Bay Harbor Islands just referred its ex-attorney of 43 years to criminal investigators
The town of Bay Harbor Islands referred its former attorney of 43 years to the Florida Department of Law Enforcement on Tuesday amid allegations that he fleeced a client out of more than $4 million, in part by abusing his position with the town.
Craig Sherman, who resigned suddenly last month, was accused in a Dec. 13 civil lawsuit of fraudulently advising a longtime client to invest almost $5 million in purported business deals, including real estate projects in Bay Harbor Islands, and promising 10% annual interest in return.
The lawsuit says that at a meeting with the client in October, Sherman admitted that he had “screwed” the client and never invested his money in local developments. Instead, Sherman paid back only some of the client’s money through his law firm’s trust fund — the same place the client wired the funds initially, expecting them to be passed on to developers — and still owes him millions, according to the suit.
FDLE spokeswoman Jessica Cary confirmed Wednesday that the agency received a request for a criminal investigation and a formal complaint about Sherman’s alleged conduct from Bay Harbor Islands Police Chief Sean Hemingway. Cary said FDLE is considering whether to open an investigation.
The client who says he was victimized by Sherman is Barry Smith, the founder of Memcorp, an electronics marketing and distribution company that once owned the Memorex brand.
“My client is shocked that a lawyer that represented him and the town of Bay Harbor Islands for over 30 years would wrongfully take over $4 million of my client’s money from the law firm’s trust account in a scheme to defraud my client,” Smith’s attorney, Jay Green, told the Miami Herald.
The existence of the lawsuit was first reported by the Miami New Times on Wednesday.
Sherman, 77, resigned as town attorney on Nov. 14, citing “personal reasons” and his age. He didn’t mention the situation with Smith.
“It has been a great 43 years , but I think for personal reasons, including but not limited to my age of 77, that it is time,” Sherman wrote. “Rest assured, it has been an honor and privilege to have served the Town for so long.”
Town Manager J.C. Jimenez said in a statement Wednesday that he wasn’t aware of the allegations against Sherman until Monday, when the interim town attorney, Frank Simone, alerted him to the lawsuit.
Simone was previously the assistant town attorney and also worked with Sherman’s private practice, which at the time was called Sherman & Simone PA, from 2010 to 2011, before starting his own firm.
Smith’s lawsuit was filed in Palm Beach County court. Sherman’s firm was based in Boca Raton.
Sherman has filed a petition for voluntary revocation of his law license with the Bar. If the petition is approved by the Bar and a judge, he will lose his license.
“The Petitioner makes no admissions herein, but would agree that there is a factual predicate for disciplinary action,” Sherman’s petition says.
Sherman did not immediately respond to an email Wednesday seeking comment.
“From our perspective, certainly, Mr. Sherman has taken the appropriate reaction in response to the allegations,” said Kevin Tynan, who is representing Sherman in his case with the Florida Bar.
According to the lawsuit, Sherman told Smith to invest in “development rights” for projects in the town that would allow developers to build at higher densities. He told Smith that, as the town’s lawyer, he could draft documents memorializing the loans and that the town had no problem with the arrangement.
Sherman did send Smith interest payments on the loans until early 2019, as well as partial repayment of the principal loan for one of the projects, according to the suit. But Smith didn’t realize at the time that the money was coming from Sherman’s law firm, rather than the developers.
Smith says he is still owed nearly $4.2 million without factoring in the 10% interest he was promised. Sherman proposed a plan to start paying him $10,000 a month, the lawsuit says, but Smith rejected it because it would take almost 35 years to complete.
He isn’t pursuing the additional interest, citing the fact that Sherman represented him for over 30 years.
“He trusted this lawyer,” said Green, Smith’s attorney. “It’s just a terrible thing.”
In addition to Sherman’s many years working for Bay Harbor Islands, his law firm, Sherman & Sherman PA, represented former Dolphins legend Dan Marino in multiple business ventures.
A previous version of this story said interim town attorney Frank Simone worked for Sherman’s law firm, Sherman & Sherman PA. The story has been updated to reflect that, when Simone worked with Sherman from 2010 to 2011, their firm was called Sherman & Simone PA, and that Simone left in 2011 to form his own firm.
This story was originally published December 18, 2019 at 4:51 PM.