October 2, 2005 in City

Sandifur’s lot

By The Spokesman-Review
 
The Spokesman-Review photo

This home on the Barbara Worth Country Club golf course outside El Centro, Calif., is the residence of C. Paul Sandifur, former CEO of Metropolitan Mortgage in Spokane.
(Full-size photo)

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EL CENTRO, Calif. – Less than a dozen miles from the Mexican border, C. Paul Sandifur Jr. is leading a new life.

It’s here in a desert town in southernmost California, where temperatures often top 100 degrees in October, that he bought a home and took a new job.

His life is a stark departure from the one he enjoyed for 20 years in Spokane, where he was a powerful force in the community as head of one of its most prestigious companies.

“Nothing about him says ‘Money,’ ” said Doug Dahm, who manages the real estate agency where Sandifur is employed as a Realtor.

Shortly after resigning from the company his father and uncle founded 50 years ago, Sandifur left Spokane and dropped from sight as Metropolitan Mortgage & Securities Co. collapsed. The company’s bankruptcy stripped 10,000 investors of some $450 million.

In the meantime, the 63-year-old Sandifur has been busy in El Centro. He received a license to sell real estate in California last January.

He stayed for a time with Marion Boenheim, whom he knew when she worked in Spokane.

She left the Inland Northwest several years ago to take a job as human resources director at Imperial Valley College near El Centro. She lives there in a modest, clean, new subdivision where all the homes look alike – tan adobe siding, terra cotta roof, neat yard and big garage.

Sandifur has traveled to Seattle and Spokane to visit with friends and meet with lawyers representing him in a tangle of lawsuits and bankruptcy matters. These so-called “Sandifur sightings” in Spokane always create a stir among Metropolitan investors, who hold him accountable for the company’s demise and their own financial losses.

In El Centro he enjoys virtual anonymity. His associates and boss call him humble, quiet and kind, a sort of freelancer who rarely comes to the office.

“Clothes, jewelry – he doesn’t have any of that kind of stuff that would make you wonder about someone,” Dahm said.

His co-workers were “just shocked” to hear last week that Sandifur once ran a $2.7 billion financial conglomerate and that he has been accused of financial fraud in a sweeping complaint filed by the U.S. Securities and Exchange Commission.

“I don’t know what to say other than we didn’t know any of this,” said Kristin Lee, who owns The Real Estate Advantage, the agency where Sandifur is employed.

Upon reading the SEC complaint, Lee said she planned to meet with Sandifur and ask why he didn’t disclose his background and experience during his two-hour job interview. She also said she’d review his job status.

“Oh my gosh. Please know that I am so sorry for those investors,” she said. “The El Centro community is very close-knit, and people trust one another. But once you violate that, you can never work there again.”

Added Lee, “He seems like such a nice older gentleman.”

His interests were politics and culture

Sandifur enjoys few of the luxuries one might expect in an era when fallen executives typically lavish themselves with expensive sports cars, palatial homes, original artworks and ritzy social calendars.

That never has been Sandifur’s style, those close to him said.

He did have a nice 16th-floor office in what used to be the Metropolitan Financial Center. And he indulged himself with some perks – speeding around town in a leased Jaguar, for example, and living in a penthouse at the Riverfalls Tower near downtown Spokane that several years ago rented for about $3,000 a month.

But Sandifur did not live an ostentatious lifestyle, for the owner of one of Spokane’s most prominent companies. His interests were politics and culture. He directed his firm’s generous giving to causes he deemed important.

Bright and passionate, Sandifur also was controlling. He was suspicious of success and ran his company tightly, according to former employees who were interviewed by a court-appointed bankruptcy examiner.

Sandifur couldn’t be reached for comment in El Centro. He didn’t return telephone messages left at his home and work, or answer the door during numerous visits to his home, although associates said he was in town at the time. But interviews and public records show that the executive and one-time philanthropist is attempting to start over.

Instead of a Jaguar, Sandifur drives a green 1990s SUV.

And he now owns a home, a tired rancher purchased from a carrot farmer outside of El Centro. He took out a 30-year, $228,000 mortgage from Washington Mutual to finance the purchase, according to Imperial County records.

A mature tree shades the house at the end of a cul-de-sac. Double front doors greet visitors under a pergola built with painted lumber that’s now warped and peeling.

The house sits along the par-three 11th hole of the Barbara Worth Country Club. A pair of sky-blue golf carts parked in the back yard look as if they have shuttled golfers across the fairways for years.

This country club and resort was built decades ago, ringed by fields of alfalfa and vegetables. It’s not the sort of manicured course cut into the woods, river valleys and lakesides of Spokane and Coeur d’Alene.

