Summary

The single iconic image of the collapse of Metropolitan Mortgage was the company’s large white rectangular building on the Spokane skyline. It’s now the Wells Fargo building.

The $2.3 billion collapse of the homegrown Spokane financial conglomerate ranks as the largest business failure in Spokane history.

The bankruptcy begun in February 2004 was marred from the outset by an accounting scandal, a major investigation by the U.S. Securities & Exchange Commission, an FBI inquiry that resulted in the conviction of a senior Metropolitan executive, receivership actions by insurance regulators in three states, numerous lawsuits including an investor class action, arbitration cases and a tangle of claims and insider business dealings.

The millions of dollars spent on high-stakes litigation and experts attempting to unravel Metropolitan’s flawed transactions and financial records unfolded against this backdrop: Most of Metropolitan’s 16,000 investors were older residents living across the Northwest. Many had invested their life’s savings in a company that once claimed its unsecured corporate bonds were as safe as certified deposits from banks.

Summary written by staff writer John Stucke

Key People

  • Maggie Lyons

    Maggie Lyons was appointed by a federal judge to be the administrator of the Metropolitan Creditors Trust during the bankruptcy and after the expulsion of the company’s executives. An accountant and manager, she continues to discover, orchestrate and pursue the financial recoveries for the bondholders and other creditors.

  • C. Paul Sandifur Jr.

    C. Paul Sandifur Jr. is the son of the company’s founder. A colorful and controversial figure in Spokane’s political and business community, investigators determined that his overbearing management style and penchant for questionable business dealings helped spur the company’s collapse. He was forced out of his family’s company, lost his personal fortune, was forced to pay hundreds of thousands of dollars in fines. He was never charged with crimes.

  • Thomas Turner

    Tom Turner worked as a top executive for the Metropolitan family of companies. He was convicted of federal crimes for his role in perpetrating an accounting fraud that deceived auditors and investors.

Complete Coverage

News >  Spokane

Then and Now: Union Pacific rail yard

Now the site of the Kendall Yards mixed use development, the area northwest of downtown Spokane and the river was once home to the Union Pacific rail yard. The railroad moved out of the area in 1955, but development of new housing, retail and commercial businesses did not proceed in earnest until after the economic downturn of 2008.
News >  Spokane

Settlement squeezes out a bit more Met money

C. Paul Sandifur Jr., the former chairman and chief executive officer of Metropolitan Mortgage & Securities Co., will pay $23,000 to investors in the bankrupt company as part of a class-action settlement reached with executives. It’s the last money expected to be paid out by the former CEO, whose father founded the Spokane company in the 1950s.
News >  Spokane

New settlement in Met suit

A $38 million settlement proposed Tuesday in the Metropolitan Mortgage & Securities Co. class action lawsuit would help several thousand investors recoup some losses from Spokane’s largest business collapse. Investors sued the bankrupted company’s outside auditors and former executives six years ago.
News >  Spokane

Met Mortgage creditors get 2 more cents on the dollar

More checks are in the mail for creditors of bankrupt Metropolitan Mortgage & Securities Co. This third round of partial payouts splits about $10.4 million among 15,500 people who held unsecured bonds in the once-prominent Spokane company and its Idaho affiliate, Summit Securities Inc.
News >  Spokane

Amid cleanup dispute, project could have new developer

An $8 million legal dispute has erupted over the bill to clean up pollutants at Kendall Yards, the stalled housing and business project along the north bank of the Spokane River in downtown Spokane. The scenario unfolds as property owner Marshall Chesrown may be closing in on a deal with an undisclosed developer that could jump-start work.
News >  Business

Ex-Met officer has filed Chapter 7 papers

Thomas Masters, a former Metropolitan Mortgage and Securities Co. executive implicated in one of the fraudulent real estate schemes that unraveled the firm, has filed a $26 million personal bankruptcy and moved to Nevada to seek work. Masters had five development projects under way, including three in the Tri-Cities and two in Spokane – one each in Hillyard and the Five Mile area. When investors withdrew financing for the projects, Masters decided to avoid the personal guarantees he made on developments by filing for bankruptcy, said his attorney, Dan O’Rourke.
News >  Business

