Sandifur’s hard landing
Met Mortgage’s former chairman faces a traumatic journey - out the door
With tears and resignation, C. Paul Sandifur Jr. is losing his family’s legacy.
A colorful and controversial figure in Spokane’s button-down establishment, Sandifur is a former campus radical who liked to drive his Jaguar fast, travel the world and listen to avant-garde classical music.
For more than 20 years, he’s quietly financed the arts in Spokane, dabbled in politics and helped Spokane’s poor.
Now, the 62-year-old businessman has been stripped of his corporate power and faces a harsh public spotlight as the firm his father founded 50 years ago is mired in financial scandal.
On Jan. 27, Sandifur resigned as chairman and chief executive officer of Metropolitan Mortgage & Securities Co. and its affiliates, companies he’d headed since 1981.
Until last fall, Metropolitan had never missed an interest payment and had grown into a $2.5billion conglomerate that dealt in real estate and insurance, and sold unsecured bonds called debentures to bankroll its enterprises.
Wednesday, the company filed for Chapter 11 bankruptcy protection - throwing thousands of investors into limbo.
Within a week, Sandifur will vacate his elegant, art-filled office on the 16th floor of the Metropolitan tower at First and Wall.
His leased Jaguar is gone. He has no lucrative buyout. He hasn’t decided whether he’ll stay in Spokane. Outsiders are running his company.
In an interview Thursday, Sandifur spoke resignedly of his potential personal stake in Metropolitan’s bankruptcy.
He stands to lose $8million to $15million in company stock - much of his personal fortune - if the company he once ran can’t make other investors whole. A brother and sister stand to lose their stock as well.
Sandifur’s crisp demeanor evaporates when he speaks of Metropolitan’s battered investors and his self-made father’s legacy.
His eyes fill with tears and his fingers tremble. He pauses and looks out his office window at the city he helped build.
“This is a very difficult period. I feel I wasn’t able to carry out the responsibility my father entrusted me with,” he said.
“I feel terrible about the small investors. My father gave me that responsibility, and I did everything in my power to carry it out,” he added.
A January 2003 U.S. Securities and Exchange Commission investigation barred Met from raising $100million by selling more debentures and caused the company to run out of cash, Sandifur said.
“That would have killed the company in any year. This was the year,” he said.
The trouble at Metropolitan is the latest chapter in Sandifur’s unconventional life, which began in Spokane in 1941.
Sandifur was a “born rebel,” said Eastern Washington University journalism professor Bill Stimson, who interviewed him for a book on Spokane’s history.
“He’s a guy who argued with his father in a town where people become successful by not arguing with their fathers,” Stimson said.
A July 1955 Spokesman-Review photo shows a perfect Eisenhower-era family: a stylish mother, a smiling, bow-tied Paul Sr. next to his oldest son, 13-year-old Paul Jr. and three other Sandifur children.
Evelyn Sandifur and her children were about to leave Spokane for a year in Europe, where they would live in a six-room apartment in Florence and travel widely.
Paul Jr.’s Christmas present that year was a trip to Cairo and Istanbul.
His father, who founded Metropolitan Mortgage in 1953 and held the first Washington state permit to sell real estate debentures, was too busy to take a year off, the accompanying newspaper article said. He joined the family on holidays.
In a 1991 book, “Just Give Me Real Estate,” Paul Sr. said his millions never made him feel happy and he continued to feel slighted by Spokane society.
Relations with his “strong-willed” father, who sometimes ridiculed him in public, were strained, Sandifur said.
Sandifur studied psychology, in part to try to understand his father. After graduating from Whitman College in 1965, Sandifur left for San Francisco and Berkeley.
At the time, “Spokane wasn’t a very happening place,” he said. He grew his hair long, drove a cab and lived in Haight-Ashbury, the center of 1960s counterculture. As a graduate student, he was forced out of the University of San Francisco for helping organize a faculty strike over the Vietnam War.
He moved to Chicago, where he worked in a factory and lived for a while out of his car. He ran a small crafts shop on tropical Kauai in Hawaii and sold real estate in the Tri-Cities in the late 1970s.
