ALBANY — A Guilderland attorney and former town justice was sentenced in federal court Thursday to serve 54 months in prison for defrauding the multimillion-dollar estate of Niskayuna philanthropists Warren and Pauline Bruggeman.
Richard J. Sherwood, 59, had earlier admitted he conspired to steal about $11.8 million from estates that he served as an attorrney and fiduciary.
Federal and state prosecutors said the scheme occurred over years, including the time when Sherwood served as part-time Guilderland town justice, from 2014 until his arrest on Feb. 23, 2018. He resigned his position on March 5, 2018. He was disbarred on Sept. 13, 2018.
The U.S. Attorney's Office, state Attorney General's Office, FBI and Internal Revenue Service worked together on the case.
In addition to imposing the prison sentence, Senior U.S. District Judge Lawrence E. Kahn ordered Sherwood to serve a one-year term of supervised release, pay $5,560,505 in restitution, and forfeit 12 bank and brokerage accounts, as well as a house that belonged to Warren and Pauline Bruggeman overlooking Galway Lake in Saratoga County, which Sherwood had transferred to himself.
In a related case prosecuted by Attorney General Letitia James' office, Sherwood pleaded guilty in Albany County Court to a state charge of first-degree grand larceny and was sentenced Thursday to three to 10 years in state prison, to be served concurrently with his federal sentence.
A co-conspirator, Thomas K. Lagan of Cooperstown, was sentenced Dec. 11 to 78 months in federal prison, to run concurrent with a state sentence of four to 12 years in prison, U.S. Attorney for Northern New York Grant C. Jaquith said.
“Our society depends on attorneys to be honest and ethical. Richard Sherwood desecrated that trust when he stole millions of dollars from clients who relied on him to transfer their money to churches and other beneficiaries after they died," Jaquith said.
Sherwood practiced primarily in the area of trusts and estates. Starting in about 2006, he provided estate planning and related legal services to the Bruggemans and to Pauline’s sister, Anne Urban, all of Niskayuna. Warren Bruggeman had a 40-year career at General Electric, most of it in executive positions, according to his obituary.
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 of Ohio, Pauline’s other sister.
Warren Bruggeman died in April 2009 and Pauline in August 2011. At the time of her death, Pauline had personal and trust assets valued at approximately $20 million.
In pleading guilty to charges of money laundering conspiracy and filing a false tax return, Sherwood admitted that after Pauline Bruggeman’s death, he and Lagan 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 Rentz, who was suffering from dementia at the time of the thefts and died in 2013.
Sherwood admitted that he and Lagan stole more than $11.8 million, and that nearly $3.6 million was transferred outright to him, with an additional $1.96 million transferred to a trust that he and Lagan controlled. Sherwood also admitted that he transferred to himself the Bruggeman family camp on Galway Lake.
Sherwood admitted that he and Lagan induced Anne Urban to create a trust whose purpose, unknown to her, was to allow him and Lagan to transfer Bruggeman/Urban assets to themselves. Sherwood and Lagan also set up more than 10 bank accounts and created a limited liability company to first conceal the theft of the money and then transfer the money to themselves, Jaquith said.
Sherwood pleaded guilty to filing false federal tax returns in 2013 and 2015. The returns did not report as income about $4.7 million that he received from the scheme.