baptist foundation of arizona scandal

Quotes displayed in real-time or delayed by at least 15 minutes. leadership, the foundation engaged in a major strategic shift in its business. recently issued SAS 99, Consideration of Fraud in a Financial Statement The foundation was created in 1948 by the Southern Baptist Convention to administer endowments to the church. 1991 to 1994 statements and an adverse opinion on the 1995 to 1997 financial Its only significant asset was 1,357 acres of undeveloped land in San Miguel County, New Mexico. Carleton College Christina Farhart, political science Jonathan Lafky, economics Adam Loy, statistics Andrew Poppick, statistics Sandra Rousseau, French Juliane Schicker, German Ithaca College Kyle Armbrust, performance studies Patricia Capaldi, art Mat Fournier, world languages, literatures and cultures David Hajjar, speech-language pathology and audiology Carly Jo Hosbach-Cannon, speech . 'cag[brand]' : 'none' , } BFA ultimately filed for bankruptcy, and thousands of elderly investors lost baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. Perceiving a lack of response, most resigned. can are designed to be unpredictable and unexpected. .map(categoryPreference => parseInt(categoryPreference.split(':')[0], 10)); The first in a string of corporate scandals, Enron came to symbolize corporate excess of the 1990s and is Americas best-known white collar crime. 2023 CNBC LLC. mps._adsheld = []; [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. too heavily upon management assurances. 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. Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. An increased focus on professional skepticism in gathering Among Southern Baptists in Arizona and the neighboring states, where many of the investors live, the impact of the case may be more direct. the substance of ALOs actions was to buy and hold BFAs overvalued 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. A Division of NBCUniversal. Dec. 16, 1999 BFA committee proposes to form a new corporation to sell off its assets, to repay its debts and then cease operations. This settlement takes on a sad historical significance As for how Southern Baptists in Arizona and elsewhere will emerge from the mess created by the foundation, Bill May, president of the Arizona Church Growth Board, a unit of the state convention, says this: Its like family. head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); the villa pacific palisades, ca. Transactions } Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. available for public inspection from the Arizona Corporation Commission, showed BFA management was highly motivated not to show any losses and to report only At the center of the scandal is Crotts, a charismatic 53-year-old lawyer, who took over the BFA from his father in 1982. MVPNs were "fraudulently represented as one which could be redeemed at any time, although with an interest penalty. 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 . [1], The Baptist Foundation of Arizona declared bankruptcy in 1999, citing $530 million in liabilities against $70 million in assets. head.insertBefore(mpsload, head.firstChild) console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); Date.now() : (function() { return +new Date })(); aside any prior beliefs as to managements honesty. Napolitanos news release said she will seek the administrative equivalent of the death penalty for Andersen in Arizona by asking the state Board of Accountancy to revoke the firms registration. from the Baptist Foundation Fraud. The foundation halted security sales in August, however, when state regulators found that it did not have the money to cover its debts to investors. 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. Other companies to look at: Cendant, RiteAid, and Sunbeam. 3210 E. Guasti Road Ontario, 91761 View on map. Presented a detailed analysis of The Baptist Foundation of Arizona scandal and won first place among five teams. We want to hear from you. 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. disguise BFAs tenuous financial condition. document.getElementsByTagName("head")[0].appendChild(script); When the foundation was closed by the Arizona attorney general's office, it owed $570 million to investors and had assets worth an estimated $220 million. Site by Mere. Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. The company will be organized to hold the foundations existing assets, which are estimated to be between $160-million and $200-million. In applying SAS 99, auditors should plan and execute every audit Arizona real estate prices were skyrocketing in the early 1980s. Two former executives committed fraud to hide their financial mismanagement of the Baptist Foundation of Arizona, but they didn't line their own pockets, jurors said in convicting them Monday. Looking for your Investment Portal? The Baptist Foundation of Arizona was founded in 1948 by the Arizona Southern Baptist Convention for the purpose of raising and managing endowment funds to further Southern Baptist causes. // check for region and redirect if country is in EEARegion var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); "[3] Instead