Grand Jury Indicts Bay Harbor Islands' Longtime Town Attorney on Federal Fraud Charges

Update published 8/11/2023 4:40 p.m.: Craig Sherman pleaded guilty to two counts of felony wire fraud as part of a plea agreement with federal prosecutors over his Bay Harbor Islands investment scheme.

A former lawyer who served as Bay Harbor Islands' attorney for four decades has been hit with a federal indictment for allegedly defrauding clients by falsely claiming he would invest their money in lucrative development projects in the upscale island community.

Craig Sherman — who had built a career as a reliable South Florida business lawyer and claimed to have once represented Dolphins quarterback Dan Marino — is facing eight felony counts of wire fraud stemming from a scheme that bilked millions of dollars from his clients, according to court documents.

Federal prosecutors say Sherman pocketed money entrusted to him by two clients based on his claims that he would invest the funds in development rights and investment packages tied to projects in Bay Harbor Islands, a town tucked between Bal Harbour and Biscayne Bay. Sherman fabricated the investment opportunities, and he expended the clients' money "for his own personal use and benefit, his law firm's use and benefit, and to sustain the fraud," prosecutors allege.

The fraud allegations against Sherman came to light in 2019 when New Times reported on a civil court case accusing Sherman of scamming a client, Barry Smith, out of $4.17 million.

Smith wired millions of dollars to Sherman between 2016 and 2019, under the impression he was funding development loans for the Grand Beach Hotel and the Wharton Kane Concourse complex, among other projects. After periodic payments stopped arriving, Smith pushed Sherman for answers, and the attorney allegedly conceded, during a meeting at his law office, that he had concocted the investments.

Sherman surrendered his law license at age 77 and consented to a final judgment in Smith's lawsuit against him, though his court filings admit no wrongdoing. He had been working under a $7,900-a-month retainer in his post as Bay Harbor Islands attorney. The town told New Times in 2019, via its new attorney, that the investment deals touted by Sherman amounted to "private representations made to Smith, with no knowledge from the town itself."

When news broke of the allegations, Bay Harbor Islands announced it was forwarding the matter to the Florida Department of Law Enforcement for a potential criminal investigation.

But as the years passed and Smith obtained writs of garnishments in the lawsuit, the prospect of criminal charges against Sherman fell out of the public eye, and it looked like the alleged scheme might remain a civil matter.

Sherman's hopes of avoiding criminal charges were dashed on May 11 after a grand jury returned the indictment, laying out federal counts that carry a 20-year maximum sentence. The longtime Miami-area attorney was taken into custody the following day. His arraignment is set for May 19.

The fraud counts with which Sherman is charged in the criminal case reference $1.65 million in wires that Sherman allegedly accepted from two unnamed clients between June 2018 and May 2019. The alleged victims were close with Sherman, counting themselves as his friends and clients since 1986 and 2012, respectively.

Smith's attorney in the civil case, William Berger, declined to comment on whether Smith is one of the victims listed in the indictment.

Sherman's disciplinary record appears to have been clean in Florida until the fraud claims arose in 2019.

His professional profile says he served in the U.S. Air Force Illinois Air National Guard in the late 1960s through 1973. He worked as an attorney in Chicago in the 1970s before moving to Miami, where he was a senior partner at Sherman & Fischman, his profile says, noting that he helped set up the Dan Marino Charitable Foundation for autistic children.

While running his private practice Sherman Law Offices (later Sherman & Sherman), he established himself as Bay Harbor Islands' veteran staff attorney, advising the town on ordinances, election issues, and contracting. His profile says he earned Martindale Hubbell's highest peer-review rating.

When reached by New Times on May 15, one Fort Lauderdale attorney who knew Sherman for years said he was shocked by the allegations. He was aware of the civil case but did not realize it had spilled into criminal court.

"I never saw this coming. I know people who had dealt with him for years and never had any problems," the attorney said.