16 March 2010

Canyon Crest: New Owner, Old Questions, Part 3

OK, so reference was made at the conclusion to the last post about investors of the new owner of Canyon Crest, Old Standard Life Insurance Company, and its parent, National Summit Corporation and its subsidiaries, Summit Securities, Inc. and Summit Group Holding, Inc., AND Summit's sister company, Metropolitan Mortgage and Securities, which also operated Western United Life Assurance Company.  Yes, it is all so unbelievably complex and convoluted and, yes, there were plenty of reasons why the one man who controlled it all, C. Paul Sandifur, Jr. set it up that way.

Specifically, the statement was that investors were $#%&ed by Summit and Metropolitan, which really means Sandifur and his "associates," including company executives, board members and sales staff.  This process began in the late 1990s and accelerated in the early 2000s, as the great tech stock-driven bubble of the end of the millenium gave way to a recession.  Ironically, just as the new mortgage and derivates-driven bubble ensued after 2002, the Sandifur Empire was well on its way to bankruptcy, scandal, government investigation, class-action lawsuits, criminal charges and trials and all of the accoutrements that accompany such.

The Metropolitan/Summit debacle actually came out of a small, if stable, well-managed company, Metropolitan, started by Sandifur's father and namesake and uncle Charles way back in 1953.  For years, Metropolitan was a pillar of the community in the eastern Washington city of Spokane.  Sandifur seemed, however, to have trouble living in his father's long shadow.  He studied psychology at a local liberal arts college and then, in 1965, went to San Francisco to make his own way in the world.  As his website biography expressed it, he grew his hair long, drove a taxi, and lived in the "happening" Haight-Ashbury neighborhood, the epicenter of the hippie movement.  According to the bio, Sandifur was expelled from graduate studies at San Francisco State University for protesting the Vietnam War.  In the post-hippie era, he traveled the country, sometimes living out of his car, doing factory work, and then, for a time, ran a crafts shop in Hawaii. 

Ah, but youthful idealism gives way to middle-age reality, don't it?  The malaise of the so-called "Me Decade" of the 70s (aren't all decades "me decades" when you get right down to it?) ended and Sandifur's father came calling in 1980, luring the prodigal son, who was pushing 40, back to Spokane and the family business.  The website bio notes that, as 20% interest rates were the norm, Sandifur's return to Spokane was followed by a 250% increase in company business--IN JUST ONE YEAR.  The unspoken intimation is that this was basically Sandifur's doing.  Following this statement is one that, in 24 years with Metropolitan, assets grew from $60 million to $2.7 billion.  Even adjusting for inflation (which, of course, was not factored in to the bio), this was a remarkable burst of business.  Then again, it was the Age of Reagan, of deregulation, of supply-side economics, of libertarian economic philosophy realized vis a vis the manifold benefits of corporations acting in enlightened self-interest, of removing limitations on the range of products and services banks, insurance companies, and savings and loans (remember those?) could offer.  For a bright, creative, driven man like C. Paul Sandifur, Jr., in the prime of business life during his forties and fifties, this was a veritable golden age!

It is notable that, in this website bio, most of the attention is paid to Sandifur's young years of wandering and soul-searching and then a general leapfrogging to his mature years, mainly covering his many charitable endeavors in Spokane, including support of avant-garde classical music, the restoration of a historic theater, and his selfless devotion to the poor and the needy. 

Given relatively little attention is what constituted the core of the Metropolitan business under Sandifur's leadership, which included his assumption of the roles of CEO, President and Chairman of the Board after 1991 and during which he amassed over 75% of the stock of the broader empire he was building, including 30 (count 'em, 30) companies. 

Almost as a sidenote is that statement that Metropolian "became the leading purchaser of seller financed real estate notes in the United States."  Another mark of distinction was that Metropolitan "was also the first company to securitize these notes and sell them on Wall Street."  As if these glories were not enough, the firm also was "the leading purchaser of lottery winnings at one time in the United States."

Further, the bio continues, "at it's high point the group had over 750 employees and invested over $100 million per month.  The company was profitable in all but three of its fifty-year history." 

Therein lies the crux of the matter:  who were the company's core investors and what happened to the profitability after the year 2000?  Stay tuned for more . . .


canyon lover said...

This is great stuff, Paul. ... By the way, you have lots of fans in Olinda Village!

Paul said...

Hi Canyon Lover, thanks for the comment, there'll be more to come on this. I appreciate the interest of Olinda Village residents, too.

Canyon Native said...

Sorry I have not responded more often. I try not to miss your blog because it is so pertinent to Canyon issues as well as offering such good insights into the history of our canyon.

The three sections on "Canyon Crest: New Owner, Old Questions" are outstanding for the information reseaarched and shared.

Canyon Native

Anonymous said...

I am a fan who lives in Olinda Village. I check your blog weekly. Good stuff!!

Paul said...

Hi Anonymous (response to Canyon Native after Pt. 4), thanks for following along and hope the continuing saga of Old Standard and Metropolitan/Summit is of interest.