The following were among the major GAAP violations alleged by
Site by Mere. 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. mps._queue.gptloaded = mps._queue.gptloaded || []; 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. When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. Nevertheless,
As a nonprofit company, ALO filed its financial statements each year with
[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. Who We Are; The Team . This settlement takes on a sad historical significance
'cag[type_cnbcteam]' : 'CNBC US Team' , 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. BFA management was highly motivated not to show any losses and to report only
})(); [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. if (typeof(window._mpspixZ) != 'string') { Some Baptist leaders worry that fund-raising efforts by Baptist agencies and local churches may be hampered not only by ill will created by the foundations troubles, but also simply because some donors will not have money to give. 'adunits' : 'Default' , 2 Case Study Two Part 1: Baptist Foundation Summary and Research The Baptist Foundation of Arizona was caught hiding important information about its financials when it filed for bankruptcy in 1999. [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. 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. })(); 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. 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. renewed efforts to prevent such accounting failings in the future. Thus, when people tried to sell it they could not because they did not own anything. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. 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. function getOneTrustCookie() { Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. 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. Here we see that Andersen chose to victimize BFAs victims yet again.. "updatecorrelator" : true s.src = "https://fm.cnbc.com/applications/cnbc.com/resources/files/2020/03/28/VisitorAPI.js"; Login Here. 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. 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. Wednesday, June 10, 2009. Crotts and Grabinski could face six to 23 years for each count. Quotes displayed in real-time or delayed by at least 15 minutes. The subsidiary then used that money to purchase the loans from the parent company. 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. It eventually grew into an independent nonprofit organization that sold individual retirement accounts and other investments. It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. [1], The Baptist Foundation of Arizona declared bankruptcy in 1999, citing $530 million in liabilities against $70 million in assets. return unescape(document.cookie.substring(cStart, cEnd)); mps._queue.adclone = mps._queue.adclone || []; return ''; [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. disguise BFAs tenuous financial condition. regardless of past experience with the entity or prior beliefs about managements
real estate in exchange for notes receivable valued in the millions of dollars. var d = new Date(); 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. BFA invested heavily in real estate, a more speculative investment strategy than other Baptist foundations in the state traditionally used. var CNBC_Premium = CNBC_Premium || {}; Legal Statement. document.addEventListener("DOMContentLoaded", function(event) { console.log('PUB-GDPR-CHECK'); 'cat' : 'CNBC TV|Primetime Shows 2|American Greed' , 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.. [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. (function() { [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]. He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. Second,
Crotts, one of three remaining defendants pleading innocent, says he was an innocent victim who himself lost $800,000. Management responded to the new environment by structuring accounting transactions
detect fraud. Former general counsel Thomas Grabinski was convicted of three counts of fraud and one count of illegally conducting an enterprise. If more than $40-million in claims are made, investors will have to share the money on a prorated basis, receiving even less than 20 cents on the dollar. Baptist Foundation indictments thrown out. . succeeded in 1984 by his son, William P. Crotts. 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. Yet, in 2002, years after the BFA . 'hline' : 'American Greed' , To this day, it is considered one of the largest affinity frauds in U.S history. script.setAttribute("src", "//www.npttech.com/advertising.js"); Accusations of New IFB being a cult were also made by former New IFB preacher Adam Fannin, who left after the Romero scandal in January 2019. 207, or tstolle@bcmd.org. Baptist Group Execs Sentenced for Fraud. 'template' : 'special_reports' , Reglious Prey: Baptist Foundation of Arizona. console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); Kyle Cooper. If the audit team had obtained copies of ALOs detailed financial statements,
BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. In 1962 Pastor Glen Crotts became the first full-time president and was subsequently
return true; Auditors must broaden the range of information that
mps._adsheld.push(adunit) 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. Auditors must exchange
