New York, NY - July 5, 2018 - New York Attorney General Barbara D. Underwood announced the grand jury indictment of financial advisor and lawyer Thomas Lagan for a scheme in which he and former Town of Guilderland Judge Richard Sherwood plundered over $9 million from family trusts they were responsible for overseeing.
“The defendants orchestrated a complex scheme to steal millions from trusts they were supposed to protect,” said Attorney General Underwood. “We will continue to ensure that those who game the system and violate the public trust are brought to justice.”
As detailed in the complaint, Lagan and Sherwood have provided estate planning and related legal and financial services to Capital Region philanthropists Warren and Pauline Bruggeman and Pauline Bruggeman’s sister, Anne Urban, since at least 2006. The Bruggemans each created a revocable trust, which contained sub-trusts designed to provide for Anne Urban and Pauline’s other sister, Julia Rentz. Other funds were to be awarded to Anne Urban and Julia Rentz outright upon the deaths of the Bruggemans.
In 2011, the Anne S. Urban Irrevocable Trust (AUIT) was created using some of the funds from the Bruggeman trusts; Sherwood was named Trustee and Lagan was named Successor Trustee.
In one instance, a sub-trust with approximately $2,000,000 was to be returned to the Pauline Bruggemen Revocable Trust for distribution to six named charities upon Anne Urban’s death; the complaint alleges that, rather than returning those funds after Urban died in 2013, the funds were disposed of through the AUIT primarily for the benefit of Sherwood and Lagan. In another part of the scheme, Sherwood and Lagan allegedly conspired to deceive an Ohio attorney into sending over $2,000,000 of Julia Rentz’s money to the AUIT, under the premise that it would be sent to charity; in fact, Sherwood and Lagan shared those proceeds. Sherwood and Lagan allegedly formed the Empire Capital Trust to benefit themselves and funded it with over $1,000,000 of stolen money. In January 2015, they allegedly transferred $3,598,908 from AUIT to a Trustco Bank account in Sherwood’s name and $2,693,865.92 from the AUIT to a Trustco Bank account in Lagan’s name.
Lagan was arraigned today before the Honorable Roger D. McDonough, Acting Supreme Court Justice in Albany County Court. Today’s indictment charges Lagan with two counts of Grand Larceny in the First Degree (a Class B felony), two counts of Criminal Possession of Stolen Property (a Class B felony), and one count of Scheme to Defraud (a Class E felony).
On June 11, 2018, Richard Sherwood pleaded guilty to Grand Larceny in the Second Degree (a Class C felony). Sherwood faces up to three to ten years in prison.
Attorney General Underwood thanks the New York State Police Special Investigations Unit, the U.S. Attorney’s Office for the Northern District of New York, the Federal Bureau of Investigations, and the New York State Office of Taxation and Finance for their valuable assistance in this investigation.
This 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 Scotellaro, Associate Forensic Auditor, provided the financial analysis. The Forensic Audit Section is supervised by Edward Keegan. Senior Analyst Sara Pogorzelski assisted in the investigation.