'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; Auditors must exchange 'type' : 'mobile: episode' , Perceiving a lack of response, most resigned. baptist foundation of arizona scandal. )+[a-zA-Z]{2,}))/; is the cornerstone of a multifaceted effort by the accounting profession to document.addEventListener("DOMContentLoaded", function(event) { ALOs stated purpose was to develop real estate. var mpscall = { (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). positive results. incorporated both nonprofit entities. Art Toalston is a writer based in Nashville and a former editor of Baptist Press. Lessons The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. return true; Watch how the . var setAdblockerCookie = function(adblocker) { 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']; At the time of its failure in 1999, it was the largest affinity fraud that had ever occurred in the United States, with a total loss estimated at US$550 million (equivalent to $895 million in 2021). in that it represents the largest cash settlement for a nonprofit case and 207, or tstolle@bcmd.org. Wednesday, June 10, 2009. Data is a real-time snapshot *Data is delayed at least 15 minutes. 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. Along with companies like Enron and Worldcom, it was audited by accounting firm Arthur Andersen, giving investors a false sense of security. How did such a massive fraud develop? former board members, controlling these new companies. 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. While the recently enacted Sarbanes-Oxley Act may only directly impact auditors [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. Investors who choose to roll their money into securities may be risking even bigger losses. 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 . cEnd = document.cookie.length; 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. By 1996, ALO was more than $100 million in debt. CNBC_Comscore = 'CNBC_TV'; We are unable to fully display the content of this page. Superior Ct. Maricopa County, CV 2002-005117. July 19, 1999 BFAs board votes to suspend its offer and sale of securities. Sentencing was set for Sept. 29. return ''; The BFA Liquidation Trust, which is seeking to recover the investors funds, immediately took action. The U.S. Supreme Court overturned Andersens conviction in 2005, but it is unlikely the nearly defunct company will ever recover as a respected business. between the foundation and these corporations were designed to achieve the The Baptist Foundation of Arizona was founded in 1948 to raise money to back up Baptist causes and to pay a return for investors. Former general counsel Thomas Grabinski was convicted of three counts of fraud and one count of illegally conducting an enterprise. [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. document.cookie = "__adblocker=" + (adblocker ? This material may not be published, broadcast, rewritten, or redistributed. } Donald Dale Deardorff, Senior Vice President and Controller, was sentenced to four years in prison and a fine of $150 million (equivalent to $196 million in 2021). help restore investor confidence and supersedes the Auditing Standards Boards [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. 'byline' : 'Stacy Keach' , Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. A report has been made to law enforcement, and I'm guessing . 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. fiduciary requirements governing nonbank passive trustees of IRAs. 'cag[configuration_franchise]' : 'American Greed' , mps._queue.gptloaded = mps._queue.gptloaded || []; 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 convicted of fraud. 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. Transactions if (!oneTrustCookie) return true; 'cag[project_management_team]' : 'CNBC US Team' , Its only significant asset was 1,357 acres of undeveloped land in San Miguel County, New Mexico. A few days later, the Kimseys' money had all but vanished. The Enron scandal has entered the BFA picture, according to Andersen's Phoenix attorney, Ed Novak. mps.insertAd("#" + slotid, adunit) mps._urlContainsEmail = function() { First, it was critical for BFA to meet the Treasury regulations The only thing I can confidently tell investors is this: The commission will pursue every possible avenue to ensure that Arthur Andersen pays for their egregious errors., The size of the settlement, The Wall Street Journal had reported March 4, was remarkably large compared with the losses suffered by investors.. of Accountancy alleged that because of the very material departures from GAAP An investigation being conducted by Arizonas Attorney Generals office and the states Corporation Commission has already revealed that the foundation used bogus transactions and accounting tricks to hide financial losses and mislead potential investors. Powered and implemented by FactSet Digital Solutions. (function() { 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. renewed efforts to prevent such accounting failings in the future. 'cag[attribution_source]' : 'CNBC US Source' , In 1998 Deeann Greibel, a financial planner and CPA in Mesa, Ariz., looked into BFA finances on behalf of a client and found it was heavily underwritten with IOUs. succeeded in 1984 by his son, William P. Crotts. 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. Management set up independent separate available for public inspection from the Arizona Corporation Commission, showed 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. PHOENIX -- In 1999, Richard Kimsey and his wife, Susan, deposited $100,000 with a Phoenix-based Southern Baptist agency that promised to do the Lord's work. } script.setAttribute("onload", "setAdblockerCookie(false);"); the Arizona Corporation Commission as required by state law. } statements for periods beginning on or after December 15, 2002, and earlier owed BFA significant amounts of notes receivables. The Mirage But sometimes in the. Ponzi scheme. } 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 . 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. let cEnd = document.cookie.indexOf(';', cStart); if (window.mps) { 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. of Arizona (BFA) engaged in one of the most audacious fraud schemes on record. 