Since moving to El Centro, Sandifur has worked on a couple of small projects for the Small Business Development Center there. He was paid a total of $293 for the work, according to director Ben Solomon.

He appeared on behalf of the SBDC at one event, an economic summit called “Explosive Growth with Vision: Preparing a Recipe for Success.”

Perhaps the most tangible indication that Sandifur has turned the page on Spokane and Metropolitan was discovered in his office in the Met tower after he resigned in January 2004. In the top drawer of his desk he left behind an envelope containing two items – a simple wedding band and the key to his penthouse.

El Centro growing rapidly

Situated less than a two-hour drive from San Diego along Interstate 8, El Centro holds promise. Its population is 41,000 people, with another 110,000 living in surrounding communities. Three in four residents are Latino.

Commercial development is rippling across the area as the services and retail sectors grow. A big new mall just opened in El Centro, while stores like Wal-Mart, Target and Costco anchor the other end of town.

El Centro has attracted the overflow from other Southern California cities. Housing remains affordable, by comparison, with a median price of $235,000. Workers at two nearby state prisons and military families from area bases can afford to live in the Imperial Valley.

Also driving the region’s economy is Mexicali, a city of 1 million people in the Mexican state of Baja California, just 10 miles away from El Centro.

U.S. and Asian manufacturers operate maquiladoras – or foreign-owned factories – in Mexicali, taking advantage of cheap labor and lax regulations.

Many managers of the factories are Americans who actually live in El Centro and commute across the border to work each day.

The El Centro area feeds the nation’s salad appetite. With a 12-month growing season, irrigated agriculture allows farmers to grow leaf lettuce, arugula, carrots, herbs, onions and other crops.

Sandifur a scapegoat, his lawyer says

Sandifur’s lawyer, Kelly Corr, said last week that the irony behind the collapse of Metropolitan Mortgage is that no one lost more than its owner. Sandifur tearfully told The Spokesman-Review in early 2004 that his personal fortune of roughly $8 million to $15 million was tied up in Metropolitan’s common stock, which is now worthless. He expressed deep sorrow for the thousands of investors who trusted their money to the company.

Corr called Sandifur a scapegoat and said he did everything possible to keep the company going.

The SEC agrees, to a point.

Marc Fagel, associate director of the SEC’s enforcement division office in San Francisco, said the agency’s investigation did not reveal executive looting.

“It’s not viewed by us as that sort of case,” Fagel said of the 11-count civil complaint filed in U.S. District Court in Seattle.

The SEC accuses Sandifur and others of conducting a fraudulent scheme to mislead investors about Metropolitan’s financial performance.

Though not technically theft, the SEC seeks ill-gotten gains from the defendants, such as salary, bonuses and stock dividends.

Sandifur has not been charged with crimes, but a Seattle grand jury indicted Thomas G. Turner, the second-highest ranking official within the Metropolitan group, on seven felony counts of lying to Metropolitan’s outside auditors.

The events follow a lifetime ban from the securities business for Sandifur, who signed an acceptance letter with the National Association of Securities Dealers promising to never again sell securities or work in a supervisory role overseeing their sale.

The SEC’s assessment of Sandifur’s financial situation aligns with an analysis conducted by bankruptcy lawyers and the new executive team hired to oversee the liquidation of Metropolitan.

Still, bankruptcy lawyers will seek to unwind $6.7 million in special stock redemptions, dividends and salaries paid to Sandifur, his ex-wife Helen Sandifur, and other family members holding common shares through a trust.

Of that, $4 million went to Paul Sandifur between the years 2000-2003. It is unknown if that money has been spent. But recovering it will be a priority for creditors, according to the analysis contained in the company’s bankruptcy plans.

Helen Sandifur was apparently paid $2.29 million – much of that garnered in a special stock redemption in 2002 as part of the couple’s divorce.

Sandifur’s cousin, Barbara Williams of Spokane, is disgusted with the situation. Along with her mother, the wife of Metropolitan co-founder Charles Sandifur, the “other” branch of the Sandifur family lost about $700,000 in the company’s failure. Charles Sandifur and his brother, Paul Sandifur Sr., started the company from scratch in 1953.

Metropolitan grew rapidly under Paul Sandifur Jr.’s leadership, amassing assets of more than $1 billion as the company ramped up the issuance of debt securities to investors across the Northwest – investors like Velma Provost.

Provost, of Wilson Creek, a small farming town west of Spokane, said her losses from Metropolitan’s collapse forced her to keep working, even though she’s 71.

“I just hope he isn’t living the high life,” she said of Sandifur, “because I’m not.

“Life is tough. I haven’t lived like this since I was young and patching gunnysacks.”


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