Sandifur met his wife, Helen, a former Spokane restaurant owner, in 1974. They married in 1979.
At his father’s request, Sandifur came home in the early 1980s to pull Metropolitan out of economic trouble due to soaring national interest rates.
He joined the company as executive vice president in 1980 and became president in 1982. That year, his parents set up trust funds for Sandifur and siblings Mary, Ann and William with Metropolitan stock.
Within a year, the company’s assets grew from $100million to $148 million.
After his parents were killed in a June 1995 traffic accident, Sandifur publicly addressed his family conflicts at the funeral.
It was held at the Metropolitan Performing Arts Center, the former 1915 State Theater, which he’d purchased and renovated for $1.5 million and reopened in 1988.
“He told us in the most heartfelt way the story of his life and how tough it was growing up. We were all riveted in silence,” said Sheri Barnard, the former mayor of Spokane.
On the outside
Sandifur has had a testy relationship with Spokane’s downtown establishment.
In the early 1990s, he battled Washington Water Power Co. over an oil spill that threatened his downtown real estate. “It was handled well in the end, but we had to make a real fuss. WWP needed nudging,” Sandifur said.
EWU’s Stimson was on the board of the Friends of the Davenport at the time. The hotel’s reopening was threatened by the oil spill, which has since been cleaned up.
“We were thrown together as allies, and I saw Spokane from his angle for the first time,” Stimson said.
Sandifur was an early critic of River Park Square, the controversial public-private partnership behind the downtown mall and parking garage that is still embroiled in litigation.
“I’d hoped there wouldn’t be so much public money involved,” Sandifur said. “We did our projects privately.”
That sentiment put him at odds with the Cowles family, developers of River Park Square.
“Paul is somewhat mercurial,” Spokesman-Review publisher Stacey Cowles said. “He thought he wasn’t treated right at a meeting of the Downtown Spokane Partnership a few years ago. That soured his relationship” with the group, Cowles said.
Recently, the two men have been meeting monthly to discuss downtown development, Cowles said.
Cowles said he’s saddened by Metropolitan’s problems.
“It’s a tragedy to have one of our leading corporations facing these allegations. The last thing we need is a major loss of wealth in the community,” he said.
Sandifur backed several politicians critical of Spokane’s downtown interests, including former Mayor John Talbott and council members Cherie Rodgers, Steve Eugster and Steve Corker.
“Paul and I agreed that River Park Square represented closed-door politics at City Hall,” Corker said.
Sandifur briefly considered backing an independent magazine run by Spokane journalists Larry Shook and Tim Connor, but changed his mind after giving about $10,000.
In May 2000, Sandifur urged them to share the results of their River Park Square investigation with the Spokane City Council before the fall elections that year, Connor said.
“It was completely inappropriate and unethical to do that. We had to go public with our readers first,” Connor said.
Stimson was invited to mediate the disagreement between Sandifur and the writers as a neutral journalism teacher.
“I tried to use an analogy - what if Stacey (Cowles) asked his reporters to help him influence an election?” Stimson said. “Sandifur said, `Do you think he doesn’t?’ It was a very cynical view of the newspaper and of journalism.”
Over two decades, Sandifur built a reputation as an arts patron and Spokane benefactor. While the Davenport was still shuttered, he saw promise downtown.
After opening the Met in 1988, he’s continued to subsidize it with a $250,000 annual corporate contribution. Its fate in the Metropolitan bankruptcy is unclear.
“Paul was a visionary for a vital downtown with cultural events and fine dining,” said Kendall Feeney, pianist and Eastern Washington University music professor.
Sandifur financed Zephyr, Feeney’s contemporary classical music performance group, which had a 12-year run.
“It was in keeping with Paul’s unusual view on things. He’s very interested in the new and not just in traditional cultural institutions,” Feeney said.
The Met is home to many arts groups that previously had to perform in cramped and unsatisfactory spaces, said Beverly Biggs, founder of the music group Allegro.
