Accused hockey dad awaits trial for fraud

Gerald Sherman is the sort of guy whose plans match his 6-foot-5 frame — big.

Sometimes, the Mercer Island father of three told potential investors he had a line on gold bullion and could turn a $100,000 investment into $1 million. Other times, he claimed to be one of only four experts who could sell "medium-term notes" that would provide a 10-fold return. Still other times, he promised extraordinary results wheeling and dealing in foreign currency.

Friends took out loans to get in on Sherman's deals. Local businessmen put up money. An offshore company invested, too.

The federal government has alleged it was all a big lie. Sherman never invested the money, according to a federal fraud indictment handed down last week.

Instead, he sank nearly $1 million into a youth-hockey association called the Washington Evergreens. Among other things, the money was used to take young players and their parents to tournaments across North America.

Prosecutors haven't been able to account for all of the money, but they say they've never seen a case like this.

"Most frauds are for personal gain," said Assistant U.S. Attorney Tate London. Yet so much of Sherman's money seemed to go toward the hockey team — his own version of Disney's "Mighty Ducks," as one lawyer called it.

Former fans, some bankrupt and embittered, say it's about time he was stopped.

In jail awaiting a bail hearing, Sherman was not available for comment.

But loyal supporters — many of whom enjoyed the benefit of Sherman's free hockey — have rushed to his defense. According to several parents, this isn't about money. It's about the children.

All-consuming sport

For those not involved in youth hockey, an introduction is in order.

"We're pretty much considered 'crazy people,' " hockey mom Connie Beckstrom wrote in an e-mail to The Seattle Times.

The sport isn't offered in schools here, so players must join one of 15 youth-hockey associations statewide. Hockey's relative rarity means it's not unusual to drive from Seattle to Spokane for a game. One Seattle area parent spoke of thrice-weekly trips to Vancouver for practice. It clearly can become all-consuming.

Team dues range from $600 to $1,750. Add to that uniforms, gear and tournament-travel costs. One mom said she's spent as much as $15,000 a year.

Whether it's this sense of hardship or something else, youth hockey is an emotionally charged world, where everybody knows everybody else's business.

In the mid- to late-'90s, Sherman got involved, talking big ideas.

He started his sons playing on established teams, but by 1999, he had founded his own hockey organization, the Washington Evergreens, that would be different.

There would be no tryouts; instead, kids would be handpicked from all over the state. The coaches would be paid professionals. The program wasn't just for the rich kids. Joining would be free, as equipment would be.

Best of all, Sherman promised to take the kids on free trips to tournaments across the continent. And parents could come along, also for free.

"It was unheard of," said Kristine Smutek, a hockey mom who later worked for the team. "Jerry's big thing was these kids shouldn't have to pay for this experience."

Parents leapt at the opportunity. They became part of the Evergreen family, proud and loyal.

"If your child was selected, it was a big deal," Smutek said.

The rise of the Evergreens left some established teams feeling plundered, and games became a forum for rival teams' parents to gossip about one another.

That wasn't the only problem.

It's unclear what, exactly, Sherman did before founding the Evergreens, although he said he manages a company called JLA Nordstjaerna.

What is clear is his knack for raising money.

The Evergreens' first break came in 2000, when Sherman persuaded a real-estate developer named Elliott Severson to obtain a $300,000 loan to tide the association over until the big money rolled in. According to the indictment and a lawsuit over the matter, Sherman promised Severson, who also has two sons on the team, a $3 million return, but failed to deliver.

Sherman used the money to pay for a Florida tournament for about 200 players and parents, according to court documents and Smutek, who said she made the travel arrangements.

Even as Sherman raised more cash, he didn't repay Severson. That's because it was "important that the Evergreens make a big impact their first season," Sherman would later explain in response to a lawsuit.

More money would be coming soon, he assured investors.

In fact, the money was coming in. He told former Evergreens employee Milford Walker about gold that could be bought cheaply and sold at a huge profit, according to an FBI interview included in court documents.