if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { A BFA liquidation trust was set up to sell off assets to allow investors to recover part of their money. if (result && result.geo && result.geo.country_code) { After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. (function(){var g=function(e,h,f,g){this.get=function(a){for(var a=a+"=",c=document.cookie.split(";"),b=0,e=c.length;b=e/100?0:100),a=[h,e,0],this.set(f,a.join(":"));else return!0;var c=a[1];if(100==c)return!0;switch(a[0]){case "v":return!1;case "r":return c=a[2]%Math.floor(100/c),a[2]++,this.set(f,a.join(":")),!c}return!0};this.go=function(){if(this.check()){var a=document.createElement("script");a.type="text/javascript";a.src=g+ "&t=" + (new Date()).getTime();document.body&&document.body.appendChild(a)}};this.start=function(){var a=this;window.addEventListener?window.addEventListener("load",function(){a.go()},!1):window.attachEvent&&window.attachEvent("onload",function(){a.go()})}};try{(new g(100,"r","QSI_S_ZN_3NNZu19yzvgN7tr","//zn3nnzu19yzvgn7tr-nysscpa.siteintercept.qualtrics.com/WRSiteInterceptEngine/?Q_ZID=ZN_3NNZu19yzvgN7tr&Q_LOC="+encodeURIComponent(window.location.href))).start()}catch(i){}})(); Inadequate disclosure regarding ALO and New Church Ventures
//begin OneTrust Redirect Foundation officials and others involved in the investment scandal that led to the collapse may eventually face both civil and criminal charges. In 1989, Arizonas
The BFA consistently sold the concept that its main objective was to help its investors serve the work of the Arizona Southern Baptist Convention, while also providing them with favorable returns, as stated in a BFA investor brochure: We are a ministry dedicated to serving the Lord and furthering Southern Baptist and other Christian causes. TARGETED_ADS: 4, Andersen is accused of ignoring a series of warnings while the Baptist Foundation of Arizona (BFA), a nonprofit company that operated much like a bank and offered high interest rates on retirement . The New Independent Fundamental Baptist Movement (New IFB) was spearheaded in part by Steven Anderson, another well-known anti-LGBTQ pastor. In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. Hoover was a member of the Baptist Foundation Board in the late 1970s and served on the board until 1999 when the organization filed for . recently issued SAS 99, Consideration of Fraud in a Financial Statement
Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. Text. Feb. 19, 2002 4:00 pm ET. In one year, there was an amazing increase in the
Officials at the Arizona Southern Baptist Convention were unavailable for comment. } Editor:
Get this delivered to your inbox, and more info about our products and services. Investors take a leap of faith and believe their money will be secure. Market data provided by Factset. The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. 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. own, and both organizations paid BFA substantial management fees to provide
}, mpsopts = { 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. Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. The Arizona Baptist Foundation. 'cag[device]' : 'mobile-touch' , 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. 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. A former BFA director
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. A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. 'site' : 'cnbc-mobile' , 2023 Southern Baptist Convention. By 1997, ALO had a negative net worth of $138.9 and owed BFA $70.3 million
BFAs liabilities included approximately $585 million owed to investors. {"@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"]} In other words, it had become a classic
First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. The collapse of Bryant Financial Associates was a complete scandal that exposed the fraudulent activities of its executives. 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. Prosecutors estimated 11,000 investors, most of them elderly, were defrauded in the 1980s and 1990s. of the accounting professions new antifraud initiatives, such as the
if (document.cookie.length > 0) { 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. The Mirage But sometimes in the. 'cag[brand]' : 'none' , First, it was critical for BFA to meet the Treasury regulations
} Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. document.cookie = "__adblocker=" + (adblocker ? }; } 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. Nov. 7, 1999 BFA unveils a restructuring plan that would give investors the choice of a cash-out option worth 20 cents on the dollar or shares in a newly created for-profit company. Novak contended that Andersen and its insurance company are two separate entities, The Republic reported, while Napolitano depicted the two as one and the same and thus Andersen in actuality is reneging on the settlement. if (EEA_REGION_COUNTRY_CODES.includes(result.geo.country_code)) { [10][11] In February 2004, the jury in the Arizona Superior Court civil trial found in favor of Grabinski, with the Court ordering National Union to pay Grabinski $2.5 million (equivalent to $3.6 million in 2021). The Phoenix-based. 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. Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. the villa pacific palisades, ca. var postLoadFunctions = {}; Bob Allen is managing editor of EthicsDaily.com. mps._debug('[MPS]: email address detected in url, bypass gpt. if (!matches) { (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). Payments were being made on the
some red flag warnings that fraud was occurring, led to the Andersen settlement. Prosecutors said investors were promised high returns and a safe investment for using their money to build churches and retirement homes, but their combined losses totaled more than a half-billion dollars. 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. 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. 'is_sponsored' : '0' , 'cag[type_creator]' : 'Stacy Keach' , of Accountancy alleged that because of the very material departures from GAAP
outside an entity that suggests the possibility that management fraud may
