Despite a series of stellar deals and successful projects in the 1980s and 1990s, real estate developer and Whatcom County native David Syre and the company he founded faced setbacks at the turn of the new century. (See part one of the story: Half a century on, Syre influence continues in Whatcom County, Salish Current, Dec. 17, 2021.)
The first years of the 2000s found Trillium Corporation as the largest non-forestry private landowner in Whatcom County, employing more than 500 people. But in the fall of 2000, a business partner of Trillium — Capital Consultants LLC of Portland, Oregon — came under federal investigation by the Securities and Exchange Commission (SEC). Capital was accused of covertly operating a Ponzi-like scheme that ultimately cost its clients hundreds of millions of dollars. By spring 2001, the company was bankrupt.
Trillium, which said it had no knowledge of the scheme, had received a $30 million loan from Capital toward a Chilean logging project, with plans for Capital to remain a partner. But when investment bank Goldman Sachs took over Capital’s debts in 2003, they had no interest in the project and moved to collect their debt.
Syre bid on the loan portfolio in an attempt to keep his acreage, but came up short. Having no choice, Trillium gave up its Chilean acreage in a settlement. Goldman announced plans in 2003 to donate 600,000 acres on Tierra del Fuego for a nature preserve, leaving Trillium with only its 170,000 acres on the Argentinian side of the island, which it still owns today.
Art of the unfortunate deal
In September 2005, trouble for another partner enveloped Trillium and Syre, but this time more directly. The SEC filed a civil suit against Syre and his company, accusing both of fraud in connection with the collapse of Spokane’s Metropolitan Mortgage and Securities.
Investment services conglomerate Metropolitan was found to have faked real estate transactions to hide losses while continuing to solicit investment funds, and to have deprived more than 10,000 investors of hundreds of millions of dollars by the time of its 2004 bankruptcy.
Trillium had become involved with Metropolitan in 2001, taking a $25 million loan to purchase downtown Denver real estate. But by spring 2002, Trillium was defaulting on that loan, after taking large losses in 2000 and 2001.
With both companies allegedly desperate for funds, the SEC accused Metropolitan’s Summit Securities of conspiring with Trillium in a shady transaction. The deal, conducted in September 2002, involved a company called Jeff Properties, set up by an associate of Syre with the associate’s 18-year-old son as the sole shareholder.
Jeff Properties purchased two pieces of land — one in Everett and another in Texas — using funds from Metropolitan and Trillium, which used funds obtained from a loan from Old Standard Life Insurance Company, a subsidiary of Summit.
This meant Metropolitan technically bought real estate from itself, while allowing Trillium to control the properties. Summit president Thomas Turner, later sentenced to two years in prison for several felonies resulting from the case, allegedly mislead auditors into thinking Jeff Properties was a third-party company.
Metropolitan claimed a $10 million gain from the deal, which along with other non-Trillium deals helped hide mounting losses. By March 2006, the charges against Syre and Trillium were dismissed by a U.S. District Court judge, but charges were soon re-filed.
In August 2007, Syre stepped down as president and CEO of Trillium, handing the reigns to his son. That October, Trillium and Syre settled the SEC’s civil complaint against them, paying $75,000 and $50,000 fines, respectively, in addition to agreeing to refrain from public statements denying the allegations.
Today, Syre insists he only followed professional advice and was taken advantage of by Metropolitan.
“I lost a lot of money with those people,” he said.
While this civil suit played out, Trillium continued purchasing millions of dollars of Whatcom County real estate. It planned large mixed-use developments in Point Whitehorn, near Cherry Point, and at the north tip of Semiahmoo Spit, which it co-owned with the Upper Skagit Indian Tribe. Syre planned to open a restaurant in the Mount Baker Theatre building, using products from his family farm near Everson.
None of those projects came to fruition.
The 2008 recession hurt many financially, Syre included.
By fall 2011, Trillium had lost millions of dollars in local real estate, including hundreds of acres at Semiahmoo and Birch Point. Trillium’s 3,000 acres on Galbraith Mountain were also gone, having been deeded to Bow’s Polygon Financial in lieu of foreclosure in 2009.
Polygon had acquired the land from Trillium when it obtained the assets of Old Standard Life Insurance from state regulators in 2005. This included Trillium’s 2002 Old Standard loans, for which Syre and his then-wife had personally guaranteed repayment.
Because of this guarantee, Polygon sued Syre in July 2011, contending the value of foreclosed properties they’d obtained fell more than $11 million short of the amount owed on the underlying loans. Syre declared Chapter 11 bankruptcy in December 2011.
His bankruptcy reorganization and resulting court battle with Polygon had a ripple effect in Whatcom Country, contributing to the December 2012 closure of Semiahmoo Resort, which put more than 200 people out of work. (The resort reopened in August 2013 under new ownership.) Syre had personally guaranteed about $15.5 million in loans and expenses to the hotel, which Washington Federal bank had placed a lien on.