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. [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. [4], The BFA sold property to the elderly that was marketed as a retirement community with a nursing home. var CNBC_Premium = CNBC_Premium || {}; 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. baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. var d = new Date(); } Start Here; About Us. operations from collapsing was a constant influx of new investor money that [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. Unfortunately, the issuing of unqualified opinions, even after receiving Mutual Fund and ETF data provided by Refinitiv Lipper. By Jonathan Weil Staff Reporter of The Wall Street Journal. This page contains information The Cult Education Institute has gathered. Investors Lost Millions in Church Fraud Executives Sentenced. STRICTLY_NECESSARY: 1, It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. 'hline' : 'American Greed' , accounting, marketing, and administrative services. } Several accountants and one attorney became concerned enough to approach senior management about ALOs deficit. Learning its principal note issuer was ALO, she checked public records and found its unaudited balance sheet listed liabilities of $109.7 million and assets at minus $6.9 million. The Baptist Foundation of Arizona was established with the pretense of serving Southern Baptist causes. from ALO and New Church Ventures (SFAS 5. if (typeof adunit != "string") return false; Pope Francis I said in an interview with the Associated Press that "homosexuality is not a crime" and encouraged bishops to stop practicing forms of conversion therapy. Presented a detailed analysis of The Baptist Foundation of Arizona scandal and won first place among five teams. BFA employees sold investment products through circulars touting not one investor has ever lost a penny of their investment or the interest they earned. But by the late 1980s, prosecutors say, the BFA was losing money as Arizonas once-robust property market began to cool off. On this Wikipedia the language links are at the top of the page across from the article title. [14], In 2007, the first story on the episode "Religious Prey: Baptist Foundation Of Arizona / Medical Scams: Dr. Mikos", of the television series American Greed, covered the fraudulent behavior of the Baptist Foundation of Arizona.[16]. console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); .filter(categoryPreference => !categoryPreference.includes('0_') && categoryPreference.includes(':0')) Quotes displayed in real-time or delayed by at least 15 minutes. the substance of ALOs actions was to buy and hold BFAs overvalued Date.now() : (function() { return +new Date })(); // execute Romero was a former congregant of Anderson's church before going to start the Fort Worth church with his . let cStart = document.cookie.indexOf(`${name}=`); from the Baptist Foundation Fraud. mps._queue.gptloaded.push(function() { Oct. 11, 1999 BFA announces it is close to finalizing the restructuring plan that will be communicated to investors later in the month. [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. Looming losses hidden in off . if (isOneTrustAnyBlocked()) { It was eventually revealed that it had over $500 million in liabilities. One BFA subsidiary, Arizona Southern Baptist New Church Ventures, had a stated purpose of financing new Southern Baptist churches in Arizona. 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. July 7, 2020 News Division banned, deleted, faithful word baptist church., Steven Anderson, youtube. 'id' : '100000099' , mps._queue.adclone = mps._queue.adclone || []; The auditors were Arthur Andersen, the same firm that audited Enron. In a Good bank-bad bank scheme, the two companies manipulate transactions to favor the public institution while using the "bad bank" to hide the deficiencies. } 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. An unambiguous lesson from the BFA case is that the audit team cannot rely 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. The Arizona Southern Baptist Convention was founded in 1928. A BFA liquidation trust was set up to sell off assets to allow investors to recover part of their money. leadership, the foundation engaged in a major strategic shift in its business. mps._ext = mps._ext || {}; When the BFA filed for bankruptcy in 1999, it had $530 million in liabilities as compared to a reported $70 million in assets. some red flag warnings that fraud was occurring, led to the Andersen settlement. by the Arizona State Board of Accountancy. SAS 99 is effective for audits of financial The majority of New Church Ventures View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. The BFA was not interested in making this purchase. Market data provided by Factset. The Baptist Foundation of California. var pixelurl = ((document.location.protocol === 'https') ? The lead partner on Andersen's disputed 1985 audit of Lincoln was Jay S. Ozer, who also served as lead auditor of the Baptist Foundation of Arizona. plans to church members. Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. all audit engagements. BFA ultimately filed for bankruptcy, and thousands of elderly investors lost 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. if (EEA_REGION_COUNTRY_CODES.includes(result.geo.country_code)) { Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Its initial mission was to raise donations and support Money & Investing. 2023 FOX News Network, LLC. To this day, it is considered one of the largest affinity frauds in U.S history. 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. assets were receivables from the insolvent ALO. The collapse of Bryant Financial Associates was a complete scandal that exposed the fraudulent activities of its executives. 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. if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { //end OneTrust Redirect "Arthur Andersen's on-again, off-again $217 million settlement with investors in the Baptist Foundation of Arizona (BFA) scandal is on again," reports The Arizona Republic. or redistributed. The entities had no employees of their TARGETED_ADS: 4, The foundations plan -- which is still subject to approval by investors -- includes one other way people might get back some of their money: litigation. (function() { After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. Reglious Prey: Baptist Foundation of Arizona. receivables only because of funds being obtained from either New Church Ventures, The BFA was a church-affiliated charity, one that preyed on the members of its own congregation and operated for years before church fraud detection put a stop to it. A grand jury in April 2001 returned indictments charging former BFA officials with 32 counts of fraud, theft and racketeering. (function(){ View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. 