Solely for the purpose of determining whether a transfer or ac- But the value of the investors shares will depend on the performance of the new companys investments and how it fares in the stock market. It eventually grew into an independent nonprofit organization that sold individual retirement accounts and other investments. MVPNs were "fraudulently represented as one which could be redeemed at any time, although with an interest penalty. } The foundation says it will pay up to $5-million into a trust intended to pay legal fees to pursue claims against what a spokesman called any third parties that could be held liable for the foundations troubles. about the Baptist Foundation of Arizona. const blockedCategories = decodeURIComponent(matches[1]) Thus, when people tried to sell it they could not because they did not own anything. The person did not actually purchase the property, but purchased the right to occupy said property. One of the key provisions of SAS 99
between the foundation and these corporations were designed to achieve the
//end OneTrust Redirect script.setAttribute("async", true); 207, or tstolle@bcmd.org. An unambiguous lesson from the BFA case is that the audit team cannot rely
disguise BFAs tenuous financial condition. that ALO had a negative net worth of $116 million and had been losing more
mps._queue.adview = mps._queue.adview || []; The majority of New Church Ventures
After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. in that it represents the largest cash settlement for a nonprofit case and
plans to church members. Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. [9], In 2002, Grabinski sued BFA's insurance carrier, National Union Fire Insurance Company of Pittsburgh, Pa. (National Union), for coverage of his legal fees per the Directors and Officers liability coverage purchased from National Union, plus damages. You may then be asked to log in, create an account if you don't already have one, Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. In 1962, Pastor Glen Crotts became the organization's first president. if (!oneTrustCookie) return true; The March 1 settlement had prompted the cancellation of a March 4 trial against Andersen in Arizonas Maricopa County for its failure to warn investors about BFA financial irregularities described as a Ponzi scheme that led to its collapse. Southern Baptist Media Day Added to SBC Calendar, Appalachian Church Boosted by Zions Cause Baptist Church in Western Kentucky, Southern Baptist Editors Challenged to Press On, Relationships, conversations key to sharing the hope of Christ, former missionary says, SBC DIGEST: Stolle to lead BCM/D; IMB pipeline tops 1,200, Spurgeon College basketball coach Billy Livezey wins Coach of the Year Award, FIRST-PERSON: Georgia Baptist bicentennial: Lamenting a heritage of racism and slavery, As Church Staffs Grow, Ministry Leaders Look to the Bible for Titles, Churches Declare Their Stance on Pastorship Through Ordination, Jesus Revolution heads into second weekend after 3rd-place box office opening, Second Daytona 500 win in three years shows moments matter in racing and life, Walgreens action on abortion pill falls short, ERLC says, ARITF releases video interview with Samantha Kilpatrick of Guideposts Faith-Based Solutions, SBC DIGEST: Unify Project prayer guide; Barber gives CP lesson at SBTC conference. The Arizona Republic called it a stunning blow to 13,000 BFA investors who had been told the March 1 settlement would, by the end of the year, help recoup 44 percent of an overall $585 million loss in the nonprofit agencys collapse. Quotes displayed in real-time or delayed by at least 15 minutes. Its bankruptcy late in 2001 caused about 4,000 employees to lose their jobs, while stock losses wiped out their retirement savings and prompted many business reforms. let cStart = document.cookie.indexOf(`${name}=`); BFA employees sold investment products through circulars touting not one investor has ever lost a penny of their investment or the interest they earned. But by the late 1980s, prosecutors say, the BFA was losing money as Arizonas once-robust property market began to cool off. document.cookie = "__adblocker=" + (adblocker ? By Jonathan Weil Staff Reporter of The Wall Street Journal. Powered and implemented by FactSet Digital Solutions. [14] The court signing off on the settlement meant that the BFA Liquidation Trust had standing should Andersen which was at the time being charged for issues surrounding Enron be unable to make that payment. script.setAttribute("onerror", "setAdblockerCookie(true);"); The Baptist Foundation of Arizona filed for bankruptcy in federal court last week, owing nearly $600-million to 13,000 people who had bought securities from the organization. Investors Lost Millions in Church Fraud Executives Sentenced. with a questioning mind, recognizing the possibility that fraud may be present,
