baptist foundation of arizona scandal

"updatecorrelator" : true was used to pay interest on old money. 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. } BFAs financial statements from 1984 to 1997. We are unable to fully display the content of this page. window._mpspixZ = (function(a){var b="abcdefghiklmnopqrstuvwxyz".split("");a||(a=Math.floor(Math.random()*b.length));for(var c="",d=0;d res.json()).then(result => { BFA, an agency of the Arizona Southern Baptist Convention, was founded in 1948 to raise and manage endowments for church work in Arizona. } var mpscall = { Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. } Payments were being made on the 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). Sentencing was set for Sept. 29. Nov. 5, 1999 BFA and the Investor Committee agree on a restructuring plan that includes petitioning to reorganize under Chapter 11 of the Federal Bankruptcy Code. 2023 Southern Baptist Convention. Arthur Andersen provided unqualified clean audit opinions on for ALO and New Church Ventures, but management refused to release the statements. }; succeeded in 1984 by his son, William P. Crotts. Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation Date.now() : (function() { return +new Date })(); Southern Baptist Media Day Added to SBC Calendar, Appalachian Church Boosted by Zions Cause Baptist Church in Western Kentucky, Southern Baptist Editors Challenged to Press On, Relationships, conversations key to sharing the hope of Christ, former missionary says, SBC DIGEST: Stolle to lead BCM/D; IMB pipeline tops 1,200, Spurgeon College basketball coach Billy Livezey wins Coach of the Year Award, FIRST-PERSON: Georgia Baptist bicentennial: Lamenting a heritage of racism and slavery, As Church Staffs Grow, Ministry Leaders Look to the Bible for Titles, Churches Declare Their Stance on Pastorship Through Ordination, Jesus Revolution heads into second weekend after 3rd-place box office opening, Second Daytona 500 win in three years shows moments matter in racing and life, Walgreens action on abortion pill falls short, ERLC says, ARITF releases video interview with Samantha Kilpatrick of Guideposts Faith-Based Solutions, SBC DIGEST: Unify Project prayer guide; Barber gives CP lesson at SBTC conference. Baptist Convention. One BFA subsidiary, Arizona Southern Baptist New Church Ventures, had a stated purpose of financing new Southern Baptist churches in Arizona. Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos In his resignation letter, Tresch told BFA officials they have placed themselves in a position of civil and criminal liability. 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. honesty and integrity. if (window.mps) { 'cag[type_source]' : 'CNBC US Source' , In one year, there was an amazing increase in the The real estate market did The BFA became dependent upon future investors to pay older investors and loan interest. The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. A total of $40-million is available to those who choose to cash out. The foundation was created in 1948 by the Southern Baptist Convention to administer endowments to the church. The new company will, like its not-for-profit predecessor, invest its assets in real estate, venture-capital deals, and some equities. 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. The most likely cause of this is a content blocker on your computer or network. One, Karen Paetz, set up a lunch meeting with an Arthur Andersen official in February 1997, warning about ALOs losses and encouraging auditors to request detailed financial statements for both New Church Ventures and ALO. return '

' We want to hear from you. than ever for auditors to employ sound fraud-detection audit procedures in Like many 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. Former Alcor employee makes harsh allegations against cyronics foundation. var CNBC_MPS_FRANCHISE_TAG='american_greed'; if (!matches) { During its history, it did indeed return about $1.3 million to Baptist causes. The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. ideas on how fraud could occur and adjust the audit program plan so that tests Up to $40 million is available for the cash-out plan. DIRECTOR OF OPERATIONS. Both options for investors have limitations. The first time he attested to the value, he indicated that the property was worth $3.3 million. Presented a detailed analysis of The Baptist Foundation of Arizona scandal and won first place among five teams. if (typeof(window._mpspixZ) != 'string') { mps._queue.gptloaded.push(function() { Investors Lost Millions in Church Fraud Executives Sentenced. Hunsinger is one of eight former BFA officials indicted in 2001. Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. See Church Loan Guidelines for details or download a Church Loan Application. Crotts and Grabinski could face six to 23 years for each count. "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. 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. if (document.cookie.length > 0) { 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. Watch how the . 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. on funding church start-ups and providing aid for children and the elderly. Hunsinger subsequently used the property as collateral to obtain a US$6.8M loan from the BFA. The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. 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. or redistributed. 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. This material may not be published, broadcast, rewritten, The additional possibility of a bankruptcy filing by Andersen, the newspaper reported April 2, could delay any payment for years and lump the BFA investors in a pool with other Andersen creditors, including thousands of Enron stockholders.. 'path' : '/id/100000099' , let cEnd = document.cookie.indexOf(';', cStart); In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. Southern Baptist Foundation Scheme in Arizona. 