Negotiations over Syre’s debt obligation, which at one point saw Polygon try to assert was as high as $33 million, was finally settled in December 2012 when Syre and his ex-wife paid Polygon $6.5 million.
Prior to the settlement, Polygon had obtained writs of attachment on Syre’s family farm, his ex-wife’s house and other personal properties, preventing any sales while the company pursed its debt in court.
Other creditors remained. A reorganization plan reportedly required Syre to pay millions each year into a distribution fund for gradual repayment until June 2016, at which point he would have paid at least $18.3 million.
Syre said his initial plan was to sell the Argentinian land, then develop a second plan to pay with earnings from his sawmills. The latter worked well, with debts settled in advance of the re-payment plan, Syre said.
According to the Bellingham Herald’s account of his bankruptcy proceedings, Syre’s declaration listed $70 million in debt and $170 million in assets.
Looking back, and ahead
Today, Syre said, he is totally debt-free — and the lack of debt isn’t the only thing that has changed for him.
Free of involvement in Trillium’s current business dealings (he said he is unsure if he’s even still chairman of the company), Syre — freshly turned 81 — keeps his attention mostly on his artwork, which includes large-scale acrylic paintings, drawings and sculptures. Many pieces are displayed at Bellingham’s Gallery Syre, which also includes the artwork of others, including his daughter Amy.
Syre expresses little disappointment or regret for the ways in which things turned out.
The failure of his Chilean project, he said, was actually very successful: it brought substantial interest to the forests of Tierra del Fuego and has been studied extensively. In fact, a book Trillium put out on corporate values features a chapter about the project, titled “Bold, Beautiful Mistakes.”
In Argentina, Trillium still owns a sawmill and dry kilns to conduct sustainable forestry practices, Syre said. Lenga harvested from the area has been exported to Vietnam and China, and the company’s Chile and Argentina furniture markets are strong, he added.
The only area in which Syre expresses any disappointment is Bellingham’s long-standing inability to come together on a meaningful waterfront vision, he said. Trillium worked with Georgia-Pacific in the early 2000s on a plan in which Trillium would develop GP-owned waterfront land, but the project fell through in 2003.
“My values now are love, compassion and forgiveness,” he said, citing Mother Teresa and the Dalai Lama as his primary mentors of the last two decades. “That’s what I paint for.”
Today, far removed from the often-cutthroat nature of high-dollar business dealings, Syre insists he holds no grudges and has no concerns about his legacy.
Those who opposed him, he believes, mostly misunderstood his intentions or misperceived him as being part of projects that he was not.
“Wherever a tree was cut, and somebody didn’t like it, was my responsibility,” he said with a laugh. “It was a lot of misinformation over the years.”
Cascadia, and hope
Misinformation is one of the reasons he supports his latest venture, Cascadia Daily News.
Syre is the sole funder of the new local news publication, which has announced it will launch in January and feature a daily online presence and weekly print edition. This follows the conclusion of Cascadia Weekly, the free Bellingham weekly paper that operated for 16 years.
When the pandemic struck in early 2020 and the paper’s entertainment advertising mainstays shut down, discussions between Syre, co-owner Bob Hall and Weekly editor Tim Johnson revolved around whether to shutter the operation.
Syre purchased Hall’s ownership for just $1, with the promise of doing what was necessary to keep the paper going. He hired a consulting team to analyze alternatives for the paper’s existence.
“It became clear to me, from the information received from the community, that there was a strong demand for local news, delivered differently than it had been in the past,” he said. “So, that was the foundation for my thinking to move forward.”
Syre will be hands-off in the newsroom, but said he will contribute to intellectual conversations about revenue creation or the extra funding of specific story projects. Cynthia Pope, Syre’s longtime counsel, will act as publisher.
Cascadia Daily News (CDN) will be led by executive editor Ron Judd, the former longtime Seattle Times columnist, and a fully staffed newsroom. Its startup budget, Syre said, will likely exceed $1.5 to 2 million a year.
Syre said it remains to be seen if his new publication will become a direct competitor to The Bellingham Herald. Attempts to take out ads in the paper to inform readers of CDN were denied by the Herald, and multiple attempts by Salish Current to obtain comment from the Herald about CDN were not answered by press time.
Bringing a second newspaper to Bellingham, Syre said, is something he sees similarly to how he saw his 10-year plan for a mall decades ago: important infrastructure for his community, capable of producing sustainable, reliable and honest local news.
“Curiosity plus truth equals hope,” he said. “I hope we earn the respect and the following of the community.”
— Reporting by Matt Benoit, compiled in part from Bellingham Herald and other sources
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