Sandifur to pay $150,000 settlement

C. Paul Sandifur, the former chief executive officer of bankrupt Metropolitan Mortgage & Securities Co., will pay $150,000 to refund investors and settle allegations that he improperly paid himself dividends as the company failed.
News >  Spokane

Met investors to get $45 million

About $45 million is set to be distributed to investors of Metropolitan Mortgage and Securities Inc. at the end of next week. It will be the second repayment following the bankruptcy of the $2.3 billion Spokane-based financial conglomerate 4 ½ years ago.
News >  Business

Second Met payout planned

A long-awaited cash distribution to investors of bankrupt Metropolitan Mortgage and Securities will be mailed in late July.
News >  Business

Met’s insurance affiliate sold

Another chapter of the Metropolitan Mortgage & Securities Co. debacle nearly closed Thursday as the state receiver sold the defunct company's largest asset – insurance affiliate Western United Life Assurance Co. The roughly $53 million deal calls for Global Life Holdings LLC to purchase Spokane-based Western United, which the state's insurance commissioner seized in 2004 as Metropolitan sought bankruptcy protection. The sale gained court approval last month.
News >  Spokane

Court approves sale of Met affiliate

A $55 million deal to sell a Metropolitan Mortgage & Securities Co. insurance affiliate received court approval Friday. It remains unknown how much cash from the sale of Western United Holding Co. may ultimately flow to the thousands of investors who held notes when Metropolitan Mortgage went bankrupt.
News >  Spokane

Met insurance deal struck

Insurance Commissioner Mike Kreidler has struck a $52 million deal to sell the key insurance affiliate of bankrupted Metropolitan Mortgage & Securities Inc. The agreement, pending court approval, would end the challenging and controversial four-year receivership of Western United Life Assurance Co. and deliver significant cash to Metropolitan noteholders, according to Kreidler's office.
News >  Spokane

Creditors want control of Met affiliate

Saying the state has mismanaged a former insurance affiliate of bankrupt Metropolitan Mortgage & Securities Co., creditors have asked a judge to force Washington Insurance Commissioner Mike Kreidler to relinquish control of the valuable asset. The insurance commissioner seized Western United Life Assurance Co. four years ago in the wake of Metropolitan's financial failure. A successful sale of the insurance affiliate could mean more cash in the pockets of Metropolitan investors, who were left holding $360 million in worthless investments.
News >  Spokane

Met trust and accounting firm settle

The Metropolitan Mortgage & Securities Co. investors' trust has reached a settlement agreement of about $30 million with an accounting firm accused of making mistakes that led to the company's demise. If approved, the settlement with PriceWaterhouseCoopers LLP would be the single largest sum collected since the Spokane financial conglomerate went bankrupt four years ago. And it marks the first time a big-money accounting firm has agreed to pay for its role in the Metropolitan debacle.
News >  Spokane

CEO’s ex-wife to pay $325,000 settlement

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.
News >  Spokane

Met investors win key reversal

Burned Metropolitan Mortgage & Securities Co. investors will have their day in court against a big auditing firm they accuse of professional negligence. They have a shot at a potential payday that could top $200 million after U.S. District Judge Fred Van Sickle on Tuesday reversed earlier tentative rulings and rejected motions by PricewaterhouseCoopers LLP to dismiss the lawsuit. He encouraged the sides to rekindle settlement talks and drop next month's trial.
News >  Spokane

Met investors’ hopes fade

Some legal efforts to win money from deep-pocketed companies that audited Metropolitan Mortgage & Securities Co. are failing, potentially dashing the hopes of thousands of investors who looked to those sources to recover some of their money. Recent rulings have cleared Ernst & Young in one major arbitration case.
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