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UNITED STATES DISTRICT COURT 

WESTERN DISTRICT OF WASHINGTON 

AT SEATTLE 

SECURITIES AND EXCHANGE COMMISSION, 

Plaintiff, 

v. 

C. PAUL SANDIFUR, JR., THOMAS G. TURNER, 

ROBERT A. NESS, THOMAS R. MASTERS, DAN 

W. SANDY, DAVID R. SYRE, and TRILLIUM 

CORPORATION, 

Defendants. 

CASE NO. C05-1631C 

ORDER 

 

I. INTRODUCTION 

 This matter has come before the Court on Defendant Sandifur’s motion for a limited stay (Dkt. 

No. 86). Having carefully considered the papers filed by the parties in support of and in opposition to the 

motion, the Court hereby DENIES the motion. 

II. BACKGROUND 

 Plaintiff, the Securities & Exchange Commission (“SEC”), filed a complaint alleging that 

Defendants, several former executives and business associates of Metropolitan Mortgage & Securities Co. 

(“Metropolitan”), participated in a fraudulent scheme to mislead investors about the company’s financial 

The Honorable John C. Coughenour

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performance. (Compl. ¶ 1.) Among others, the complaint named Defendant Sandifur and Defendant 

Thomas. 

Defendant Thomas was indicted by the Department of Justice in September 2005. This indictment 

was in connection with the fraud alleged in the complaint in the instant action. In December 2005, 

Defendant Thomas and the SEC stipulated to a limited stay of this action as to Defendant Turner only. 

Defendant Sandifur, fearing that the DOJ’s ongoing criminal investigation into the Metropolitan 

matter may result in an indictment against him, now moves for a similar limited stay of the SEC action as 

to himself. 

III. ANALYSIS 

 Defendant Sandifur argues that a stay in this action is necessary because “[t]he facts and issues 

raised by the [complaint in this action] and those under criminal investigation are too closely related to 

resolve simultaneously without impairment of Mr. Sandifur’s right against self-incrimination.” (Mot. 2.) 

 In general, “[t]he Constitution does not ordinarily require a stay of civil proceedings pending the 

outcome of criminal proceedings.” Keating v. Office of Thrift Supervision, 45 F.3d 322, 324 (9th Cir. 

1995). “In the absence of substantial prejudice to the rights of the parties involved, simultaneous parallel 

civil and criminal proceedings are unobjectionable under our jurisprudence. Nevertheless, a court may 

decide in its discretion to stay civil proceedings when the interests of justice seem to require such action.” 

Id. (citations omitted). 

 The case-specific inquiry courts apply to determine whether a stay is appropriate considers the 

following factors: (1) “the extent to which the defendant’s fifth amendment rights are implicated,” id. 

(citing Fed. Sav. & Loan Ins. Corp. v. Molinaro, 889 F.2d 899, 902 (9th Cir. 1989)); (2) “the interest of 

the plaintiffs in proceeding expeditiously with this litigation or any particular aspect of it, and the 

potential prejudice to plaintiffs of a delay,” id. at 325; (3) “the burden which any particular aspect of the 

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proceedings may impose on defendants,” id.; (4) “the convenience of the court in the management of its 

cases, and the efficient use of judicial resources,” id.; (5) “the interests of persons not parties to the civil 

litigation,” id.; and (6) “the interest of the public in the pending civil and criminal litigation,” id. 

 Plaintiff does not deny that the ongoing criminal investigation of Defendant Sandifur relates to the 

conduct alleged in the complaint in this action. Indeed, it appears that the subject matter of the DOJ 

investigation overlaps 100% with the subject matter of the SEC action. (Finegold Decl. ¶ 6 (stating that 

the DOJ investigation involves “a subset” of the SEC action).) Plaintiff also does not deny or contest 

statements made by Defendant’s counsel in his declaration that the DOJ had been “working ‘with the 

SEC’ and ‘working off of some of the SEC’s work.” (Id.) Plaintiff does, however, argue that a stay 

would (1) force it to forgo discovery from a key participant in the four allegedly fraudulent transactions, 

and (2) harm Plaintiff’s and the public’s interest in deterring securities fraud by promptly punishing 

wrongdoers. 