He also touted sophisticated securities that supposedly only he and three others were authorized to sell. Walker wound up taking out a second mortgage on his house and putting up $100,000.

Sherman raised an additional $397,000 from a Bahamas company called DAR SA, according to the federal indictment, promising a tenfold return.

These high rates of return, said prosecutor London, "should have caused a lot of people to stand up and wonder."

Evergreens players and their parents, meanwhile, said they would have willingly paid typical hockey fees. Still, they were grateful for the opportunities afforded their kids, who traveled to Toronto, Montreal and elsewhere, according to a lawsuit that arose over the Severson investment.

Besides, parents said, they weren't involved in Sherman's business deals. They knew there were "sponsors" for the team, said Barbara Volland, the mother of an Evergeens player, but they weren't "privy to who's doing that. We're just there and our kids are playing hockey."

Despite all the money coming in, bills piled up.

Sherman was sued for failing to pay for hotel rooms and a videographer and was accused of failing to pay for ice-rink time. Even his lawyers sued.

A court found that Sherman didn't pay one of his employees, and others weren't paid either, according to one employee and several parents. This had the effect of alienating the very people who had dedicated so much.

A flurry of lawsuits

Walker, for example, sued him for back wages and for enticing him into a phony investment. He won both times. Court records indicate Sherman has yet to compensate Walker.

The Bahamian investor, DAR SA, won a judgment for $750,000.

Smutek said she wound up filing for bankruptcy after being evicted from her home and living on a friend's couch. She said she was promised a salary of $4,000 a month but got less than half. For two years Sherman assured her repeatedly that the money was "two weeks away."

"I got sucked in, I'll admit it," she said, adding, "He's hurt a lot of families."

Over the past five years, 11 judgments have been entered against Sherman or the Evergreens totaling more than $1.5 million, according to court records. He also was ordered by the state to stop selling securities.

Desperate for money, Sherman went to Bank of America with a "letter of credit" that, in essence, claimed he qualified for a $600 million loan, according to the indictment. Prosecutors say it was bogus.

The May 4 indictment reasserts many of the allegations in the lawsuits, charging Sherman with securities fraud, wire fraud and attempted bank fraud.

At least a year before the indictment, Sherman pulled away from the Evergreens, leaving it up to parents to run the teams.

Several people involved with local hockey said he left under pressure from the league's governing board, the Pacific Northwest Amateur Hockey Association. Without Sherman at the helm, parents say they paid for everything. The Evergreens' Web site says that they will return to free hockey this season.

Despite the complaints that had been building for several years, Sherman retains a large following.

What's Jerry Sherman's secret?

People in the hockey world say his enthusiasm is infectious.

"If he sold cars, he'd be the best in the world," another youth-hockey leader said.

And there's no question that the Evergreens gave kids a great opportunity, not to mention some of the best coaching around.

Even detractors say that Sherman does what he does "for the love of hockey."

Because of all this, he has created a following in which supporters are able to brush aside all criticism as nothing more than "petty attempts by grown men and women to keep the kids off the ice," Kristin Flanigen, mother of an Evergreens player, wrote in an e-mail to The Times.

As for the federal charges, some supporters believe they were the result of people who are jealous of the team's success.

To those supporters, it seems like an extension of what happens on the ice, where they say their kids have endured taunts not just from rival teams, but from parents, as well.

A recent news story about the indictment set off a flood of angry e-mail messages and phone calls from parents who saw the article as part of a smear campaign. Volland, the hockey mom, complained that the story "was written with no thought or care as to the effect it will have on the children."

"After all," she wrote, "Isn't [it] all about the kids?"

One woman involved in local hockey, who is not a fan of Sherman's, said his supporters "found a leader who would fight for them. They also found a leader who would pay for them.

"To be invited into that group was a special thing. He was able to make them all feel very good about themselves," she said.

Maureen O'Hagan: 206-464-2562 or mohagan@seattletimes.com