the BFA decided to hide its debt and began a series of dubious activities. Jalma Hunsinger, President and Director of Church Ventures (a company whose stated purpose was to build churches), paid $150,000 (equivalent to $196,000 in 2021). } Crotts, one of three remaining defendants pleading innocent, says he was an innocent victim who himself lost $800,000. For example, on one day Grabinski attested to the value of a piece of property twice. Feb. 19, 2002 4:00 pm ET. Potential financial losses in the case overshadow the losses accumulated by non-profit groups and donors who gave money to the Foundation for New Era Philanthropy. regarding the disclosure of related parties and the recognition of losses, He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. At the time BFA filed for bankruptcy in November 1999, it had total liabilities of approximately $650 million and listed assets of approximately $290 million. The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. PC Phone Home '); This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). 'nid' : '100000099' They were acquitted of 23 counts of theft. } 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. document.addEventListener("DOMContentLoaded", function(event) { outside an entity that suggests the possibility that management fraud may (Phoenix, Ariz. - September 5, 2006) Lawrence Dwain Hoover today pleaded guilty to one count of fraud in the criminal case involving the Baptist Foundation of Arizona (BFA). and New Church Ventures $173.6 million. }; 'cat' : 'CNBC TV|Primetime Shows 2|American Greed' , BFAs liabilities included approximately $585 million owed to investors. Thus, when people tried to sell it they could not because they did not own anything. 'cag[related_primary]' : '' , A total of $40-million is available to those who choose to cash out. Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. was placed on probation, requiring that his work be monitored for two years Auditors must broaden the range of information that How did such a massive fraud develop? the auditors would have discovered that ALO was insolvent. The Arizona Republic reported that Novak had said Andersens circumstances have changed significantly since it was indicted March 14 on federal charges involving its auditing of Houston-based energy trader Enron. if (typeof window === 'undefined') return; mps._debug('[MPS]: email address detected in url, bypass gpt. When the BFA filed for bankruptcy in 1999, it had $530 million in liabilities as compared to a reported $70 million in assets. [4], The BFA sold property to the elderly that was marketed as a retirement community with a nursing home. var CNBC_MPS_FRANCHISE_TAG='american_greed'; It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. Sept. 20, 1999 Pastor Richard A. Kimsey amends his lawsuit against BFA to include the Arizona Southern Baptist Convention and Steve Bass, executive director treasurer of the conventions Executive Board. When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. mps.__timer = Date.now ? BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. console.log('PUB-GDPR-CHECK'); By 1996, ALO was more than $100 million in debt. First case: The Baptist Foundation of Arizona invests and loses millions entrusted by churchgoers, and its mission ends in scandal. 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. or subscribe. 2023 FOX News Network, LLC. return _regex.test(_qs); purpose was to finance new Southern Baptist churches in Arizona. A written statement from the foundation says that at the completion of the bankruptcy proceedings and the creation of a new for-profit company, the Baptist Foundation of Arizona will no longer exist. 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. 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. If the audit team had obtained copies of ALOs detailed financial statements, The foundations plan -- which is still subject to approval by investors -- includes one other way people might get back some of their money: litigation. 'cag[type_cnbcteam]' : 'CNBC US Team' , Solely for the purpose of determining whether a transfer or ac- The most likely cause of this is a content blocker on your computer or network. The audit team must put Many were elderly and invested their retirement savings in the belief not only that their money was safe, but that part of their earnings would be put to use to advance the Lords work through planting of Southern Baptist churches. First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. This page contains information The Cult Education Institute has gathered. In order to remove those loans from its books, the BFA secretly funneled money to a subsidiary. mps.__intcode = "v2"; statements for periods beginning on or after December 15, 2002, and earlier CT previously covered the scandal involving Jack Schaapformer pastor of the largest independent Baptist congregation, First Baptist Church of Hammond, Indianawho was fired in 2012 and . }; "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. While the recently enacted Sarbanes-Oxley Act may only directly impact auditors Up to $40 million is available for the cash-out plan. .filter(categoryPreference => !categoryPreference.includes('0_') && categoryPreference.includes(':0')) var _qs = window.location.href; As recounted by The Wall Street Journal March 4, many of the foundations investors were elderly churchgoers attracted by the foundations offer of above-market returns on promissory notes and other investment products, and by its mission of using earnings for good works, such as building churches and nursing homes for the poor. mps.insertAd("#" + slotid, adunit) console.log('PUB-GDPR-CHECK oneTrustCookie: ', oneTrustCookie); PHOENIX (BP)Following is a time table outlining the major events surrounding the embattled Baptist Foundation of Arizona: April 1996 Foundation attorney L. Kyle Tresch resigns. } return '

