Trillium charges dismissed
United States District Court Judge John Coughenour has dismissed fraud charges against Trillium Corporation and president David Syre on the grounds that knowing something is unusual is not the same as knowing it’s wrong.
an order signed March 2 Judge Coughenour wrote that the
federal Securities and Exchange Commission (SEC) failed
to make a case that Trillium, Syre and Trillium associate
Dan Sandy had “actual knowledge” they
were helping Metropolitan Mortgage execute a fraud.
In September 2005 the SEC filed a civil complaint alleging that Trillium, Syre and Sandy conspired with executives of Metropolitan Mortgage to set up a land deal that would allow the mortgage company to report a $10 million dollar profit as part of a cover-up of the company’s financial decline. A company named after Sandy’s son, Jeff Properties, was formed to borrow money from Metropolitan and Trillium, who borrowed its share from a Metropolitan subsidiary, and use the funds to buy a property from Metropolitan. The property and debt would then transfer to Trillium in 2003, allowing Metropolitan to report profit from the sale in 2002 while they still had provided all of the financing.
Coughenour’s ruling found that the SEC’s characterization of the transaction as “highly atypical” was not enough to support a charge of fraud. “Even if defendants Trillium Syre and Sandy knew the transaction was ‘highly atypical,’ atypicality does not, by itself, establish that a transaction is fraudulent or improper,” he wrote.
Trillium vice-president David Blair said they were happy to see the charges dismissed without prejudice.
“We anticipated all along that this is what the court would rule. It did,” he said.