Penalty box for `hockey dad"
November 24, 2008 · Updated 4:50 PM
By Ruth Longoria
Perhaps he saw himself as something of a Robin Hood, taking money from the wealthy and spending it on kids who couldn't otherwise afford to play what some consider a rich man's game. When Island resident Gerald Alan ``Jerry'' Sherman started his ice hockey team, the Washington Evergreens, it was considered a golden opportunity for kids to become involved in a sport that was often too expensive for most young people and families. There are few ice hockey teams in the state, some say that's partly because with the cost of uniforms, equipment and travel, hockey parents can spend up to $15,000 per year on sport-related expenses.
But Sherman offered kids a chance to play hockey without paying their own way. Sherman's Mercer Island investment company, JLA Nordstjaerna, run out of his rented home in the 3700 block of 90th Avenue S.E., paid for everything, including the cost for youths and their parents to attend frequent competitions across the country and throughout Canada. But the golden opportunity quickly turned to dross, at least for investors in JLA, in what looks to have been Sherman's pirated pipe dream.
After more than five years of allegedly promising investors high returns that were never realized for out of the country gold purchases, and despite numerous letters to the court on behalf of Sherman from friends, family members and hockey supporters, Sherman was refused bail Wednesday morning by Judge Monica Benton at a detention hearing at Seattle's Western District U.S. Courthouse.
``I am not going to release Mr. Sherman,'' Benton told the courtroom filled with reporters, supporters and family members, after the prosecutor and attorney had an opportunity to present their cases concerning Sherman's possible release on bail or electronic home monitoring. ``But, it is remarkable that there are so many people willing to write on his behalf,'' Benton added.
Sherman is being held on charges that include 16 counts of alleged wire fraud, securities fraud, mail fraud and attempted bank fraud. Federal prosecutors allege the 54-year-old Mercer Island man bilked friends, acquaintances, a bank, and even an off-shore oil company of millions of dollars. Investors allegedly were told they were getting in on a gold program in which Sherman would purchase gold bullion at ten- to fifteen-percent of normal market prices, transport the gold to a refinery, then sell the refined gold on world markets at full price.
Investors were never repaid and, according to court charging papers, Sherman told Federal Bureau of Investigations agents he does not, nor has he or JLAN ever owned or purchased gold. The money allegedly scammed from investors was used instead to fund Sherman's hockey team, their travel, coaches, and for his own personal travel and living expenses. There is no paper trail leading to Sherman's expenses. Sherman, his wife J.C. and their three children, have lived on the Island for more than 10 years, said Sherman's attorney, Scott J. Engelhard.
Sherman founded the non-profit Washington Evergreens ice hockey team in 1999. He led the team of teenage boys from across the state to a mix of victories and losses until August 2004, when he left, allegedly under pressure from the Pacific Northwest Amateur Hockey Association, due to controversy surrounding Sherman's financial association with the team.
However, Sherman told federal investigators that, with the use of investor funds, he had plans ``to create a large high tech business development that incorporated virtual reality technology and a National Hockey League (NHL) team and ice arena,'' according to court documents.
Sherman also told investigators that his investors all knew their money was being used to fund the hockey team, and thus they were able to use the investments as charitable contributions for income tax purposes. He didn't answer investigator's questions as to how the investments could be repaid. ``Sherman stated the youth hockey club had no potential of ever making money, although his larger plan including the NHL team and high tech business, which would take significant additional time and money to develop, could eventually make money,'' according to court documents.
After receiving no return on their investments, several investors took Sherman to court over the vanishing funds. According to court documents, Sherman has not yet paid any of the past 11 court judgments, which total about $1.5 million in fines, imposed against him and the hockey team, including a $750,000 judgment for DAR SA, an investor in the Bahamas.
Sherman's trial on federal charges is set for June 27 before Judge John Coughenour. If found guilty, Sherman could face up to 15 years in prison and $1.25 million in fines.
Benton's decision Wednesday to hold Sherman in jail without bail may have been influenced by comments of Assistant U.S. Attorney J. Tate London, who listed reasons to consider Sherman a flight risk and danger to the community, despite his enthusiasm for youth sports. London said Sherman's devotion to his family and young people was part of a ``dual persona.''
``It's the con man and swindler who presents the risk of flight,'' London said. ``Mr. Sherman has made an art form out of deception,'' London added, concerning Sherman's ability to invoke trust and generosity from potential investors. ``He presents a significant financial risk to the community.''