It’s also become a venue for traveling performances, local literary and film festivals and a key part of the Davenport Arts District.
Karen Mobley, Spokane Arts Commission director, has nominated Sandifur for a national award for business philanthropy.
Much of Sandifur’s assistance is behind the scenes, such as providing a graphic designer to help the Davenport Arts District, Mobley said.
Sandifur also has personally supported environmental groups, including the Lands Council and Save Our Summers, a group fighting grass field burning.
“I feel strongly about environmental issues, especially clean air,” Sandifur said.
He donated money to build a bridge over the Spokane River that connects the north side of the river to the Centennial Trail in Peaceful Valley. He also supports area Boy Scouts, Spokane County Commissioner Phil Harris said. “He’s a very quiet person when it comes to charitable gifts,” Harris said.
As Spokane’s economy worsened in 2002, Sandifur founded CARE, a Metropolitan charity run by Judith Gilmore, a Spokane activist and Metropolitan’s community relations director.
“Paul said he wanted to enhance his giving - doing more for more,” Gilmore said.
The charity serves 25 to 30 grassroots nonprofits. Gilmore stocks a large company warehouse in the West Central neighborhood with hundreds of items, including head lice combs, baby blankets, computers and second-hand clothes.
CARE also runs tax workshops to teach working poor people how to obtain federal earned income tax credit refunds and coaches groups on how to apply for nonprofit status.
CARE may not survive the bankruptcy reorganization, Gilmore said.“We’re getting a flood of e-mails wishing us well,” she said.
Sandifur also loves ideas.
For several years, he’s invited a mix of people to “salon dinners” at a high-rise on Riverside Avenue where he rents a top-floor apartment.
“He has a fine view of the Monroe Street Bridge and the Spokane River,” said the Rev. William Houff, a retired Unitarian minister and dinner guest.
“The discussion ranged far and wide, from Spokane to world politics,” Houff said.
“Paul makes an effort to reach out to people in a way other business leaders don’t. He’s not just your ordinary rich guy. He’s lived the whole gamut - and that makes him a very interesting person,” said Mobley, another guest at Sandifur’s salons.
Sandifur lives comfortably but not ostentatiously, his friends say. His one flash of wealth: the new Jaguars he used to lease before Metropolitan’s financial troubles.
“He drives so fast it scares me to death,” Corker said.
Sandifur’s marriage broke up nearly a decade ago. The couple’s legal battles over an estimated $9million to $11million in community property weren’t resolved until 2001, court records show.
In May 2000, Helen Sandifur accused Sandifur of hiding assets by undercompensating himself at Metropolitan “to enhance the value of property claimed as separate,” the documents say. His annual compensation wasn’t specified.
They’re still not divorced, but they’ve resolved their financial conflicts and remain friends, Sandifur said.
Corker, named last week to head Metropolitan affiliate Western United Life Assurance Co., is dating Helen Sandifur.
She and Corker were about to leave on a world cruise late last year when Sandifur called, asking Corker to stay in town to help with Metropolitan’s problems.
On Dec.3, Corker became a Metropolitan director.
“I hope we can create an environment where we make the debenture holders and other investors whole and Paul can continue to call Spokane his home,” Corker said.
Sandifur’s friends and benefactors are rallying around him.
“So many of us are hoping that the reorganization plans will be successful for Metropolitan and that Paul will come through OK,” said Allegro’s Biggs.
Others who hold Metropolitan debentures are more critical. They say Sandifur should have reined in expenses and curtailed his charitable spending as the company faltered.
In 2002 and 2003, Carol and Clarence Dixon of Spokane invested a total $50,000 in Metropolitan debentures. Company brokers never told them their investment was risky or the company was in financial straits, she said Friday.
“I’m unhappy with the entire company, including Sandifur,” Dixon said. “I want my money back.”
Sandifur retains one perk at Metropolitan: a board director position, which provides him a say in the company’s affairs. But he doesn’t expect to keep it for long as Metropolitan enters bankruptcy.
“It may be extremely temporary. It’s almost like I’m not here.”