baptist foundation of arizona scandal baptist foundation of arizona scandal

They were acquitted of 23 counts of theft. 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. receivables only because of funds being obtained from either New Church Ventures, 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. Like many 'path' : '/id/100000099' , Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. from the Baptist Foundation Fraud. } that ALO had a negative net worth of $116 million and had been losing more document.cookie = "__adblocker=" + (adblocker ? Site by Mere. Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. } Market data provided by Factset. The Baptist Foundation of Arizona was established with the pretense of serving Southern Baptist causes. network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. '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; console.log('PUB-GDPR-CHECK'); 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. the State Board of Accountancy: Arthur Andersen, without admitting or denying any fault, settled an investors if (typeof adunit != "string") return false; 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. real estate in exchange for notes receivable valued in the millions of dollars. Mutual Fund and ETF data provided by Refinitiv Lipper. (function() { Baptist Foundation of Arizona's auditor Arthur Anderson Illegal practices of Baptist Foundation of Arizona Holding company with losses of $585 million Told everyone they were building churches Global Crossing's auditor Arthur Anderson Global Crossing illegal practices Borrowing money and changing the origin The company will be organized to hold the foundations existing assets, which are estimated to be between $160-million and $200-million. BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. "They had their faith shattered and faced the possible loss of all their retirement investments.". ', window.location); 1 (803) 227-6197 kcooper@mybfsc.org. 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. to these companies and received notes receivable that were recorded at the earlier fraud standard, SAS 82. [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. 'cag[type_cnbcteam]' : 'CNBC US Team' , own, and both organizations paid BFA substantial management fees to provide STRICTLY_NECESSARY: 1, New Era, which solicited investments largely from Christian institutions, folded in 1995 after taking in about $350-million in what had amounted to a Ponzi scheme. 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. var s = document.createElement("script"), el = document.getElementsByTagName("script")[0]; SAS 99 is effective for audits of financial [9], In 2002, Grabinski sued BFA's insurance carrier, National Union Fire Insurance Company of Pittsburgh, Pa. (National Union), for coverage of his legal fees per the Directors and Officers liability coverage purchased from National Union, plus damages. The U.S. Supreme Court overturned Andersens conviction in 2005, but it is unlikely the nearly defunct company will ever recover as a respected business. 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. [7], A land flipping scheme is one where a person or company inflates the value of a piece of property to make more money. In 1992, records indicated that the company had lost $3.2 million due to questionable transactions. 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']; statements for periods beginning on or after December 15, 2002, and earlier } Editor: can are designed to be unpredictable and unexpected. Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. } 3210 E. Guasti Road Ontario, 91761 View on map. accounting, marketing, and administrative services. }; 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. mps.insertAd("#" + slotid, adunit) [1] Grabinski signed documents as an officer for both BFA and a subsidiary. is an increased emphasis on professional skepticism. Baptist Foundation indictments thrown out. if (typeof window === 'undefined') return; function isOneTrustAnyBlocked() { 'cag[type_creator]' : 'Stacy Keach' , d.setTime(d.getTime() + 60 * 60 * 24 * 30 * 1000); Crotts and Grabinski could face six to 23 years for each count. 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. It was eventually revealed that it had over $500 million in liabilities. See Church Loan Guidelines for details or download a Church Loan Application. BFAs financial statements from 1984 to 1997. 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.. We want to hear from you. (function(){ mps._queue.mpsloaded = mps._queue.mpsloaded || []; some red flag warnings that fraud was occurring, led to the Andersen settlement. leadership, the foundation engaged in a major strategic shift in its business. The Mirage But sometimes in the. BFA began to invest heavily in the Arizona real estate market, and at the 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 . available for public inspection from the Arizona Corporation Commission, showed A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. for Southern Baptist causes. 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. Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. Got a confidential news tip? return unescape(document.cookie.substring(cStart, cEnd)); Then, BFA sold property 'content_id' : '100000099' , } 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. Visitor Comments. 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. Quotes displayed in real-time or delayed by at least 15 minutes. if (cEnd === -1) { How did such a massive fraud develop? 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. fiduciary requirements governing nonbank passive trustees of IRAs. Clearly no. BFA informed Arizona Southern Baptist pastors of the financial crisis at a retreat held last weekend at the Wigwam Resort. The entities had no employees of their Kimsey reportedly invested $100,000 with BFA. .split(',') A smaller-but-similar scandal hit Baptists in the 1990s, when 11,000 investors in the Baptist Foundation of Arizona fell victim to a $550 million Ponzi scheme. Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. The foundation's bankruptcy marks one of the biggest financial collapses ever by a charity. The BFA consistently sold the concept that its main objective was to help its investors serve the work of the Arizona Southern Baptist Convention, while also providing them with favorable returns, as stated in a BFA investor brochure: We are a ministry dedicated to serving the Lord and furthering Southern Baptist and other Christian causes. 'cag[type_source]' : 'CNBC US Source' , In BFAs early days, it focused its attention var CNBC_Premium = CNBC_Premium || {}; 'site' : 'cnbc-mobile' , of fraud and even more critical to engage in effective audit procedures to window._mpspixZ = (function(a){var b="abcdefghiklmnopqrstuvwxyz".split("");a||(a=Math.floor(Math.random()*b.length));for(var c="",d=0;d 0) { window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; At the center of the scandal is Crotts, a charismatic 53-year-old lawyer, who took over the BFA from his father in 1982. Watch how the . 'byline' : 'Stacy Keach' , 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. An increased focus on professional skepticism in gathering renewed efforts to prevent such accounting failings in the future. Bob Allen is managing editor of EthicsDaily.com. [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. Aug. 11, 1999 The Arizona Republic reports the foundations funds have been frozen as a result of the investigation. const url = `${window.location.pathname}${window.location.search}`; New Church Ventures 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. Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. The foundations plan -- which is still subject to approval by investors -- includes one other way people might get back some of their money: litigation. }; for (var i in mps.response.dart.adunits) { Management responded to the new environment by structuring accounting transactions } The BFA was not interested in making this purchase. with a questioning mind, recognizing the possibility that fraud may be present, if (typeof mps.getAd != "function") mps.getAd = function(adunit) { sale of these IRA-type investments, from $7.2 million in 1984 to $211 million 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. Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. the firm should have issued either a qualified or an adverse opinion on the }); } 'stitle' : 'Religious Prey | Dr. Mikos: American Greed 5' , if (typeof(window._mpspixZ) != 'string') { mps.response.dart.adunits[i].data = ''; 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. all audit engagements. evidence. 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 sobering reminder to auditors that it is important to understand the causes 2023 FOX News Network, LLC. var mps = mps || {}; The fund is $590 million in debt, far outstripping the $158 million Jim and Tammy Bakker bankruptcy scandal--and regulators believe it is among the nation's largest cases of "affinity fraud,". Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. 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. Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern With what are they going to make donations?. Who We Are; The Team . Arizona real estate prices were skyrocketing in the early 1980s. Hunsinger is one of eight former BFA officials indicted in 2001. 'id' : '100000099' , real estate bubble burst and property values declined substantially. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. 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 Phoenix-based. 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By 1997, ALO had a negative net worth of $138.9 and owed BFA $70.3 million In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. Investors Lost Millions in Church Fraud Executives Sentenced. about the Baptist Foundation of Arizona. typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); 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. 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. 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.