563, with Lagan admitting that 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.

In December 2019, Sherwood was sentenced to 54 months in federal prison, and to also serve 3 to 9 years in state prison. That same month, Lagan was sentenced to 78 months in federal prison and to also serve 4 to 12 years in state prison.

From prison, and notwithstanding his prior guilty pleas in federal and state court, Lagan then 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. Assistant Attorney General Jennifer Allinson represented the Charities Bureau in the Surrogate’s Court case.

Assistant U.S. Attorneys Elizabeth Conger and Melissa Rothbart represent the United States on the asset forfeiture and restitution matters in this case, with assistance from the Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section.