WESTERLY, R.I. — Washington Trust Co. has agreed to pay nearly $5 million for allowing the former president of a Westerly manufacturing company to move corporate funds into his personal account, embezzling millions from the firm, according to the company’s current president.
The bank, in restating its first quarter earnings from $3.5 million to $154,000, said it had settled the four-year old lawsuit brought against it by Maxson Automatic Machinery.
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The suit, filed in January 1997, alleged that Washington Trust breached its fiduciary duty by permitting Maxson’s former president and treasurer, Anthony Clancy, to transfer funds from Maxson’s corporate account with the bank for his personal benefit.
According to a Washington Trust spokeswoman, nobody in the bank was accused of wrongdoing, and no one was aware of wrongdoing, during the time of the events named in the lawsuit — 1985 to 1996.
Clancy, who plead no contest to charges of embezzlement, served three years of a four-year sentence on home confinement, said Joseph F. Matthews, current Maxson president. Clancy embezzled more than the $4.8 million paid to Maxson by Washington Trust, Matthews said. He refused further comment.
