Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SATURDAY, May 7, 1994 TAG: 9405090150
SECTION: C1 PAGE: VIRGINIA EDITION: METRO
SOURCE: MICHAEL STOWE STAFF WRITER
DATELINE: LENGTH: Medium
The Martinsville bank announced this week that it had reached a settlement with Lucy Pannill Sale. The lawsuit confirmed the payment amount at $5.5 million.
The money was discovered to be missing from Sale's account more than a year ago. An FBI search warrant revealed that former Piedmont trust officer Susan Stone was under investigation in connection with the missing funds.
No charges have been filed, but a source familiar with the case said an indictment against Stone is expected in the next few months.
The suit, filed in U.S. District Court in Roanoke, is asking the court to order Progressive Casualty Insurance Co. and Continental Insurance Co. to honor the $5.5 million claim.
Douglas Densmore, an attorney for the bank, said Piedmont repaid Sale out of its earnings and is now trying to reach a settlement with the insurance companies.
"We fully expect to prevail," he said. "It's a large claim, and of course the carriers are always reluctant to pay."
Piedmont, which had $394 million in assets in 1993, notified both insurance companies of the potential claim April 23, 1993, according to the suit, but has been unable to reach terms with either one.
"At this point in time, we have not been reimbursed," said Leon Lackey, Piedmont's vice president of marketing.
Lackey said the bank had set aside $1.3 million to cover the deductible portion of its insurance claim and is working to recover some assets from Stone.
Sale is the daughter of Pannill Knitting Co. founder William Pannill and widow of E.A. Sale, the president of Sale Knitting Co.
Ben Gardner, her attorney, said Friday that Sale was satisfied with her settlement with the bank and just wants to put the incident behind her.
The federal suit also claims that Continental interfered in Piedmont's negotiations with Sale.
In December 1993, according to the suit, Continental agreed that it would contribute toward a settlement with Sale, provided that the heiress would agree to give a deposition.
The questioning of Sale was intended to ensure that she had not authorized removing any of the $5.5 million from her account.
The suit claims that in April, Continental wrongly told Sale's attorney that taking her deposition was not a requirement of the settlement.
"As a result of Continental's intentional interference ... counsel for Mrs. Sale demanded settlement with Piedmont, refused to agree to a deposition of Mrs. Sale as part of the settlement and threatened suit for damages far in excess of the proposed settlement," the suit says.
Piedmont is in an "untenable position" without Sale's deposition, according to the suit, because either Continental or Progressive might refuse to pay if she were to testify in court that she authorized withdrawal of the money.
In response to problems with Sale's account, the Federal Reserve bank issued a cease and desist order against Piedmont requiring closer supervision of trust department employees.
Lackey said the last year at the bank has been an "arduous" time that the bank simply wants to leave behind.
by CNB