The suits against Andersen alleged that the foundation had become a Ponzi scheme, needing to raise tens of millions of dollars to pay the high returns it had promised to earlier investors., The Journal noted that, according to the lawsuits, a key reason why the scheme lasted as long as it did was that Andersen continued to certify the foundations financial statements and dismissed multiple warnings by individuals that the foundation was defrauding investors. 30. } var script = document.createElement("script"); For example, the Phoenix New Times reported a case wherein an individual wanted to sell a US$1.9M (million) piece of asbestos-contaminated property to the BFA for US$1 as a tax write off. First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. Napolitano and the Arizona Corporation Commission then filed a civil lawsuit against Andersen in January 2001, seeking civil remedies for violations of the Arizona Securities and Consumer Fraud Act. The Baptist Foundation of Arizona (BFA) was a Southern Baptist charity, which executed an affinity fraud on unwitting worshippers in the Southern Baptist community in Arizona, leading to the largest collapse of a religious financial institution in U.S. history. return false; aside any prior beliefs as to managements honesty. The newspaper also quoted Arizona Corporation Commission Chairman Bill Mundell as saying, How do you break the news to an elderly couple who risked their life savings? Over a period of several years, the management of the Baptist Foundation
Arizona has had its fair share of scams and schemes over the years, but none was more prominent than the Baptist Foundation of Arizona financial collapse and bankruptcy. Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen The BFA became dependent upon future investors to pay older investors and loan interest. [15] At the time, this settlement was the second largest settlement in the nation's history for a Big Five accounting firm that was not related to the Savings and Loan collapses of 1986 to 1995. The principal allegation of the lawsuit is that Arthur Anderson ignored clear signs and evidence that one of its clientsthe Baptist Foundation of Arizona (BFA)was engaged in ongoing fraud . He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. In his resignation letter, Tresch told BFA officials they have placed themselves in a position of civil and criminal liability. BFAs liabilities included approximately $585 million owed to investors. They can either cash out of the foundation, receiving 20 per cent of the value of their investments and the interest due to them, or elect to receive shares of stock in a new for-profit company that will be publicly traded. The foundations statement also acknowledges past wrongdoing, saying that the organization concealed money-losing investments by transferring them to affiliated companies. auditors overlook? MVPNs were marketed with the notion that they received a higher than average yield and that part of the investment's return was used for God's mission. This material may not be published, broadcast, rewritten, Year after year, Arthur Anderson audits the Baptist Foundation of Arizona, giving the non-profit group its stamp of approval and a clean bill of financial health. Also in 1998, an alternative Phoenix newspaper, the New Times, ran a series of 13 investigative reports alleging fraud and insider deals. Several accountants and one attorney became concerned enough to approach senior management about ALOs deficit. PHOENIX (ABP) The Arizona Court of Appeals has upheld convictions of two former Baptist Foundation of Arizona officials sentenced to prison in 2006 for defrauding more than 11,000 investors in a Ponzi scheme. head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); mps._queue.mpsloaded.push(function(){ if (cEnd === -1) { Management set up independent separate
Tuesday, September 5, 2006. Two of the most significant entities set up to hide BFAs nonperforming
Baptist Foundation of Arizona's auditor Arthur Anderson Illegal practices of Baptist Foundation of Arizona Holding company with losses of $585 million Told everyone they were building churches Global Crossing's auditor Arthur Anderson Global Crossing illegal practices Borrowing money and changing the origin var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. available for public inspection from the Arizona Corporation Commission, showed
own, and both organizations paid BFA substantial management fees to provide
Yet, in 2002, years after the BFA . Improving and strengthening fraud detection is at the heart
cStart = cStart + name.length + 1; regardless of past experience with the entity or prior beliefs about managements
Editor:
PHOENIX - Two former executives of the Baptist Foundation of Arizona, which collapsed in what has been called the largest nonprofit bankruptcy filing in the nation's history, have been. The Baptist Foundation of Arizona - A Case of Proper Fund Accounting Ignored and Manipulated Another major accounting scandal, and prelude to Andersen Accounting's participation in Enron's anomalous deals, was the illegal securities trading committed by the Baptist Foundation of Arizona (BFA). })(); [14] Christianity Today reported that the timing of this court approved settlement avoided "the worst case scenario for Baptist Foundation investors" of Andersen being convicted in its then ongoing criminal case regarding its audits of Enron, then quickly filing "for bankruptcy-court protection" from any civil lawsuits not yet settled in a court. Clearly no. But it also "loaned" nearly $140 million to companies owned by three of the Foundation's directors. These. One of ALOs primary purposes was to buy and hold non-producing or overvalued investments in real estate so BFA could avoid writing them down as losses. PHOENIX Two former executives with the Baptist Foundation of Arizona were sentenced to prison Friday and ordered to repay millions for defrauding thousands of investors in a botched. } SAS 99 is effective for audits of financial
