Spoiled brats or entitled to millions? Chace cousins rip each other in court over $70m family trust

PROVIDENCE – For years, Arnold “Buff” Chace Jr. has played a pivotal role in the revitalization of downtown Providence. Whether he engaged in self dealing by relying on an $80 million family trust to make those projects work proved central Thursday in Superior Court.

Judge Brian P. Stern heard arguments in a case that has pitted Buff Chace against his cousin Malcolm Chace IV, who, along with his siblings and their heirs, have sued to get the developer removed as trustee of the family fund.

“What they are asking the court to do is set aside the intent of the father in the selection of trustees and the management of his assets,” Buff Chace's lawyer Matthew T. Oliverio said.

Malcom Chace IV's father, Malcolm “Kim” Chace III, deliberately chose Buff Chace and his stepson William Saltonstall, as trustees upon his death in 2011, Oliverio said. He empowered the trustees with broad discretion and intended for them to use family assets to revitalize historic Providence buildings in keeping with his vision, he said.

Malcolm Chace IV and the other beneficiaries might not like the trustees’ decisions, but that doesn’t mean Buff Chace engaged in self dealing or breached their loyalty, Oliverio said in urging the judge to rule in the trustees’ favor short of trial.

Did Buff Chace use the family trust as a `piggy bank’

But lawyers for Malcolm Chace and the other beneficiaries argued Buff Chace did just that.

“Does broadest discretion mean a trustee can convert trust assets for his own interests?” Michael Marino asked as Malcolm Chace observed from the gallery.

“Even broad discretion is bounded and it’s most specifically bounded by that duty of loyalty …,” Marino continued. “The broadest discretion doesn’t mean you can steal.”

Marino emphasized that “but for” the family trust money, Buff Chace's buildings would not have been renovated, and accused him of using it as his piggy bank.

“Whether the beneficiaries are spoiled brats makes no difference … None of these things allow a divided loyalties transaction,” Marino said in arguing Buff Chace had put his own interests ahead of all others.

More: Chace family members trade barbs in legal feud dividing one of RI's richest families

In a second case, Malcolm Chace and the others are challenging a death-bed change to Kim Chace's will that doubled his wife, Elizabeth Zopfi Chace’s, annual allotment from the trust to $800,000. They question the will’s validity, claiming that the lawyer who signed it then witnessed his own signature.

Their lawyers argued Thursday that Stern should let the matters proceed to trial because the court has an obligation to determine if the trust is being properly administered.

Buff Chace's lawyers insist the case should be dismissed, asserting that the not well grounded in fact and was clearly intended to merely harass Buff Chace, Zopfi Chace, and Saltonstall..

Stern plans to issue rulings in the coming months.

Tax breaks take center stage

The arguments came a day after the Providence City Council moved in another courtroom to unravel tax breaks Buff Chace received on downtown buildings that officials say cost the city millions in tax revenue.

Superior Court Judge Joseph J. McBurney heard arguments Wednesday on the Council’s motion to intervene in the case to try to undo the tax agreement Buff Chace reached with the city. Those parties are set to return to court Friday.

Chace family history

Kim Chace was one of Rhode Island’s wealthiest businessmen and philanthropists. He served for years on the board of the Berkshire Hathaway conglomerate, 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 Chace on Forbes' annual list of wealthiest Americans, placing him at 271 in 1999 and at 236 in 2001. His wealth was estimated at more than $900 million. In 1996, he founded BankRI.

This article originally appeared on The Providence Journal: RI's Chace family dynasty infighting over trust money plays out in court