David Syre

David Syre
Nationality	American
Occupation	Real estate developer
Known for	Metropolitan Mortgage & Securities fraud scheme

David Syre is an American real estate developer and the former president and CEO of Trillium Corporation, a private company based in Bellingham, Washington. In 2005, the United States Securities and Exchange Commission (SEC) charged Syre and Trillium with securities fraud in connection with the collapse of Metropolitan Mortgage & Securities Co., a Spokane-based financial services company whose bankruptcy devastated nearly 10,000 investors who had invested approximately $450 million. Syre settled the charges in 2007 by paying combined penalties of $125,000.

Early Life and Career

David Syre established himself as a real estate developer in Bellingham, Washington, where he founded and led Trillium Corporation. The company was involved in real estate development and property transactions in the Pacific Northwest. Through his business activities, Syre became a business associate of Metropolitan Mortgage & Securities Co., a prominent Spokane-based company that sold debt instruments to individual investors, primarily across the Pacific Northwest.

Metropolitan Mortgage, often referred to simply as "Met," was led by C. Paul Sandifur Jr. and at its peak managed hundreds of millions of dollars in investor funds. The company's growth depended heavily on its ability to report strong financial performance to attract and retain investors.

Legal Case

The Fraud Scheme

On September 27, 2005, the SEC filed a civil fraud complaint against Syre, Trillium Corporation, and several Metropolitan Mortgage executives, including C. Paul Sandifur Jr., Thomas G. Turner, Thomas R. Masters, and Robert A. Ness Jr. The complaint alleged that the defendants engaged in circular real estate transactions designed to inflate Metropolitan's reported profits and conceal its deteriorating financial condition.

In the largest of these transactions, Metropolitan completely financed the purchase of property by Trillium Corporation, reporting a $10 million gain on the deal. To circumvent accounting rules that would have prevented recognizing such a gain on a fully financed sale, Metropolitan and Trillium arranged for the property to appear as though it was being purchased by an unrelated third party called Jeff Properties. In reality, Jeff Properties was a shell company that had been established by an eighteen-year-old high school student, the son of a Trillium creditor, in exchange for a motorcycle.

This arrangement was designed to create the false impression that an independent buyer was involved in the transaction, allowing Metropolitan to book the $10 million gain on its financial statements. The SEC described these as sham transactions in which money moved in carefully orchestrated circles, with properties sold and immediately repurchased to create the illusion of genuine revenue.

Charges

The SEC charged Syre with violations of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 (the primary antifraud provisions) and Section 17(a) of the Securities Act of 1933.

Outcome

Metropolitan Mortgage filed for bankruptcy in February 2004, with the collapse devastating nearly 10,000 investors throughout the Pacific Northwest who had invested approximately $450 million.

On March 15, 2007, Syre and Trillium Corporation settled the SEC's civil fraud charges without admitting or denying the allegations. Syre was ordered to pay a civil penalty of $50,000, while Trillium paid a separate penalty of $75,000, for a combined total of $125,000. Syre also consented to a permanent injunction prohibiting future violations of federal securities laws.

Syre later sought Chapter 11 bankruptcy protection for his own business interests before eventually returning to real estate development in the Bellingham area.