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. Hunsinger subsequently used the property as collateral to obtain a US$6.8M loan from the BFA. 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 head.insertBefore(mpsload, head.firstChild) A total of $40-million is available to those who choose to cash out. })(); The auditors were Arthur Andersen, the same firm that audited Enron. If you continue to experience issues, contact us at 202-466-1032 or help@chronicle.com. 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. 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. mps._urlContainsEmail = function() { } The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. return Object.values(OneTrustCategories).filter((c) => blockedCategories.includes(c)).length > 0; mps._ext = mps._ext || {}; "These verdicts are a victory for thousands of victims who believed the promises made by the defendants," Attorney General Terry Goddard said in a statement. var setAdblockerCookie = function(adblocker) { In BFA's early days, it focused its attention Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos But it also "loaned" nearly $140 million to companies owned by three of the Foundation's directors. var mpscall = { (Phoenix, Ariz. - June 10, 2009) Attorney General Terry Goddard today announced that the Arizona Court of Appeals has upheld the convictions and sentences of former Baptist Foundation of Arizona executives William Crotts and Thomas Grabinski. 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. More specifically, the litigation was brought by Arizona's Corporation Commission (Securities Division), as well as the state's attorney general. be taking place requires a higher degree of due diligence by auditors. 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. Profits from investments were supposed to be used to fund the churches' ministries and numerous charitable causes. 3210 E. Guasti Road Ontario, 91761 View on map. to mitigate the real estate losses. Legal Statement. 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. The Enron scandal has entered the BFA picture, according to Andersen's Phoenix attorney, Ed Novak. return true; a sobering reminder to auditors that it is important to understand the causes
The audit team must put
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.. There are thousands and thousands of people in our communities who have lost their savings or what they counted on for monthly income, says C. Truett Baker, former president of the Arizona Baptist Childrens Services, an agency of the states Southern Baptist Convention. 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. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. Improving and strengthening fraud detection is at the heart
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. A report has been made to law enforcement, and I'm guessing . One pastor who had recently entrusted $1 million in church funds to. By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen Southern Baptist Foundation Scheme in Arizona. Both options for investors have limitations. Then, BFA sold property
let cEnd = document.cookie.indexOf(';', cStart); mpsload.id = "mps-load"; In applying SAS 99, auditors should plan and execute every audit
The 1996 information,
"[6], Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. 1 (803) 227-6197 kcooper@mybfsc.org. }).catch(() => {}); Baptist Group Ex-Leaders Guilty of Fraud. manager on the BFA audit lost their CPA licenses to practice and a third CPA
Money & Investing. Some 13,000 investors lost $570 million, mainly elderly Baptists, some of whom lost their entire life's savings. } In August 2006, a jury found Crotts, the foundation's ex-president, and . It's 5 a.m. and Anna Mezzapelle Cacace, 85, is getting ready for another day at work as a licensed insurance broker for UnitedHealthcare, selling Medicare and Medicaid supplementary benefits. regarding the disclosure of related parties and the recognition of losses,
The BFA opens a web site address www.bfaz.org to answer questions. Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. To this day, it is considered one of the largest affinity frauds in U.S history. A few days later, the Kimseys' money had all but vanished. .map(categoryPreference => parseInt(categoryPreference.split(':')[0], 10)); 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. "true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; than $20 million per year for several years. He pleaded guilty to six felonies and agreed to testify against other defendants, which include former CEO William Crotts and General Counsel Thomas Grabinksi. Start Here; About Us. 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). baptist foundation of arizona scandal. Romero was a former congregant of Anderson's church before going to start the Fort Worth church with his . What clues did the
Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. positive results. Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. 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? BFAs financial statements from 1984 to 1997. SOCIAL_MEDIA: 8 mps._queue.refreshads = mps._queue.refreshads || []; 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. 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. The Arizona Southern Baptist Convention was founded in 1928. A grand jury in April 2001 returned indictments charging former BFA officials with 32 counts of fraud, theft and racketeering. Controversial Arizona pastor Steven Anderson, the firebrand KJV-Onlyist from Faithful word Baptist Church in Tempe, AZ, has been permanently banned from Youtube, having his entire operation shout down from multiple accounts. credible tips or complaints are received about management fraud, auditors
See Church Loan Guidelines for details or download a Church Loan Application.