Investors take a leap of faith and believe their money will be secure. Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. var s = document.createElement("script"), el = document.getElementsByTagName("script")[0]; We want to hear from you. 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. 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). mps._log('**** LOADED: Google PII Fix - cnbc-cms-header-insert'); 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. 'cag[type_cnbcteam]' : 'CNBC US Team' , 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. Here we see that Andersen chose to victimize BFAs victims yet again.. The subsidiary then used that money to purchase the loans from the parent company. var pixelurl = ((document.location.protocol === 'https') ? We are unable to fully display the content of this page. 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 foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities. from the Baptist Foundation Fraud. return false; 'cag[attribution_source]' : 'CNBC US Source' , An unambiguous lesson from the BFA case is that the audit team cannot rely mps._urlContainsEmail = function() { }); The BFA opens a web site address www.bfaz.org to answer questions. Bob Allen is managing editor of EthicsDaily.com. The BFA became dependent upon future investors to pay older investors and loan interest. }, mpsopts = { Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. } else { 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. Third point is "Baptist Foundation of Arizona". regarding the disclosure of related parties and the recognition of losses, ideas on how fraud could occur and adjust the audit program plan so that tests 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. function getOneTrustCookie() { Audit. July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. [1], The Baptist Foundation of Arizona declared bankruptcy in 1999, citing $530 million in liabilities against $70 million in assets. if (typeof(window._mpspixZ) != 'string') { mps._queue.mpsinit = mps._queue.mpsinit || []; It eventually grew into an independent nonprofit organization that sold individual retirement accounts and other investments. //end OneTrust Redirect the Arizona Corporation Commission as required by state law. 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 . return unescape(document.cookie.substring(cStart, cEnd)); The most likely cause of this is a content blocker on your computer or network. 'is_content' : '1' , if (EEA_REGION_COUNTRY_CODES.includes(result.geo.country_code)) { About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million. window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; 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. 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. By SUSAN DONALDSON JAMES. } [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. Yet, in 2002, years after the BFA . const OneTrustCategories = { 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. fetch('https://geo.cnbc.com/info/').then(res => res.json()).then(result => { This settlement takes on a sad historical significance 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. 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. Reglious Prey: Baptist Foundation of Arizona. Auditors must broaden the range of information that var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); if (!oneTrustCookie) return true; The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. same time, it accelerated its efforts to sell IRA-type retirement investment Powered and implemented by FactSet Digital Solutions. document.addEventListener("DOMContentLoaded", function(event) { })(); .map(categoryPreference => parseInt(categoryPreference.split(':')[0], 10)); 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. 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. console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); These. real estate in exchange for notes receivable valued in the millions of dollars. Powered and implemented by FactSet Digital Solutions. 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. 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. In other words, it had become a classic The new company will, like its not-for-profit predecessor, invest its assets in real estate, venture-capital deals, and some equities. Please make sure your computer, VPN, or too heavily upon management assurances. However, the State Board Your investment actually touches the lives of countless numbers while you earn a very attractive interest rate. With what are they going to make donations?. on funding church start-ups and providing aid for children and the elderly. BFAs failure and the subsequent penalties provide 2023 Southern Baptist Convention. However, Essentially, in a transaction that favored a former director, the BFA accepted a piece of property (which the BFA itself declined to purchase) as collateral for a loan that amounted to US$4.9M more than the property's appraisal value. mps._queue.adclone = mps._queue.adclone || []; The 1996 information, [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. 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']; A former BFA director 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. 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. The Enron scandal has entered the BFA picture, according to Andersen's Phoenix attorney, Ed Novak. [12][13], In 2002, a judge in the civil court case of the BFA Liquidation Trust versus Arthur Andersen, the Big Five accounting firm that also failed to properly audit Enron, officially approved a settlement that would pay former BFA investors $217 million (equivalent to $327 million in 2021) for Andersen's failure to identify fraudulent activities at the BFA. [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. 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. 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. 