Senior trust officer testifies 2009 trust of former Carhartt leader 'deeply underwater'

A senior trust officer with Plante Moran Trust testified Wednesday that a 2009 irrevocable trust of former Carhartt leader Gretchen Valade "is deeply underwater" with liabilities far exceeding its assets.

Julie Cotant was the last of nine prosecution witness to testify in the trial of attorney David Sutherland, who is charged with embezzling funds from Valade trusts. Cotant spent all day Wednesday testifying about the trusts, their assets and expenses, among other things.

Sutherland, of Grosse Pointe Farms, is accused of embezzling several million dollars from Valade trust funds for which Sutherland was trustee.

He is facing two counts of embezzlement over $100,000, one count of embezzlement from a vulnerable adult of $100,000 or more and one count of conducting criminal enterprises. Each count is a 20-year felony offense, the Michigan Attorney General's Office previously said.

Trust is $60 million in debt

Defense attorney James Joseph Sullivan said he was reserving his opening statement when the trial began May 15 in Wayne County Circuit Court. He has filed a motion for a directed verdict, to be argued Thursday. If the motion is denied, it is anticipated Sullivan would give an opening statement to the jury Friday.

Sutherland was trustee for Valade's 2009 irrevocable trust. Plante Moran became the trustee of that trust in August 2020, Cotant testified. When the firm took it over, the interests it held included real estate (buildings and parking lots), some promissory notes and life insurance policies.

She testified the trust today holds about $9.4 million. However, Cotant testified that the trust owes $60 million, adding that money was borrowed from Valade's 1982 revocable trust to keep the 2009 irrevocable trust alive. The borrowing occurred while Valade was alive, Cotant testified.

Valade, a businesswoman, philanthropist and arts patron, died at her Grosse Pointe Farms home on Dec. 30, 2022. She was 97 and the granddaughter of Carhartt Inc. founder Hamilton Carhartt.

Sutherland was charged in January 2023, less than two weeks after Valade died.

Cotant testified that money is no longer being lent from the 1982 revocable trust.

Cotant also testified that two promissory notes, one from Byzantine Holdings LLC, of which Sutherland was a partner, and another from Sutherland himself, each for $5 million, are owed to the 2009 irrevocable trust. However, she testified a review of records on each note indicates those figures appear to be in excess of $7.7 million each.

Cotant testified the $5 million promissory note for Byzantine was exceeded in July 2019, but there were six transactions totaling more than $100,000 to Byzantine in October 2019 and three checks to Byzantine totaling more than $400,000 total in June 2020.

In regard to Sutherland's personal $5 million promissory note, there was more than $100,000 in checks written to entities, such as Tuscola Energy, which Cotant said the 2009 irrevocable trust had no ownership interest. One list presented by prosecutors showed about 16 entities, including entities they have said Sutherland had an interest in.

Cotant testified that the two $5 million loans did not help the beneficiaries of the 2009 irrevocable trust, rather aiding the recipients of the loans, based on her review. She testified there was a $500,000 payment on the Sutherland note and that neither note has been paid in full.

She testified under cross-examination that she believed there had been some distributions to beneficiaries in the 1982 trust, but they have made calculated decisions on distributions because of pending litigation and they don't want to deplete the trust. She testified there may not be distributions made from the 2009 irrevocable trust because the debt far exceeds its assets.

A loan from William Cardinal Foundation

During his opening statement, a Michigan assistant attorney general asserted to the jury that Sutherland betrayed Valade, using her "like a human ATM."

Sutherland also is accused of stealing from the trust of a Grosse Pointe Farms school in a separate case that will be tried later. He's charged with one count of embezzlement of $100,000 or more in that case.

In that case, attorneys with the state Attorney General’s Office said the allegation involves embezzlement of more than $1.4 million from the William Cardinal Foundation, which is to benefit education at St. Paul on the Lake Catholic School in Grosse Pointe Farms. That alleged crime is said to have occurred between Aug. 1, 2018, and last year, according to statements made during Sutherland's arraignment in June 2023 in Grosse Pointe Farms Municipal Court.

On Tuesday, attorney James Zavell, who once worked with Sutherland, testified in the Valade trust case that Sutherland twice told him he was thinking about taking a loan from the William Cardinal Trust. Zavell testified that he twice told Sutherland that he thought that was a bad idea.

Zavell testified that when Sutherland told him he took the loan, he told Sutherland he thought that was a mistake. Zavell testified that he thought the loan was "a million bucks or something like that" and that a promissory note was written up for that.

Contact Christina Hall: chall@freepress.com. Follow her on X, formerly Twitter: @challreporter.

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This article originally appeared on Detroit Free Press: Testimony: Former Carhartt leader Valade's trust 'deeply underwater'