Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, June 19, 1993 TAG: 9306190232
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: DOUGLAS PARDUE STAFF WRITER
DATELINE: LENGTH: Long
The documents, partially unsealed Friday by a federal judge in Roanoke, accuse Stone, a bank officer, of systematically pilfering the trust accounts of Lucy Pannill Sale. Stone took the money over at least three years by taking advantage of Sale's trust and a lax system of internal checks at Piedmont Trust Bank, according to the documents.
In January, when a routine bank audit discovered huge amounts of money missing from Sale's multimillion-dollar accounts, Stone persuaded Sale to sign a letter saying that the missing money was a gift, the court documents say.
Sale signed the statement because she knew Stone was in "a matter of some seriousness," but had no idea how much money was missing or why, Phil Gardner, Sale's attorney, said Friday. The statement Stone gave Sale to sign had left the amount blank, Gardner said.
She signed, he said, because she had trusted Stone as the manager of her account for years and had absolute faith in her. "She didn't want to see Susan in trouble. . . . Mrs. Sale was very attached to Susan."
Gardner said Sale, an 85-year-old widow who now lives in Hilton Head, S.C., has spent much of the last half of her life trying to help people and causes - usually with anonymous gifts of money from her trust. Gardner said he was forbidden from revealing the size of the trust, but said the missing money is a "significant reduction of the account, but didn't wipe it out."
Stone was the person Sale trusted to arrange and deliver the gifts.
When Sale learned the nature and magnitude of the case, Gardner said, she was "brokenhearted. . . . She feels like anybody would feel if you get bit by your own dog - hurt, anger."
According to court documents, Sale also signed other papers for Stone indicating that she had authorized gifts. But, the court documents say, Sale told the FBI that she often signed what Stone brought to her "but did not always fully understand the full significance of the documents she signed, since she completely trusted Stone."
Gardner said he has no proof, but suspects the pilfering began long before the 1990 date mentioned in the unsealed court documents.
An "unexplainable standard of living existed before then," Gardner said.
Before Stone was fired, she earned $42,000 a year. In documents filed in federal court, the FBI agrees that Stone continues to appear to be "living considerably beyond her means," judging from her expensive cars, travel habits and credit-card payments. Federal officials refused to reveal a five-page list of items believed to have been purchased with the $1.5 million.
Some court officials involved in the case say the actual amount of money taken may be near $3 million. That would make it the largest bank embezzlement in Virginia since 1956, when Minnie Mangum got 20 years for stealing $3 million from a Norfolk savings and loan.
Stone has not been charged, but Assistant U.S. Attorney Jennie Wearing said the investigation is part of a continuing grand jury probe. She wouldn't say if anyone else is a target of the investigation.
Details of the case came to light this week after U.S. District Judge Sam Wilson, at the request of the Roanoke Times & World-News, unsealed a search warrant for Stone's home, office and personal computer.
The judge also released Friday a 17-page affidavit filed by the FBI to obtain the search warrant.
Because the investigation is continuing, the judge allowed federal prosecutors to not release certain names and details. But the affidavit outlines how the government believes Stone stole the money to enjoy a high life she couldn't afford.
Stone, 43, had worked for the bank more than 20 years. As a trust officer, she personally administered two trust accounts for Sale, whose fortune came from the Pannill family knitting business, which was sold and now is Sara Lee Knit Products.
As the trust account administrator, Stone had the ability to take money from the accounts. She did that in two main ways, the affidavit says. She obtained Sale's permission to make some small cash gifts, which she then greatly increased and gave to herself. And she simply transferred money from the trust to accounts she opened or controlled.
The affidavit says she was able to cover the embezzlement by faking permission letters from Sale and because she prepared most of the bank's trust customer tax returns - work she often did at home away from bank scrutiny.
Federal authorities won't say if there is any evidence of money missing from other trust accounts handled by Stone.
Piedmont Trust Bank President Irving M. Groves Jr. released a statement Thursday emphasizing that the bank's internal auditing staff discovered the misapplications. But bank officials had no comment Friday on how the embezzlement went undetected for at least three years. Bank officials also refused to say how often they audit their trust accounts and wouldn't reveal why so much apparently unquestioned authority was given to one person.
Bank officials said only that they are cooperating with the federal investigation and plan a complete audit of the trust department "to assure that all possible controls and safeguards are in place and operable."
by CNB