Metropolitan Mortgage

SEATTLE – Federal prosecutors called a former executive of Metropolitan Mortgage & Securities Co. a liar who schemed to mask losses at the Spokane financial conglomerate by deceiving auditors. The executive's attorneys, however, tried to direct at least some of the blame for the company's failure toward those auditors.

The criminal trial of a leading executive of defunct Spokane financial conglomerate Metropolitan Mortgage & Securities Co. begins Tuesday in Seattle, three years after the company filed for bankruptcy amid an accounting scandal. Thomas Turner worked as president of Summit Securities Inc., a sister company of Metropolitan, controlled by common owner C. Paul Sandifur Jr.

Two former Metropolitan Mortgage & Securities Co. executives and a Rochester, Wash., businessman accused of fraud have settled lawsuits pressed by the U.S. Securities and Exchange Commission. The men, including former Metropolitan controller Robert Ness, a former vice president, Thomas Masters, and businessman Dan W. Sandy allegedly played separate roles in what federal investigators say was a series of corrupt real estate deals that inflated Metropolitan's profitability and hid the firm's deteriorating financial condition. The deception allowed Metropolitan to continue selling stocks and bonds to investors and escape regulatory scrutiny, according to the suit.

Lawyers and other professionals unraveling the tangled business dealings of Metropolitan Mortgage & Securities Co. have collected $19.4 million in fees and expenses during the past 21/2 years, according to company records and court filings. At least 28 law firms, outside accountants, tax consultants, public relations companies, insurance actuaries, turnaround specialists, expert witnesses, property appraisers and other companies were hired. It has been the largest and most expensive Eastern Washington bankruptcy. And the work isn't done.

Richard Ziehnert hurried to the trash can and started digging. At last he retrieved an unopened, nondescript envelope from Wells Fargo. Inside was a check for $263. It wasn't so much the money Ziehnert wanted. The $263 represented so much more: betrayal, loss, patience and finally payback. The check was his initial disbursement from his lost Metropolitan Mortgage & Securities Co. investments.

At last. After 31 months, 12,500 court filings and a full-scale federal accounting fraud investigation, Metropolitan Mortgage & Securities Co. is mailing checks today to the thousands of people burned by Spokane's worst corporate financial failure.

Investors in defunct Metropolitan Mortgage & Securities Inc. will receive a small payout within about two months. It's been a 2½-year wait for thousands of people, who could only watch as the Spokane financial conglomerate went bankrupt and became engulfed in a snarl of accounting scandals and lawsuits.

Helen Sandifur, the ex-wife of former Metropolitan Mortgage & Securities Co. CEO C. Paul Sandifur Jr., is fighting allegations that $2.1 million paid to her by the company should be returned. Attorney John Bury argued Thursday that attorneys and trustees for Metropolitan Mortgage were too late when they filed a special bankruptcy lawsuit to rewind the payments.

Metropolitan Mortgage & Securities Co. and its insurance affiliate have resolved part of a bitter dispute that should finally allow the bankrupt firm to release money to thousands of creditors this summer. The agreement makes it possible to pay people who hold Metropolitan debenture bonds between 7 cents and 8 cents on the dollar, said acting chief executive Maggie Lyons. Those holding debenture bonds of Summit Securities Inc. will receive an initial payout between 3 cents and 6 cents on the dollar.