PROVIDENCE, R.I. (WPRI) — Rhode Island’s former top federal prosecutor has joined the legal team engaged in a court battle that has split one of the state’s most prominent families.
Robert Corrente — who served as U.S. attorney from 2004 to 2009 and is now in private practice — confirmed that he has been retained by Elizabeth Sundell Chace in a lawsuit involving the assets of her late father, Malcolm G. “Kim” Chace III, who died in 2011.
“This is an interesting and important case that could have broad implications for trustees and beneficiaries of many Rhode Island trusts,” Corrente told Target 12 in an email.
The Chaces have been a powerful Rhode Island clan for generations. Kim Chace’s branch became one of the state’s richest families after Warren Buffett took control of their ailing textile company — Berkshire Hathaway — in the 1960s and transformed it into the $600 billion conglomerate Buffett still runs today.
Now, however, Kim Chace’s children and grandchildren have gone to court to accuse his nephew — prominent Providence developer Arnold “Buff” Chace Jr. — as well as his stepson William Saltonstall, of mismanaging a trust created in Kim Chace’s will. The trust was seeded with over $70 million in assets.
The suit accuses Buff Chace of investing assets from the trust in multiple Providence real-estate deals in which he himself also had an ownership interest, involving buildings such as 40 Fountain St. and 270 Westminster St. It also argues the two trustees have failed to provide proper accounting of the trust’s assets to other family members.
(Unlike Kim Chace’s branch of the family, Buff Chace’s branch sold their stake in Berkshire Hathaway to Buffett early on, and therefore didn’t benefit from the famous financier’s subsequent investing success.)
“We think that, as the case develops, the evidence will show a disturbing pattern of conflicts of interest, sloppy trust administration, and outright self-dealing,” Corrente said.
Matthew Oliverio, who is representing Buff Chace in the suit, declined to respond to Corrente.
“My office has a policy not to offer comment on behalf of our clients who have pending cases that have yet to be finally adjudicated in the courts,” Oliverio told Target 12.
In court documents, Buff Chace and Saltonstall have pushed back at the allegations by Kim Chace’s heirs. They argue that Kim’s eldest son — Malcolm Chace IV — is using “a manufactured pretext” to steer the management of the trust assets to his own investment firm, and suggest he is also bitter that his father didn’t make him a trustee.
“The Trustees have at all times acted in accordance with the expressed intentions of [Kim Chace] by investing a small fraction of Trust assets in real estate rehabilitation and revitalization projects of historic buildings in downtown Providence,” they say in court filings.
Court documents filed on behalf of the trustees also say Kim Chace’s widow, Elizabeth Z. Chace, retains “complete faith, trust and confidence” in her nephew and son to continue managing the trust “during her lifetime.” (William Saltonstall is Elizabeth Z. Chace’s son from an earlier marriage.) Under the terms of Kim’s will, the trust pays her $800,000 a year.
As the dispute plays out, lawyers for the two Chace wings had a conference on Friday before R.I. Superior Court Associate Justice Michael Silverstein, who was covering for Associate Justice Brian Stern. No further hearings had been set yet as of Tuesday.
Ted Nesi (firstname.lastname@example.org) is a Target 12 investigative reporter and 12 News politics/business editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Twitter and Facebook