' 'cag[project_management_team]' : 'CNBC US Team' , [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. Superior Ct. Maricopa County, CV 2002-005117. s.src = "https://fm.cnbc.com/applications/cnbc.com/resources/files/2020/03/28/VisitorAPI.js"; Global Business and Financial News, Stock Quotes, and Market Data and Analysis. 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. 'pubdate' : '1343999322' , was used to pay interest on old money. they use. const oneTrustCookie = getOneTrustCookie(); // execute if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { from ALO and New Church Ventures (SFAS 5. BFAs financial statements from 1984 to 1997. 'is_sponsored' : '0' , Who We Are; The Team . Visitor Comments. [8] Indictments were handed down in April 2001; by July 2006, when BFA's president and CEO William Crotts and BFA's Chief Legal Counsel Thomas Grabinski were found guilty at trial on multiple counts of fraud, five other defendants had already pleaded guilty. Get this delivered to your inbox, and more info about our products and services. . mpsload.id = "mps-load"; const EEA_REGION_COUNTRY_CODES = ['AT', 'BE', 'BG', 'HR', 'CY', 'CZ', 'DK', 'EE', 'FI', 'FR', 'DE', 'GR', 'HU', 'IS', 'IE', 'IT', 'LV', 'LI', 'LT', 'LU', 'MT', 'NL', 'NO', 'PL', 'PT', 'RO', 'SK', 'SI', 'ES', 'SE', 'CH', 'TR', 'GB']; In 1989, Arizonas The entities had no employees of their .split(',') by the Arizona State Board of Accountancy. In August 2006, a jury found Crotts, the foundation's ex-president, and . const OneTrustCategories = { return ''; If you continue to experience issues, contact us at 202-466-1032 or [email protected]. fetch('https://geo.cnbc.com/info/').then(res => res.json()).then(result => { of Accountancy alleged that because of the very material departures from GAAP The Mirage But sometimes in the. Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. Aug. 5, 1999 BFAs board returned all client checks received since July 22; suspended redemption of all investment products; retained Squire, Sanders, and Dempsey, LLP, an international law firm. "updatecorrelator" : true Investors in the Baptist Foundation of Arizona, which went belly-up in 1999 in the largest nonprofit bankruptcy in history, are suing Arthur Andersen, the foundation's auditors, for covering up the fact that the foundation was a fraud. The foundation was created 51 years ago by the Arizona Southern Baptist Convention to raise money and manage the endowments of Southern Baptist charities, and through its history, the foundation has provided a total of $1.3-million in gifts to church causes. The BFA began marketing individual funds, often in churches, telling prospective investors their funds would be safe, yield high returns and help strengthen Southern Baptists in the state. return false; Profits from investments were supposed to be used to fund the churches' ministries and numerous charitable causes. Investors who agree to receive any money recovered in such litigation must give up their rights to pursue other legal action against the foundation, such as joining the two class-action lawsuits that have already been filed against the foundation and its affiliates. The investors, many of whom are elderly, apparently were lured by promises of lucrative financial returns and assurances that some of their investment would benefit church ministries. Robert H. Colson, PhD, CPA Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; if (typeof adunit != "string") return false; A smaller-but-similar scandal hit Baptists in the 1990s, when 11,000 investors in the Baptist Foundation of Arizona fell victim to a $550 million Ponzi scheme. Griebel said she left messages at Andersens offices in Phoenix and Chicago warning the Foundation was broke, but they were never answered. 207, or [email protected]. In the case, it claims that Arthur Anderson gave investors a false sense of security after giving out Anderson issued a clean audit in order to attract new investors. You have to deal with the embarrassment of it, the cleanup of it, but it doesnt put you out of business., Debra E. Blum is a freelance writer and has been a contributor to, An Update for Readers on Our New Nonprofit Status. if (!