Helen Sandifur, the ex-wife of Metropolitan Mortgage & Securities Co.’s chief executive, will pay $325,000 into a special trust to refund investors in the bankrupted company under a settlement disclosed last week.
The Metropolitan trust sued Sandifur two years ago for $2.1 million, alleging her divorce settlement from former Metropolitan Mortgage chief executive C. Paul Sandifur Jr. was improperly funded from the corporate treasury at a time when the company was technically insolvent. The trust also sought to unwind special dividend payments she earned.
It was all part of an effort to recoup money from various Sandifur family members, who earned dividends from their sole ownership of the company’s common stock.
Some of the more than a dozen lawsuits have been settled; one notable exception is a $500,000 claim against C. Paul Sandifur. While the trust presses that claim, the U.S. Securities and Exchange Commission settled a separate lawsuit against the former Metropolitan boss for $151,000.
In the suit against Helen Sandifur, the trust argued that her 2002 divorce resulted in her holding common stock in Metropolitan that was redeemed in a special arrangement, along with a $55,000-a-year company salary that in effect ensured she would not use her knowledge and contacts to compete with Metropolitan.
The settlement terms were filed in Bankruptcy Court records last week.
About 10,000 people hold $352 million in Metropolitan notes. Another 6,600 people own $113 million in notes from Metropolitan’s sister company in Idaho, Summit Securities Inc. These investors have so far collected between 4 cents and 7 cents on the dollar.
Thousands more investors held $131 million worth of preferred stocks that were rendered worthless in the company’s bankruptcy case, filed in February 2004.