Identity of Edwards Home's Buyers Veiled

A letter to the board from the Service Employees International Union states that after Sunrise announced the accounting change and filing delay in May the stock value plummeted 34 percent and that the cumulative impact of company restatements will reduce net income for 2003 through 2005 by 26 percent.

The Klaassens sold 600,000 shares, worth about $20 million, in 12 transactions from Dec. 19, 2005, to May 2, 2006 -- the last sales coming one week before the company's accounting troubles came to light and the company's stock plunged, according to public records confirmed by Sunrise sources.

Several stockholders in Sunrise, including two large unions whose support Edwards has courted, have pressed for action.

The 1.8 million-worker SEIU alleges its pension fund lost significant money in its investment in Sunrise, and the union asked for an independent investigator to take over the internal probe of the stock trades and accounting practices. Pension funds for the United Food and Commercial Workers Union filed a class-action lawsuit against Sunrise this week, seeking to recover losses from the stock's fall.

"What went on there is totally inappropriate. It is very clear that very important insiders traded in this stock before it [the accounting problems] became known publicly and before the stock took a hit," said Stephen Abrecht, the SEIU's pension chief. "The pattern of stock-option grants seen here pretty much follows the pattern we've seen in other companies that were hit by corporate-governance issues."

Abrecht said he was unaware of the Edwards home deal and would reserve judgment on it.

Sunrise officials declined to address the house sale, saying the deal was a personal matter of the Klaassens, and said any insider trades were conducted according to securities rules. "We are cooperating fully with the SEC," company spokeswoman Meghan Lublin said yesterday.

Paul Klaassen started Sunrise in the Virginia suburbs in 1981, saying he was inspired by his visits as a child to his grandparents' nursing home in the Netherlands to try to create a more pleasant living opportunity for seniors. Today, Sunrise operates 436 senior communities in more than 37 states as well as Canada, Britain and Germany.

Before public service, Edwards was a successful trial lawyer who in 2003 reported assets between $14 million and $45 million.

Edwards has run into controversy once before on a house sale. In 2002, he reached a deal to sell a Washington house to a U.S. lobbyist for Saudi Arabia and then refused to give back the lobbyist's $100,000 earnest money when the deal collapsed. At the time of the sale, the Saudis were trying to improve their image in Congress after the Sept. 11 attacks, and Edwards was serving on the Senate intelligence committee.

Edwards said he did not know the buyer was a Saudi lobbyist until after the deal had fallen through.

Staff writer Cecilia Kang contributed to this report.