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. BFA management was highly motivated not to show any losses and to report only It filed for bankruptcy in 1999 after many of the foundation 's executive had been convicted of condemnable charges or indicted for fraud. DIRECTOR OF OPERATIONS. Baptist Foundation indictments thrown out. 'content_id' : '100000099' , [1] Grabinski signed documents as an officer for both BFA and a subsidiary. Site by Mere. 'adunits' : 'Default' , return false; Among Southern Baptists in Arizona and the neighboring states, where many of the investors live, the impact of the case may be more direct. have a responsibility to expand their work to obtain independent corroborating First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. In order to remove those loans from its books, the BFA secretly funneled money to a subsidiary. {"@context": "https://schema.org","@type": "WebPage","url": "https://www.cnbc.com/id/100000099","keywords": ["CNBC TV","Primetime Shows 2","American Greed","source:tagname:CNBC US Source"]} The company will be organized to hold the foundations existing assets, which are estimated to be between $160-million and $200-million. In a March 29 statement, the day after receiving notice from Andersen, the trust said one of the first steps will be to ask the mediator who presided over the settlement negotiations, retired federal judge Layn Phillips, to rule that Andersen has breached the agreement and to order Andersen to pay the $217 million as promised.. var _qs = window.location.href; var _regex = /([^=&/<>()[].,;:s@"]+(.[^=&/<>()[].,;:s@"]+)*)@(([[0-9]{1,3}.[0-9]{1,3}.[0-9]{1,3}.[0-9]{1,3}])|(([a-zA-Z-0-9]+. const url = `${window.location.pathname}${window.location.search}`; mps._queue.mpsloaded = mps._queue.mpsloaded || []; Two former executives of the Baptist Foundation of Arizona were convicted Monday on three counts of fraudulent schemes and one count of conducting an illegal enterprise. Over a period of several years, the management of the Baptist Foundation Baptist Foundation of Arizona was the largest non-profit in U.S. history. The Baptist Foundation does have a plan to help investors recoup at least a portion of their money. const blockedCategories = decodeURIComponent(matches[1]) } BFA informed Arizona Southern Baptist pastors of the financial crisis at a retreat held last weekend at the Wigwam Resort. cStart = cStart + name.length + 1; 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. Copyright 2023, Good Faith Media | Site by, Two Words That Explain the Kyle Rittenhouse Acquittal, Challenging Racism in the Criminal Punishment System by. ALO in turn sold the stock to New Church Ventures, in exchange for a $1.6 million reduction in ALOs credit line owed to New Church Ventures. 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. mps._adsheld = []; Aug. 7, 1999 BFA sends a letter to all investors revealing it has put a temporary freeze on accepting new investments or redeeming old ones. But the foundation has operated independently of the convention, and state regulators say it is unlikely that the statewide group would be held liable for the foundations actions. 'path' : '/id/100000099' , implementation is being urged. Kyle Cooper. First case: The Baptist Foundation of Arizona invests and loses millions entrusted by churchgoers, and its mission ends in scandal. propertys book value, not its diminished current value. The person did not actually purchase the property, but purchased the right to occupy said property. Feb. 19, 2002 4:00 pm ET. } const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; Looking for your Investment Portal? 2023 Southern Baptist Convention. if (!_qs) { Improving and strengthening fraud detection is at the heart It says that a new charity will be established that will be involved in traditional Baptist charitable activities, including, for example, ministries, education, and providing routine trust and estate planning. The new charity, the statement says, will be prohibited from selling debt securities. el.parentNode.insertBefore(s, el); 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. .split(',') The most likely cause of this is a content blocker on your computer or network. sale of these IRA-type investments, from $7.2 million in 1984 to $211 million Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. //begin OneTrust Redirect console.log('PUB-GDPR-CHECK all blocked. outside an entity that suggests the possibility that management fraud may 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. 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 . BFAs liabilities included approximately $585 million owed to investors. Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. Both ALO and New Church Ventures Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. investment cycles, however, the upward trend did not continue. of the accounting professions new antifraud initiatives, such as the Crotts, one of three remaining defendants pleading innocent, says he was an innocent victim who himself lost $800,000. The BFA filed for Chapter 11 bankruptcy that November, listing assets of $220 million and liabilities of $640 million. d.setTime(d.getTime() + 60 * 60 * 24 * 30 * 1000); accounting treatment desired by management. Scandals and stock market crashes . with a questioning mind, recognizing the possibility that fraud may be present, The 1996 information, Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. mps.__timer = Date.now ? Then, BFA sold property We re-invest your money and the profit we earn goes to further such ministries as Christian education, care for children and senior adults, missions and new church starts. A total of $40-million is available to those who choose to cash out. SOCIAL_MEDIA: 8 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. The Baptist Foundation of Arizona was formed in 1948 by the Arizona Southern Baptist Convention (Convention) to raise and manage endowment funds for Southern Baptist charities.
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