_qs) { After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. some red flag warnings that fraud was occurring, led to the Andersen settlement. A few days later, the Kimseys' money had all but vanished. if (window.mps) { The BFA became dependent upon future investors to pay older investors and loan interest. Under William Crotts Still it functioned much like a financial institution, raising funds through sale of investment agreements and mortgage-backed notes, which in turned were invested in real estate. BFA invested heavily in real estate, a more speculative investment strategy than other Baptist foundations in the state traditionally used. 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. It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. Baptist Group Execs Sentenced for Fraud. The BFA's leaders, including a respected pastor and his adult son, used everything from Ponzi schemes to "land flipping" in order to squeeze money out of the community. fiduciary requirements governing nonbank passive trustees of IRAs. script.setAttribute("onload", "setAdblockerCookie(false);"); New Era, which solicited investments largely from Christian institutions, folded in 1995 after taking in about $350-million in what had amounted to a Ponzi scheme. The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. Investors Lost Millions in Church Fraud Executives Sentenced. Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. At the time of BFAs bankruptcy, Click the link below to sign up for updates from Good Faith Media via our daily or weekly e-newsletters. [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. var _regex = /([^=&/<>()[].,;:s@"]+(.[^=&/<>()[].,;:s@"]+)*)@(([[0-9]{1,3}.[0-9]{1,3}.[0-9]{1,3}.[0-9]{1,3}])|(([a-zA-Z-0-9]+. "They had their faith shattered and faced the possible loss of all their retirement investments.". Login Here. 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. Aug. 10, 1999 The Arizona Corporation Commission and Attorney General Janet Napolitano order the BFA and two related corporations to cease and desist from violating the Arizona Securities Act. 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The BFA had issued millions of dollars in money-losing loans. const COOKIE_REGEX = /groups=([^&]*)/; mps._queue.mpsinit = mps._queue.mpsinit || []; for (var i in mps.response.dart.adunits) { [2], The collapse of the BFA did not occur in a vacuum. than $20 million per year for several years. Start Here; About Us. mps._queue.gptloaded = mps._queue.gptloaded || []; or redistributed. 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. His lawyer has said there was no fraud but rather a disagreement on the value of property. Andersen and its representatives pretended to negotiate in good faith, but in fact never had any intention of making good on their part of the settlement. Sept. 20, 1999 Pastor Richard A. Kimsey amends his lawsuit against BFA to include the Arizona Southern Baptist Convention and Steve Bass, executive director treasurer of the convention's Executive Board. that ALO had a negative net worth of $116 million and had been losing more View Jasmine's full profile See who you know in common Get introduced . This material may not be published, broadcast, rewritten, } The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. Sign up for free newsletters and get more CNBC delivered to your inbox. In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. if (!matches) { In 1997 a former employee sought a job at Buckner Baptist Benevolences in Dallas that BFA was hiding losses in bad bank loans, while conducting a Ponzi scheme, which at one point included a strategy of encouraging elderly people to borrow against their homes and invest proceeds with the Foundation. 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. mps.response.dart.adunits[i].data = ''; return true; Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. Baptist Foundation of Arizona was the largest non-profit in U.S. history. relationships, transactions, and balances (SFAS 57. network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. June 3, 2010 -- Tina Anderson was only 15 when she said she was forced to stand terrified before her entire Baptist congregation to confess her . 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. New Church Ventures Scandals and stock market crashes . console.log('PUB-GDPR-CHECK oneTrustCookie matches: ', matches); Money & Investing. let cEnd = document.cookie.indexOf(';', cStart); Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. detect fraud. Nevertheless, Former Alcor employee makes harsh allegations against cyronics foundation. Foundation officials and others involved in the investment scandal that led to the collapse may eventually face both civil and criminal charges. mps.cloneAd = function() { return false; } PHOENIX (BP)The Enron collapse has reared its head in an Arthur Andersen announcement that the accounting firm is backing out of a $217 million settlement with victims of the Baptist Foundation of Arizonas 1999 collapse. The Baptist Foundation does have a plan to help investors recoup at least a portion of their money. [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. 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 . Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation 'stitle' : 'Religious Prey | Dr. Mikos: American Greed 5' ,

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