 Having considered the factors at play in this case, the Court finds that the interests of justice do 

not require the imposition of a stay as to the proceedings involving Defendant Sandifur. First and 

foremost, the Court notes that Defendant Sandifur has not yet been indicted, nor does the prospect of an 

indictment seem certain.1

 The mere fact that the government refused to confirm in its response papers 

that no indictment shall issue does not operate as proof that an indictment will issue. Even if the prospect 

of an indictment were certain, or indeed, even if an indictment had already issued, courts have repeatedly 

held that Defendant Sandifur and others like him have “no absolute right not to be forced to choose 

 

1

 Different courts have used different words to discuss the degree of uncertainty about an indictment that would 

render a stay inappropriate — while Defendant Sandifur prefers to cite to United States v. Certain Real Property, 

751 F. Supp. 1060, 1063 (E.D.N.Y. 1989), which uses the words “fanciful” and “imaginary”, Plaintiff cites to cases 

using the words “speculative”, U.S. Commodity Futures Trading Commission v. A.S. Templeton Group, Inc., 297 

F.Supp.2d 531, 535 (E.D.N.Y. 2003), and “uncertain”, State Farm Mutual Automobile Insurance Company v. 

Beckham-Easley, 2002 U.S. Dist. LEXIS 17896, *4–10 (E.D.N.Y. 2001). It bears noting that these three cases, all 

of which use slightly different wording, are from the same district. From the substance of the discussion in each of 

these cases, the Court concludes that all of these different words refer to the same level of uncertainty. 

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between testifying in a civil matter and asserting his Fifth Amendment privilege.” Keating, 45 F.3d at 

326. In the present case, the Court finds that Defendant Sandifur’s fears regarding asserting his Fifth 

Amendment privilege in the context of this civil enforcement action are simply too attenuated to justify 

entry of a stay given the weight of Plaintiff’s (and the public’s) countervailing interests. 

 In addition to his argument regarding his fears about potential self-incrimination, Defendant 

Sandifur argues that the parallel nature of this civil enforcement action and the criminal investigation into 

his activities may breed such irregularities as to justify entry of a stay. Defendant relies on United States 

v. Stringer, 408 F. Supp. 2d 1083 (D. Or. 2006), and United States v. Scrushy, 366 F. Supp. 2d 1134 (N.D. 

Ala. 2005), in which courts expressed displeasure with the intertwined nature of the civil and criminal 

proceedings against the defendants. Neither of these opinions, both of which granted motions to suppress, 

is apposite to the present situation. First, both the Stringer and Scrushy courts noted that the SEC had 

virtually become a tool of the respective criminal investigations. There is no evidence that such 

interaction between the SEC and the DOJ exists here. Though there are statements in the record 

indicating that the DOJ is “working off some of the SEC’s work,” there is no indication that the DOJ is 

somehow directing or otherwise interfering with the SEC’s conduct of its own investigation. There is also 

no indication that the DOJ has accessed inappropriate material. For these reasons, the Court finds that 

there is no showing of improper agency interaction as there was in Stringer and Scrushy. 

Second, both the Stringer and Scrushy courts approached the problem of intertwined 

investigations after it was clear that the intertwined investigations had already resulted in violations of the 

defendants’ due process rights. Here, the injury to Defendant Sandifur’s due process rights is highly 

speculative, given that there is as of yet no indictment against him, and no showing of improper 

interference by the DOJ with the SEC’s enforcement action. 

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For these reasons, the Court finds that neither Stringer nor Scrushy are instructive in the present 

case. 

In contrast to the speculative nature of the injury to Defendant Sandifur if the stay is denied, the 

granting of a stay would prejudice Plaintiff and negatively impact the public interest. Defendant Sandifur 

was Metropolitan Mortgage’s chief executive officer and controlling shareholder. He is alleged to have 

knowledge of the false statements and omissions that form the basis of the SEC’s complaint. As Plaintiff 

notes, a stay would force Plaintiff to forego discovery from a key participant in each of the four alleged 

fraudulent transactions. 

In addition to the consideration that any prejudice to Plaintiff is necessarily an injury to the public 

interest because this is a civil enforcement action, the public also has a general interest in the expeditious 

resolution of this case. As Plaintiff points out, the public’s interest in deterring future wrongdoing and in 

having confidence in the integrity of the securities markets is best served by prompt resolution of this 

case. 

 Finally, the Court itself has an interest in seeing that this civil case is not indefinitely delayed in 

the interest of a defendant’s speculative fear that his due process rights will be implicated. A denial of the 

stay at this juncture best serves the Court’s interest in judicial efficiency and its ability to manage its 

cases. 

 In sum, the Court finds that Defendant Sandifur’s interest in a stay is outweighed by the 

considerable burdens imposed upon Plaintiff, the public, and the Court. Accordingly, Defendant 

Sandifur’s motion for a limited stay must be denied. 

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IV. CONCLUSION 

 The Court hereby DENIES Defendant Sandifur’s motion for a limited stay. Defendant Sandifur 

may have ten judicial days from the date of entry of this order in which to file a pleading responsive to the 

complaint. 

 SO ORDERED this 19th day of June, 2006. 

 

 

A

UNITED STATES DISTRICT JUDGE 

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