PROVIDENCE – The bitter legal dispute over the alleged mismanagement of a valuable trust that tore apart one of Rhode Island’s most prominent families has reached a settlement, according to lawyers involved in the case.
Malcolm Chace IV, his siblings and their children sued their cousin, downtown Providence developer Arnold B. “Buff” Chace Jr., in 2021, seeking to have him removed as trustee of an $80-million-plus trust that Malcolm’s father, Malcolm “Kim” Chace III, left his heirs upon his death in 2011.
Malcolm IV’s faction cited a climate of animus and distrust in requesting Buff’s removal. They accused Buff of spurning their attempts to get an accounting of how the trust has been managed for more than a decade and alleged that he breached their trust and his duties by engaging in self-dealing, using the fund for his own enrichment.
Matthew T. Oliverio, Buff’s lawyer, released a statement Friday, along with family spokeswoman Patti Doyle. The case had been headed to trial Monday before Superior Court Judge Brian P. Stern on whether the trustees “acted solely in the interests of beneficiaries," as required by law.
"We are pleased to announce that the 2021 lawsuit, Malcolm Chace IV, et al v. Arnold B. Chace Jr., et al has been resolved to the satisfaction of all parties. We wish to thank the Honorable Superior Court Justice Richard A. Licht, who served tirelessly as mediator in this matter. We are grateful to have reached an amicable settlement between the two parties as we long believed this was the preferred outcome for all involved," they said.
Terms of the agreement are confidential and will remain sealed, they said.
More: City attorney warns of a 'parade of horribles' if city intervenes in Buff Chace tax breaks
Trading accusations of self-dealing
Buff Chace and co-trustee William Saltonstall, Kim’s stepson, had argued in response to the allegations that any charges of animus and distrust were a “manufactured pretext” for Malcolm IV to enrich himself and come in retaliation for Malcolm IV's father not naming him trustee. They accuse Malcolm IV, who goes by Malcolm Jr., of wanting to manage the trust to extract fees for himself and his own investment firm, Canton Hathaway LLC.
The trustees asserted that they operated in good faith at all times and without conflict in their administration of the trust, in keeping with Kim’s wishes.
Buff and Saltonstall accused Malcolm of being the “ringleader” in “leveling false accusations in an attempt to reverse his father’s knowing and willful decision” not to appoint him as trustee.
“This move by Malcolm Chace IV is fueled by his extreme jealousy of his father’s relationship with his stepmother, Defendant Elizabeth Zopfi Chace … and his desperate need to control the funds in the trust,” lawyers Oliverio and Gina Renzulli Lemay wrote.
They argued that Malcolm refused to honor his father’s wishes – in contravention to well-settled law – and cite sworn testimony from Zopfi Chace that Kim refused to appoint Malcolm as trustee because he was allegedly an alcoholic.
According to the filing, Kim did not trust Malcolm and wanted “to guard the trusts against bad judgments.” In addition, they say Kim intended to protect Liz’s interests by naming Buff and Saltonstall as trustees due to Malcolm’s troubled relationship with his stepmother.
Also at issue is whether a trustee can invest trust assets in an entity in which they hold an interest, particularly without notice to the beneficiaries as Malcolm alleged Buff did.
Dispute was headed for trial after ruling
Judge Stern refused to rule on either side of the case before it went to trial earlier this year after concluding that he did not have enough facts to rule whether Chace and Saltonstall “acted solely in the interests of beneficiaries” as trustees of the family trust.
In question were a series of deals in which Buff used trust money to help purchase and renovate buildings in downtown Providence through his development company, Cornish Associates.
Tax breaks Buff Chace received from the city for 10 buildings have been under scrutiny. The City Council last year hired law firm Wistow, Sheehan & Loveley to review the deals and voted to take legal action to unravel the $42.5 million in relief he is expected to receive over 30 years. That case remains ongoing.
In a separate case that remains pending, Kim’s children and grandchildren are challenging an increase in Zopfi Chace's annual allotment from the trust. The trust initially provided Zopfi Chace with $400,000 each year for life. That sum was increased to $800,000 shortly before Kim Chace's death.
A storied family
The storied Chace family made its fortune through a string of textile mills that spun a quarter of the country’s fine cotton in the 1930s and later merged to form Berkshire Hathaway. Their ancestors were renowned activists in the anti-slavery, women's-rights and prison-reform movements.
Kim Chace ranked as one of the state’s wealthiest businessmen and philanthropists. He served for years on the Berkshire Hathaway board, forming a close alliance with billionaire Warren Buffett.
The family's ownership of textile mills, ties with Berkshire Hathaway and other investments even landed Kim on Forbes' annual list of wealthiest Americans, placing him at 271 in 1999 and at 236 in 2001, with wealth estimated at more than $900 million. In 1996, he founded BankRI.
This article originally appeared on The Providence Journal: Providence developer Buff Chace, cousins settle bitter legal dispute. What we know.
Local News
Comments / 0