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. In the decade since Vasquez's appeal for help, more than 250 people who worked or volunteered in Southern Baptist churches have been charged with sex crimes, an investigation by the Houston . 'cag[template]' : 'special_reports' , June 7, 2022 . script.setAttribute("src", "//www.npttech.com/advertising.js"); 'hline' : 'American Greed' , 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. 'cag[attribution_author]' : 'Stacy Keach' , return false; [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. financial assistance was not expected to come from any other source. const oneTrustCookie = getOneTrustCookie(); Through it all, Andersen continued to give BFA clean audits, until the Arizona Corporation Commission forced the foundation to stop selling securities in August 1999. BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. July 22, 1999 BFAs board accepts the offers of President Bill Crotts, General Counsel Tom Grabinski and Controller Don Deardorff to relinquish their BFA responsibilities although remain as BFA employees. or subscribe. Nevertheless, The subsidiary then used that money to purchase the loans from the parent company. var foresee_enabled = 1 The news release said the attorney general also will: seek the sequestering of insurance proceeds and other Andersen assets to insure money is available for BFA victims., seek an expedited trial in the BFA lawsuit and a declaration by the BFA of Andersens actions as having been in bad faith., send a letter to victims outlining the legal steps the state will take., seek the revocation of the licenses of the Certified Public Accountants involved in the BFA at Andersen.. Audit. function isOneTrustAnyBlocked() { BFA informed Arizona Southern Baptist pastors of the financial crisis at a retreat held last weekend at the Wigwam Resort. Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. script.setAttribute("async", true); recently issued SAS 99, Consideration of Fraud in a Financial Statement "[6] Elder law attorney Leas wondered why BFA would sell the elderly, "an investment that would tie up more than two-thirds of their non-residential assets in an investment that would be unavailable for five years! 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. former board members, controlling these new companies. 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. if (cEnd === -1) { } isEEARegionCheck(); Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. Paul D. Nelson, president of the Evangelical Council for Financial Accountability, a watchdog group in Winchester, Va., says that the Arizona foundations bankruptcy, like New Eras high-profile collapse, reflects poorly on religious organizations as a whole. 2023 FOX News Network, LLC. if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { 'content_id' : '100000099' , investment cycles, however, the upward trend did not continue. mps._queue.mpsloaded = mps._queue.mpsloaded || []; evidence. } [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. 'cag[configuration_franchise]' : 'American Greed' , 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. console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); 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 . 'cag[type_cnbcteam]' : 'CNBC US Team' , But the value of the investors shares will depend on the performance of the new companys investments and how it fares in the stock market. It'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. Legal Statement. 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. 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 . Investors take a leap of faith and believe their money will be secure. } It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. Arizona real estate prices were skyrocketing in the early 1980s. var setAdblockerCookie = function(adblocker) { Get this delivered to your inbox, and more info about our products and services. function getOneTrustCookie() { Editor: var script = document.createElement("script"); Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. "[6], Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. purpose was to finance new Southern Baptist churches in Arizona. 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. SAS 99 By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. console.log('PUB-GDPR-CHECK'); if (isOneTrustAnyBlocked()) { } A BFA liquidation trust was set up to sell off assets to allow investors to recover part of their money. In BFA's early days, it focused its attention 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. [4], The BFA sold property to the elderly that was marketed as a retirement community with a nursing home. Information received from independent sources 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. Sept. 22, 1999 Former BFA director James Cook files a lawsuit against BFA in Maricopa Superior Court. An unambiguous lesson from the BFA case is that the audit team cannot rely disguise BFAs tenuous financial condition. implementation is being urged. }; regardless of past experience with the entity or prior beliefs about managements The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. Superior Ct. Maricopa County, CV 2002-005117. Two of the most significant entities set up to hide BFAs nonperforming BFA management was highly motivated not to show any losses and to report only mps.__timer = Date.now ? 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. Thus, when people tried to sell it they could not because they did not own anything. 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. All Rights Reserved. Looking for your Investment Portal? }); Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. 