New York Attorney General Letitia James and the Department of Justice (DOJ) announced on Wednesday that $6.3 million stolen from family trusts of three deceased women has been recovered.
The millions in restitution have been collected and distributed to the victims of attorney Richard Sherwood and financial adviser Thomas Lagan, who were both found guilty of money laundering and tax fraud. Each was sentenced in December 2019 to federal and state prison for stealing approximately $11.8 million from the estates of three deceased sisters.
Of the roughly $6.3 million recovered, a portion has been returned to victims including St. Nicholas Ukrainian Catholic Church, Ukrainian American Cultural Center, Inc., Ellis Hospital Foundation, Inc., and the Bruggeman '46 Scholarship Fund at Rensselaer Polytechnic Institute.
James has gained attention for a lawsuit against former President Donald Trump, his adult sons and the Trump Organization, which led to Trump being ordered to pay $454 million stemming from a civil fraud lawsuit. Trump is appealing the decision.
Roughly $5 million of the restitution came from criminally derived assets that were forfeited to the U.S. and then approved by the DOJ to be directly applied to the victims. Sherwood, of Guilderland, New York, forfeited $3.55 million to the victims while Lagan forfeited $1.39 million.
James and U.S. Attorney for the Northern District of New York, Carla Freedman, said that the United States Attorney's Office's (USAO) Asset Recovery Unit is continuing efforts to recover the remainder of the owed restitution.
"New Yorkers should be able to trust that their financial advisers and attorneys are looking out for their best interests—not stealing their hard-earned money," James said in a statement. "Sherwood and Lagan defrauded a well-meaning family, and in the process, cheated local nonprofit organizations out of funds intended to support their missions."
Newsweek reached out to James' office via email for further comment.
"This substantial recovery is the result of our efforts to make sure that crime does not pay," Freedman said in a statement. "We will continue to use every appropriate avenue to enforce restitution judgments against Sherwood and Lagan in an effort to return as much money as possible to the victims of their fraudulent scheme."
The convicted pair provided estate planning and related legal and financial services to philanthropists Warren and Pauline Bruggeman, of Niskayuna, New York, and Pauline's sister, Anne Urban, of Watervliet, New York.
The couple was advised by Sherwood and Lagan to sign wills directing all their assets—aside from trusts for Anne and Pauline's other sister, Julia Rentz—to churches, civic organizations, a hospital, and a university scholarship fund.
After the Bruggemans both died, Sherwood and Lagan encouraged Anne to create a trust that, unbeknown to her, made them the beneficiaries of the sisters' estates upon her death.
Anne later died and Sherwood and Lagan, as trustees of the estates, reportedly hid their theft by directing funds through a sham trust they designed called the Empire Capital Trust—of which money would be transferred from that account to themselves.
Lagan was sentenced on December 11, 2019, to 78 months in prison with two years of supervised release tacked on in addition, for money laundering and filing a false tax return.
Judge Lawrence Kahn also ordered Lagan to pay $7,707,450 in restitution, and to forfeit the following as proceeds of his crimes: 10 bank and brokerage accounts; an additional $255,000 already paid to the government; three properties in Otsego County; a 2016 Mercedes-Benz S550; a 2015 Jeep Wrangler Sport; a 2015 Lexus RX450; and a 2015 Sea-Doo Jet Ski and accompanying trailer.
As part of the case investigated by James' office, Lagan pleaded guilty in Albany County Court to grand larceny in the first degree, and was sentenced to four to 12 years in prison with sentences running concurrently.
Eight days later, Sherwood was sentenced to 54 months in federal prison for conspiring to steal approximately $11.8 million from said estates.
Kahn ordered Sherwood to serve a one-year term of supervised release, to pay $5.56 million in restitution, and to forfeit the following: 12 bank and brokerage accounts, and a house overlooking Galway Lake in Saratoga County.
Another three-to-nine years in prison was added on concurrently, due to the grand larceny charges.
Following the prison sentencing, the Office of the Attorney General's (OAG) Charities Bureau petitioned the court to reinstate Anne's original trust to ensure the funds would go to the charitable organizations she initially designated as beneficiaries.
The move was unsuccessfully challenged by Lagan while he was already serving his prison sentence, according to the OAG and DOJ.
On Wednesday, James along with the attorneys general of Florida, Washington D.C., Virginia and Tennessee, announced a new lawsuit filed against the National Collegiate Athletic Association (NCAA) challenging a rule that restricts "prospective student athletes' ability to earn money and benefit from their name, image, and likeness (NIL)" by preventing them from "reviewing NIL compensations offers before enrolling in a school."
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Nick Mordowanec is a Newsweek reporter based in Michigan. His focus is reporting on Ukraine and Russia, along with social ... Read more