Then, BFA sold property
Over lunch in February 1997 with an auditor from Arthur Andersen LLP, a recently resigned accountant from the Baptist Foundation of Arizona had disturbing things to say about her former employer's investment practices. console.log('PUB-GDPR-CHECK oneTrustCookie: ', oneTrustCookie); } else { The Cacaces were among 11,000 investors who lost a combined $580 million when the Baptist Foundation of Arizona, or BFA, a registered nonprofit, filed for Chapter 11 bankruptcy in 1999 in what prosecutors described as a Ponzi scheme. Looking for your Investment Portal? if (!_qs) { [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. The Cacaces were among 11,000 investors who lost a combined $580 million when the Baptist Foundation of Arizona, or BFA, a registered nonprofit, filed for Chapter 11 bankruptcy in 1999 in what prosecutors described as a Ponzi scheme. // execute Prosecutors estimated 11,000 investors, most of them elderly, were defrauded in the 1980s and 1990s. The following were among the major GAAP violations alleged by
renewed efforts to prevent such accounting failings in the future. const matches = oneTrustCookie.match(COOKIE_REGEX); var foresee_enabled = 1 the Arizona Corporation Commission as required by state law. Sentencing was set for Sept. 29. The new company will, like its not-for-profit predecessor, invest its assets in real estate, venture-capital deals, and some equities. }; mps._queue.gptloaded = mps._queue.gptloaded || []; be taking place requires a higher degree of due diligence by auditors. Contact (909) 738-4000 info@bfcal.org. The insurance company is refusing to honor the settlement, based on a clause added at the last minute allowing the insurance company to void the March 1 settlement, The Arizona Republic reported. He pleaded guilty to six felonies and agreed to testify against other defendants, which include former CEO William Crotts and General Counsel Thomas Grabinksi. Baptist Foundation of Arizona (Southern Baptist charity) BFA: Books for Africa (St. Paul, MN) BFA: Body Fat Analysis (biology) BFA: British Fantasy Award (British Fantasy Society; UK) BFA: Baseball for All (various locations) BFA: Botswana Football Association (Botswana) BFA: Blank Firing Attachment: BFA: Benefit Fraud Assessment: BFA "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. var setAdblockerCookie = function(adblocker) { The BFA case involves the largest Chapter 11 bankruptcy filing by a nonprofit organization in U.S. history and the March 1 settlement was approximately twice the largest malpractice court settlement previously agreed to by Chicago-based Arthur Andersen. The Bear Foundation's contributions to local nonprofits easily number in the tens of millions, and include a $4.5 million contribution to a new Baptist Health Care health center at Brent Lane and . same time, it accelerated its efforts to sell IRA-type retirement investment
Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. var CNBC_MPS_FRANCHISE_TAG='american_greed'; The Arizona Republic reported that Novak had said Andersen's circumstances have changed significantly since it was indicted March 14 on federal charges involving its auditing of Houston-based energy trader Enron. baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. than $20 million per year for several years. The Arizona Baptist Foundation. incorporated both nonprofit entities. of fraud and even more critical to engage in effective audit procedures to
Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. [11], In early 2007, several former members of the BFA's executive management team were sentenced for the fraudulent activities associated with the BFA. return Object.values(OneTrustCategories).filter((c) => blockedCategories.includes(c)).length > 0; evidence. National Union Fire Insurance Company of Pittsburgh, Pa. United States District Court for the District of Arizona, Religious Prey: Baptist Foundation Of Arizona / Medical Scams: Dr. Mikos, "Elderly couple pays dearly for Baptist fund's trouble", "In the Name of the Father and the Son and the Wholly Owned Subsidiary", "Baptist Foundation of Arizona's Financial Collapse", "Terry Goddard Applauds Verdicts in Baptist Foundation Trial", "Grabinski v. National Union Fire Insurance Company of Pittsburgh, CV 04-01751-PHX-MHM, D. Az", "Final 5 Ariz. Foundation Defendants Sentenced", "Victims of the Baptist Foundation of Arizona | SENTENCES IMPOSED", "BFA Liquidation Trust v. Arthur Andersen, LLP", "Arthur Andersen Reaches Deal (Again) with Baptist Foundation of Arizona Investors", "Religious Prey: Baptist Foundation Of Arizona / Medical Scams: Dr. Mikos", https://en.wikipedia.org/w/index.php?title=Baptist_Foundation_of_Arizona&oldid=1137812926, Christian organizations established in 1948, Baptist organizations in the United States, Baptist denominations established in the 20th century, Articles lacking reliable references from May 2022, Creative Commons Attribution-ShareAlike License 3.0, This page was last edited on 6 February 2023, at 16:04. [2], The collapse of the BFA did not occur in a vacuum. isEEARegionCheck(); Former general counsel Thomas Grabinski was convicted of three counts of fraud and one count of illegally conducting an enterprise. of Accountancy alleged that because of the very material departures from GAAP
