Former Met officer may deal

Federal prosecutors and a former Metropolitan Mortgage & Securities Co. executive accused of deceiving auditors are negotiating a possible plea agreement.

Such a development with Thomas Turner, who worked as the No. 2 executive at the financial conglomerate, would net the first conviction in the massive accounting fraud that wiped out the savings of thousands of regional investors. And it may offer insight into whether C. Paul Sandifur Jr., the colorful and controversial former CEO and chairman of Metropolitan, will be charged with crimes.

It has been two years since the Spokane company collapsed into bankruptcy. Teams of attorneys, accountants and government regulators unraveled the complicated business dealings and are moving toward resolution of the case. It stands as Spokane’s largest financial failure.

Turner is living in Sparks, Nev., a bedroom community of Reno. He was working for a boat builder before he was arrested and charged in September with seven felony counts of making false statements and material omissions to Metropolitan’s outside accountants.

He was released on personal recognizance and had to surrender his passport.

Suzanne Lee Elliott, who now serves as Turner’s court-appointed lawyer, declined to comment on the progress of plea bargaining and cautioned against concluding that a plea deal was imminent.

“As lawyers we’re always engaged in plea negotiations with the government,” she said.

An order signed by U.S. District Judge John C. Coughenour in Seattle described the plea negotiations as “active.” The order allowed Turner to waive his right to a speedy trial so the sides can “explore settlement options in this case and possibly eliminate the need for a trial.”

If plea negotiations fail, Turner will be tried beginning May 1.

Prosecutors from the U.S. Department of Justice’s fraud section in Washington, D.C., did not return telephone messages this week. They have said publicly that their investigation of Metropolitan continues, though they have stopped short of disclosing whether Turner would be offered a deal in exchange for his cooperation.

Elliott declined to elaborate on Turner’s defense strategy, but said a voluminous amount of paperwork has been gathered during discovery.

“There’s mountains of material,” she said.

Judge Coughenour appointed Elliott to the case after Turner, who was hired in 1985 as a financial analyst for Metropolitan, declared he did not have enough money to pay for his own criminal defense.

He climbed his way up the corporate ladder and Sandifur named him president of affiliated company Summit Securities Inc. in the 1990s.

Turner was paid $185,000 in 2002, making him the second-highest paid person within the conglomerate.

Turner is now paying $500 a month toward his legal fees, though the federal government is reimbursing his lawyer $90 an hour.

Though Turner is the only former Metropolitan employee charged with crimes, the U.S. Securities and Exchange Commission has brought a sweeping civil complaint against him as well as Sandifur, who’s now living in El Centro, Calif., Robert Ness, of Bellevue, and Thomas Masters of Spokane.

The SEC alleges the men falsified financial results by reporting profits from real estate deals in which Metropolitan sold property to buyers who received all of the money to purchase the property from Metropolitan or its closely held affiliates.

The frauds, which Sandifur notoriously called “rabbit transactions,” disguised Metropolitan’s true financial condition, the SEC alleges.

Also named in the SEC complaint was Trillium Corp., a Bellingham timber and real estate firm, and Trillium insiders including owner David Syre and Dan Sandy. Everyone named in the suit has denied the SEC’s allegations.

With mounting losses hidden from investors, Metropolitan issued more notes to unsuspecting people, many of whom had entrusted Metropolitan with their money for decades.

The SEC lawsuit is set for trial in May 2007 in Seattle.