baptist foundation of arizona scandal

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. 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. Date.now() : (function() { return +new Date })(); 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 . [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. Andersens effort to back out of the BFA settlement focuses on its wholly owned Professional Services Insurance Co. in Hamilton, Bermuda. The Mirage But sometimes in the. // check for region and redirect if country is in EEARegion 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. if (typeof adunit != "string") return false; investment cycles, however, the upward trend did not continue. 'subtype' : 'primetime_show' , Third point is "Baptist Foundation of Arizona". 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. If the audit team had obtained copies of ALOs detailed financial statements, We are unable to fully display the content of this page. Sign up for free newsletters and get more CNBC delivered to your inbox. This material may not be published, broadcast, rewritten, or redistributed. Its initial mission was to raise donations and support for Southern Baptist causes. 1991 to 1994 statements and an adverse opinion on the 1995 to 1997 financial BFA ultimately filed for bankruptcy, and thousands of elderly investors lost let cEnd = document.cookie.indexOf(';', cStart); The real estate market did Perceiving a lack of response, most resigned. Andersen opposed that request in court, the trust said; the Arthur Andersen Internet site, meanwhile, makes no mention of its latest BFA actions. } 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. The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. return true; var CNBC_MPS_FRANCHISE_TAG='american_greed'; Its only significant asset was 1,357 acres of undeveloped land in San Miguel County, New Mexico. (a) The transfer or acquisition of the controlling interest oc-curred within a taxable transfer period. 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. The first time he attested to the value, he indicated that the property was worth $3.3 million. Improving and strengthening fraud detection is at the heart was placed on probation, requiring that his work be monitored for two years their life savings. The BFA became dependent upon future investors to pay older investors and loan interest. 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. 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Baptist Foundation indictments thrown out. Andersen settled a class-action lawsuit with BFA investors for $217 million, without admitting any wrongdoing. Money & Investing. In applying SAS 99, auditors should plan and execute every audit He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. Watch how the . ', window.location); mps._queue.adload = mps._queue.adload || []; receivables only because of funds being obtained from either New Church Ventures, SAS 99 Presented a detailed analysis of The Baptist Foundation of Arizona scandal and won first place among five teams. This material may not be published, broadcast, rewritten, Please make sure your computer, VPN, or or redistributed. 'cag[related_primary]' : '' , Then, BFA sold property Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. mps._queue.adclone = mps._queue.adclone || []; 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. } else { window._mpspixZ = (function(a){var b="abcdefghiklmnopqrstuvwxyz".split("");a||(a=Math.floor(Math.random()*b.length));for(var c="",d=0;d {}); } mps._queue = mps._queue || {}; var mps = mps || {}; 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. "[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! Robert H. Colson, PhD, CPA Solely for the purpose of determining whether a transfer or ac- 'cag[type_creator]' : 'Stacy Keach' , Aug. 30, 1999 Pastor Richard A. Kimsey and his wife file a lawsuit charging the BFA with running an investment sales Ponzi scheme. 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). return true; 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.. BFA began to invest heavily in the Arizona real estate market, and at the 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. 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. //end OneTrust Redirect His lawyer has said there was no fraud but rather a disagreement on the value of property. fetch('https://geo.cnbc.com/info/').then(res => res.json()).then(result => { The new company will, like its not-for-profit predecessor, invest its assets in real estate, venture-capital deals, and some equities. What clues did the Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. 1 (803) 227-6197 kcooper@mybfsc.org. 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 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. 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 Arizona Baptist Foundation. 'is_sponsored' : '0' , is the cornerstone of a multifaceted effort by the accounting profession to ideas on how fraud could occur and adjust the audit program plan so that tests propertys book value, not its diminished current value. 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. After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. "host" : 'mps.cnbc.com', Twenty years later, Glen Crotts' son, William Pierre "Bill" Crotts, became the organization's second president. Looming losses hidden in off . Southern Baptist Foundation Scheme in Arizona. var CNBC_Premium = CNBC_Premium || {}; BFAs liabilities included approximately $585 million owed to investors. return false; auditors overlook? "updatecorrelator" : true 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. Several accountants and one attorney became concerned enough to approach senior management about ALOs deficit. Looking for your Investment Portal? 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. } to these companies and received notes receivable that were recorded at the When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. (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. for (var i in mps.response.dart.adunits) { aside any prior beliefs as to managements honesty. mps._queue.mpsloaded = mps._queue.mpsloaded || []; var mpscall = { operations from collapsing was a constant influx of new investor money that 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. assets were receivables from the insolvent ALO. Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. '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; In 1989, Arizonas window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; return '

' 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. The majority of New Church Ventures Management responded to the new environment by structuring accounting transactions Baptist Group Execs Sentenced for Fraud. They were acquitted of 23 counts of theft. At the center of the scandal is Crotts, a charismatic 53-year-old lawyer, who took over the BFA from his father in 1982. Auditors must broaden the range of information that function getOneTrustCookie() { statements. Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. 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.. 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. BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. As a nonprofit company, ALO filed its financial statements each year with var pixelurl = ((document.location.protocol === 'https') ? regarding the disclosure of related parties and the recognition of losses, } for ALO and New Church Ventures, but management refused to release the statements. with a questioning mind, recognizing the possibility that fraud may be present, cStart = cStart + name.length + 1; Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos accounting treatment desired by management. 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. 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. [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. "true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. Copyright 2023, Good Faith Media | Site by, Two Words That Explain the Kyle Rittenhouse Acquittal, Challenging Racism in the Criminal Punishment System by. 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,". if (result && result.geo && result.geo.country_code) { 2023 CNBC LLC. About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million. An increased focus on professional skepticism in gathering [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). [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. if (isOneTrustAnyBlocked()) { 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. 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 . evidence. 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. mps.cloneAd = function() { return false; } Anderson asked for the documents and BFA officials refused to provide them. 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. the substance of ALOs actions was to buy and hold BFAs overvalued (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 } Aug. 27, 1999 A class action lawsuit filed by investor Franklin Kestner Sr. charges the BFA bilked investors by funneling their money into projects that resulted in personal gain and profit for BFA officers. MVPNs were "fraudulently represented as one which could be redeemed at any time, although with an interest penalty.

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