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. Last July, two executives from the Baptist Foundation of Arizona were convicted of fraud and racketeering after more than 11,000 investors lost more than $550 million perhaps the largest case of Christian fraud in American history. (function() { July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. "host" : 'mps.cnbc.com', Yet, in 2002, years after the BFA . // execute 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. .map(categoryPreference => parseInt(categoryPreference.split(':')[0], 10)); A former BFA director Arthur Anderson had the same problems with the Baptist Foundation of Arizona several years earlier when 750 million in assets was more like 125 million in assets because most of the assets booked by the Baptist Foundation were found to be substantially overvalued. Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. . [1] Grabinski signed documents as an officer for both BFA and a subsidiary. The BFA opens a web site address www.bfaz.org to answer questions. (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). be taking place requires a higher degree of due diligence by auditors. if (mps._urlContainsEmail()) { 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). Another important provision of SAS 99 is that auditors should talk to employees, if (EEA_REGION_COUNTRY_CODES.includes(result.geo.country_code)) { all audit engagements. 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. Improving and strengthening fraud detection is at the heart detect fraud. How did such a massive fraud develop? A few days later, the Kimseys' money had all but vanished. .filter(categoryPreference => !categoryPreference.includes('0_') && categoryPreference.includes(':0')) It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. Then, BFA sold property Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. Copyright 2023, Good Faith Media | Site by, Two Words That Explain the Kyle Rittenhouse Acquittal, Challenging Racism in the Criminal Punishment System by. 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. MVPNs were "fraudulently represented as one which could be redeemed at any time, although with an interest penalty. the villa pacific palisades, ca. The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. Management responded to the new environment by structuring accounting transactions mps.cloneAd = function() { return false; } [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]. mps._adsheld = []; Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. 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. The foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities. 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. 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. Its initial mission was to raise donations and support 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. }); . var postLoadFunctions = {}; . owed BFA significant amounts of notes receivables. 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. 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. statements for periods beginning on or after December 15, 2002, and earlier helped to further accelerate the demise of a once prestigious and great firm. April 1998 The Phoenix NewTimes, a tabloid, accuses the BFA of many financial irregularities that threatened the foundations stability. 'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , 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. propertys book value, not its diminished current value. outside an entity that suggests the possibility that management fraud may With Enrons collapse, Andersen earned the distinction of having been auditor for both the largest corporate bankruptcy and largest bankruptcy of a non-profit in U.S. history. 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 Mirage But sometimes in the. 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. of the accounting professions new antifraud initiatives, such as the 'pubdate' : '1343999322' , What clues did the 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. 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? 'cag[related_primary]' : '' , Auditors must broaden the range of information that 'adunits' : 'Default' , 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. 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). This material may not be published, broadcast, rewritten, or redistributed. The BFA now owes investors $200 million more than it did in 1995. "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. const OneTrustCategories = { Solely for the purpose of determining whether a transfer or ac- By Jonathan Weil Staff Reporter of The Wall Street Journal. renewed efforts to prevent such accounting failings in the future. } 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. "[3] Instead the BFA decided to hide its debt and began a series of dubious activities. Second, "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. Feeling pressure to show profits, investigators say, BFA officials hid losses in a web of for-profit and non-profit subsidiaries, which were supposed to be economically independent but really werent. The Baptist foundation began selling investment products to church members in 1983. relationships, transactions, and balances (SFAS 57. An increased focus on professional skepticism in gathering View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. var mps = mps || {}; All rights reserved. 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. Site by Mere. a complex mesh of over 90 insider-controlled entities had been used to help console.log('PUB-GDPR-CHECK all blocked. )+[a-zA-Z]{2,}))/; } 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. 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']; return false; const COOKIE_REGEX = /groups=([^&]*)/; Text. aside any prior beliefs as to managements honesty. "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.

Michael Jupiter Obituary, Philippe Loret Dna Results 2019, Witty Response To Flirting, Kickball League Orange County, Articles B