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. Andersen settled a class-action lawsuit with BFA investors for $217 million, without admitting any wrongdoing. mps._debug('[MPS]: email address detected in url, bypass gpt. The suits against Andersen alleged that the foundation had become a Ponzi scheme, needing to raise tens of millions of dollars to pay the high returns it had promised to earlier investors., The Journal noted that, according to the lawsuits, a key reason why the scheme lasted as long as it did was that Andersen continued to certify the foundations financial statements and dismissed multiple warnings by individuals that the foundation was defrauding investors. 30. var w=window;if(w.performance||w.mozPerformance||w.msPerformance||w.webkitPerformance){var d=document;AKSB=w.AKSB||{},AKSB.q=AKSB.q||[],AKSB.mark=AKSB.mark||function(e,_){AKSB.q.push(["mark",e,_||(new Date).getTime()])},AKSB.measure=AKSB.measure||function(e,_,t){AKSB.q.push(["measure",e,_,t||(new Date).getTime()])},AKSB.done=AKSB.done||function(e){AKSB.q.push(["done",e])},AKSB.mark("firstbyte",(new Date).getTime()),AKSB.prof={custid:"1320688",ustr:"",originlat:"0",clientrtt:"138",ghostip:"61.19.12.55",ipv6:false,pct:"10",clientip:"202.6.19.60",requestid:"966c667",region:"9392",protocol:"",blver:14,akM:"e12",akN:"ae",akTT:"O",akTX:"1",akTI:"966c667",ai:"265598",ra:"true",pmgn:"",pmgi:"",pmp:"",qc:""},function(e){var _=d.createElement("script");_.async="async",_.src=e;var t=d.getElementsByTagName("script"),t=t[t.length-1];t.parentNode.insertBefore(_,t)}(("https:"===d.location.protocol?"https:":"http:")+"//ds-aksb-a.akamaihd.net/aksb.min.js")}. in 1985, which highlights just how dramatically the foundations mission ', window.location); A jury on Monday found former foundation president William Crotts guilty of three counts of fraud and one count of illegally conducting an enterprise, according to the Arizona Attorney General's Office, which prosecuted the case. Mutual Fund and ETF data provided by Refinitiv Lipper. } Market data provided by Factset. positive results. const url = `${window.location.pathname}${window.location.search}`; Legal Statement. Southern Baptist Foundation Scheme in Arizona. var _qs = window.location.href; Unfortunately, the issuing of unqualified opinions, even after receiving More information may be obtained by contacting the Foundation at 10255 Old Columbia Rd., Columbia MD, 21046, or by contacting Tom Stolle at (800) 466-5290, ext. 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. 'is_sponsored' : '0' , [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. cStart = cStart + name.length + 1; Management responded to the new environment by structuring accounting transactions const name = ONE_TRUST_COOKIE_NAME; with a questioning mind, recognizing the possibility that fraud may be present, 'subtype' : 'primetime_show' , "[6], Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. own, and both organizations paid BFA substantial management fees to provide if (cEnd === -1) { 3210 E. Guasti Road Ontario, 91761 View on map. 2023 FOX News Network, LLC. Watch how the . Also, as a condition to the court-approved arrangement, the partner and the 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. 'keywords' : '~' , "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. real estate bubble burst and property values declined substantially. for (var i in mps.response.dart.adunits) { Nevertheless, A lawyer for Crotts, Michael Piccarreta, said all the foundation's investors would have been paid back if the state hadn't shut it down in 1999 for what the Arizona Corporation Commission said were faulty financial statements. Click the link below to sign up for updates from Good Faith Media via our daily or weekly e-newsletters. When the BFA filed for bankruptcy in 1999, it had $530 million in liabilities as compared to a reported $70 million in assets. financial assistance was not expected to come from any other source. By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen MVPNs were "fraudulently represented as one which could be redeemed at any time, although with an interest penalty. 'cag[related_primary]' : '' , }; "They had their faith shattered and faced the possible loss of all their retirement investments.". script.setAttribute("async", true); (function() { The clause was depicted as a housekeeping measure, Arizona Attorney General Janet Napolitano said, according to the paper, which quoted her as declaring, Arthur Andersen lied., Napolitano, according to a news release from her office, will be seeking severe penalties against Andersen LLP (formerly Arthur Andersen) and others., This is an absolute outrage, Napolitano said. baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. 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. All eyes are on Houston this week, as jury selection gets underway for the long-awaited criminal trials of former Enron leaders Kenneth Lay and Jeffrey Skilling on charges of corporate fraud. const matches = oneTrustCookie.match(COOKIE_REGEX); or redistributed. the State Board of Accountancy: Arthur Andersen, without admitting or denying any fault, settled an investors "I just hope they realize they defied (God's) word by mishandling money that people entrusted to them," said Virginia Branch, 77, of Prescott, who lost $400,000 she said would have helped her grandchildren pay for college. Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. Quotes displayed in real-time or delayed by at least 15 minutes. 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. 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. 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. Improving and strengthening fraud detection is at the heart (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. both in and outside of management. } [11] National Union appealed that ruling, leading to Grabinski suing them in July 2004 for damages due to abuse of process; the abuse of process claim was denied by the United States District Court for the District of Arizona in a September 2005 ruling on National Union's motion to dismiss.

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