The BFA filed for Chapter 11 bankruptcy that November, listing assets of $220 million and liabilities of $640 million. June 7, 2022 . . } The CPA Journal. Aug. 27, 1999 A class action lawsuit filed by investor Franklin Kestner Sr. charges the BFA bilked investors by funneling their money into projects that resulted in personal gain and profit for BFA officers. 'stitle' : 'Religious Prey | Dr. Mikos: American Greed 5' , A non-profit corporation chartered in 1948 to help Southern Baptist causes, the BFA returned about $1.3 million to Baptist causes in 50 years but loaned nearly $140 million to companies owned by three current and former BFA directors. The BFA was not interested in making this purchase. The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. document.addEventListener("DOMContentLoaded", function(event) { The BFA Liquidation Trust, which is seeking to recover the investors funds, immediately took action. var CNBC_Premium = CNBC_Premium || {}; A Division of NBCUniversal. former board members, controlling these new companies. Second,
Founded in 1948 to raise money for Southern Baptist causes, BFA and its subsidiaries and affiliates had marketed securities throughout the United States as retirement vehicles for investors and served as a custodian for tax-deferred Individual Retirement Accounts. Kyle Cooper. 'nid' : '100000099' Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. 'cag[related_primary]' : '' , 'cag[type_source]' : 'CNBC US Source' , The foundation's bankruptcy marks one of the biggest financial collapses ever by a charity. The auditors were Arthur Andersen, the same firm that audited Enron. Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. 'cag[template]' : 'special_reports' , 'https' : 'http') + '://pix.nbcuni.com/a-pii.gif?X=piiblock&S=' + mps.pagevars.instance + '&P=' + mps.pagevars.mpsid + '&A=' + i + '&U=' + encodeURIComponent(window.location.href) + '&_=' + window._mpspixZ; 'keywords' : '~' , The BFA had issued millions of dollars in money-losing loans. some red flag warnings that fraud was occurring, led to the Andersen settlement. Start Here; About Us. mpsload.src = "//" + mpsopts.host + "/fetch/ext/load-" + mpscall.site + ".js?nowrite=2"; When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. "They had their faith shattered and faced the possible loss of all their retirement investments.". Date.now() : (function() { return +new Date })(); This settlement takes on a sad historical significance
The collapse of Bryant Financial Associates was a complete scandal that exposed the fraudulent activities of its executives. A jury on Monday found former foundation president William Crotts guilty of three counts of fraud and one count of illegally conducting an enterprise, according to the Arizona Attorney General's Office, which prosecuted the case. Since August, the foundation has fired its top three officials, severed ties with the law and accounting firms with which it had worked, laid off 72 of its 127 employees, and closed its two branch offices. Andersen blamed WorldCom for the scandal, insisting that the . If you continue to experience issues, contact us at 202-466-1032 or help@chronicle.com. The Reverend Ed Shaw suggested that the BFA "Explain the situation completely to investors; ask their forgiveness; let them know their gift of principal would help if they choose to give some or all of it. Things are moving quickly now in the sex scandal involving the three oldest sons of Steven Anderson of Tempe, Arizona's favorite SPLC hate group Faithful Word Baptist Church. mps.insertAd("#" + slotid, adunit) 'hline' : 'American Greed' , Also on March 29, the trust gained a judges order to reschedule a key trial for April 29 the earliest date permitted by law, the trusts statement noted. [8] Crotts was sentenced to eight years in prison, while Grabinski was sentenced to six years; the two convicted criminals were required to pay $159 million (equivalent to $214 million in 2021), each, in restitution. Crotts and Grabinski could face six to 23 years for each count. [11] Independent of the abuse of process ruling, the original Arizona Superior Court ruling was upheld by the Arizona Court of Appeals in March 2005, at which point National Union paid the $2.5 million to Grabinski. Once javascript and access to those URLs are allowed, please refresh this page. Twenty years later, Glen Crotts' son, William Pierre "Bill" Crotts, became the organization's second president. Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges.