'byline' : 'Stacy Keach' , The collapse of Bryant Financial Associates was a complete scandal that exposed the fraudulent activities of its executives. }); The Arizona Southern Baptist Convention was founded in 1928. let cStart = document.cookie.indexOf(`${name}=`); Investors Lost Millions in Church Fraud Executives Sentenced. Hunsinger is one of eight former BFA officials indicted in 2001. It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. Southern Baptist Foundation Scheme in Arizona. const COOKIE_REGEX = /groups=([^&]*)/; than ever for auditors to employ sound fraud-detection audit procedures in Baptist Group Ex-Leaders Guilty of Fraud. statements for periods beginning on or after December 15, 2002, and earlier var pixelurl = ((document.location.protocol === 'https') ? The audit team requested the financial statements Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern }, mpsopts = { mps._debug('[MPS]: email address detected in url, bypass gpt. Sentencing was set for Sept. 29. The Baptist foundation began selling investment products to church members in 1983. One pastor who had recently entrusted $1 million in church funds to. about the Baptist Foundation of Arizona. 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 . It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); The foundation's bankruptcy marks one of the biggest financial collapses ever by a charity. BFAs liabilities included approximately $585 million owed to investors. to mitigate the real estate losses. return false; return Object.values(OneTrustCategories).filter((c) => blockedCategories.includes(c)).length > 0; 3210 E. Guasti Road Ontario, 91761 View on map. } 'cag[type_creator]' : 'Stacy Keach' , detect fraud. He pleaded guilty to six felonies and agreed to testify against other defendants, which include former CEO William Crotts and General Counsel Thomas Grabinksi. The 1996 information, About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million. [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). Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). function isOneTrustAnyBlocked() { 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 . mps.cloneAd = function() { return false; } if (result && result.geo && result.geo.country_code) { } 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. Two year earlier than Enron scandal, the Baptist foundation of Arizona also failed. More specifically, the litigation was brought by Arizona's Corporation Commission (Securities Division), as well as the state's attorney general. By Jonathan Weil Staff Reporter of The Wall Street Journal. mps._log('**** LOADED: Google PII Fix - cnbc-cms-header-insert'); } 2023 Southern Baptist Convention. When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. Still it functioned much like a financial institution, raising funds through sale of investment agreements and mortgage-backed notes, which in turned were invested in real estate. 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. 'hline' : 'American Greed' , 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 The person did not actually purchase the property, but purchased the right to occupy said property. 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. [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. 'cag[device]' : 'mobile-touch' , mps._adsheld = []; Watch how the . Please make sure your computer, VPN, or 1991 to 1994 statements and an adverse opinion on the 1995 to 1997 financial function isEEARegionCheck() { 'id' : '100000099' , 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. Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. 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. STRICTLY_NECESSARY: 1, Powered and implemented by FactSet Digital Solutions. cEnd = document.cookie.length; const OneTrustCategories = { 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. of fraud and even more critical to engage in effective audit procedures to if (document.cookie.length > 0) { 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. When Investors take a leap of faith and believe their money will be secure. 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.. for (var i in mps.response.dart.adunits) { The New Independent Fundamental Baptist Movement (New IFB) was spearheaded in part by Steven Anderson, another well-known anti-LGBTQ pastor. The BFA became dependent upon future investors to pay older investors and loan interest. lawsuit for $217 million. An increased focus on professional skepticism in gathering Superior Ct. Maricopa County, CV 2002-005117. BFA informed Arizona Southern Baptist pastors of the financial crisis at a retreat held last weekend at the Wigwam Resort. 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. the State Board of Accountancy: Arthur Andersen, without admitting or denying any fault, settled an investors However, the State Board some red flag warnings that fraud was occurring, led to the Andersen settlement. 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. During its history, it did indeed return about $1.3 million to Baptist causes. 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. 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. window._mpspixZ = (function(a){var b="abcdefghiklmnopqrstuvwxyz".split("");a||(a=Math.floor(Math.random()*b.length));for(var c="",d=0;d parseInt(categoryPreference.split(':')[0], 10)); 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. return unescape(document.cookie.substring(cStart, cEnd)); and New Church Ventures $173.6 million. What clues did 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 . the auditors would have discovered that ALO was insolvent. 'nid' : '100000099' Baptist Group Execs Sentenced for Fraud. regardless of past experience with the entity or prior beliefs about managements The Arizona Republic reported that Novak had said Andersens circumstances have changed significantly since it was indicted March 14 on federal charges involving its auditing of Houston-based energy trader Enron. 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. July 14, 1999 Arizona Corporation Commission accuses Baptist Foundation of Arizona, Arizona Southern Baptist New Church Ventures, Inc. and Christian Financial Partners, Inc. of violating Arizona Securities Act. Along with companies like Enron and Worldcom, it was audited by accounting firm Arthur Andersen, giving investors a false sense of security. })(); Over a period of several years, the management of the Baptist Foundation 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. 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']; }).catch(() => {}); Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. Dec. 16, 1999 BFA committee proposes to form a new corporation to sell off its assets, to repay its debts and then cease operations. } Redirecting. in 1985, which highlights just how dramatically the foundations mission {"@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"]} script.setAttribute("src", "//www.npttech.com/advertising.js"); } } 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. 2023 FOX News Network, LLC. In 1962 Pastor Glen Crotts became the first full-time president and was subsequently The entities had no employees of their Its only significant asset was 1,357 acres of undeveloped land in San Miguel County, New Mexico. var dynamic_yield_enabled = 1 } 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. These. 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). 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. Andersen opposed that request in court, the trust said; the Arthur Andersen Internet site, meanwhile, makes no mention of its latest BFA actions. if (typeof mps.getAd != "function") mps.getAd = function(adunit) { Ponzi scheme. "true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; var postLoadFunctions = {}; 'content_id' : '100000099' , 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. Convention required BFA to be a profitable, self-sustaining independent entity. In 1989, Arizonas 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. By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. By 1996, ALO was more than $100 million in debt. // execute help restore investor confidence and supersedes the Auditing Standards Boards statements. Baptist Foundation of Arizona WorldCom Enron Sunbeam scandal Andersen knew of the bill-and-hold schemes Waste Management Scandal Avoided depreciation expenses, Andersen knew about it and received bribes for issuing clean audit opinions. [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. Second, The second time, on the same day, he declared the same piece of property was valued at $960,000.[4]. too heavily upon management assurances. 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 Baptist Foundation of Arizona was formed in 1948 by the Arizona Southern Baptist Convention (Convention) to raise and manage endowment funds for Southern Baptist charities. In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. In 1962, Pastor Glen Crotts became the organization's first president. View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. mps._queue.refreshads = mps._queue.refreshads || []; isEEARegionCheck(); Napolitanos office began its legal initiatives against Andersen on behalf of the Arizona Accountancy Board in December 2000 over allegations the firm failed to conduct proper audits on BFAs financial statements. Information received from independent sources 'keywords' : '~' , outside an entity that suggests the possibility that management fraud may Crotts and Grabinski could face six to 23 years for each count. 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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. All rights reserved. 'site' : 'cnbc-mobile' , Start Here; About Us. 2023 Southern Baptist Convention. to these companies and received notes receivable that were recorded at the Management set up independent separate In applying SAS 99, auditors should plan and execute every audit In BFAs early days, it focused its attention var s = document.createElement("script"), el = document.getElementsByTagName("script")[0]; One of ALOs primary purposes was to buy and hold non-producing or overvalued investments in real estate so BFA could avoid writing them down as losses. if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { 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. 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.. than $20 million per year for several years. Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. 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. View Jasmine's full profile See who you know in common Get introduced . We are unable to fully display the content of this page. [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]. Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. 1 (803) 227-6197 kcooper@mybfsc.org. head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); 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. Some 13,000 investors lost $570 million, mainly elderly Baptists, some of whom lost their entire life's savings. The first time he attested to the value, he indicated that the property was worth $3.3 million. All Rights Reserved. The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. Legal Statement. head.insertBefore(mpsload, head.firstChild) propertys book value, not its diminished current value. Twenty years later, Glen Crotts' son, William Pierre "Bill" Crotts, became the organization's second president. Lessons mps._adsheld.push(adunit) (function() { that ALO had a negative net worth of $116 million and had been losing more var script = document.createElement("script"); accounting, marketing, and administrative services. return false; } Also in 1998, an alternative Phoenix newspaper, the New Times, ran a series of 13 investigative reports alleging fraud and insider deals. The audit team must put 'subtype' : 'primetime_show' , 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. "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. Hunsinger subsequently used the property as collateral to obtain a US$6.8M loan from the BFA. CNBC_Comscore = 'CNBC_TV'; baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. mps._queue.mpsloaded = mps._queue.mpsloaded || []; Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. A Division of NBCUniversal. manager on the BFA audit lost their CPA licenses to practice and a third CPA For example, Select Trading Group, a subsidiary of ALO, created its own subsidiary, Santa Fe Trails Ranch II. The Baptist Foundation of Arizona was established with the pretense of serving Southern Baptist causes. )+[a-zA-Z]{2,}))/; console.log('PUB-GDPR-CHECK oneTrustCookie matches: ', matches); const oneTrustCookie = getOneTrustCookie(); (a) The transfer or acquisition of the controlling interest oc-curred within a taxable transfer period. financial assistance was not expected to come from any other source. }); Editor: BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. Sept. 22, 1999 Former BFA director James Cook files a lawsuit against BFA in Maricopa Superior Court. 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. 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. 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. incorporated both nonprofit entities. BFA ultimately filed for bankruptcy, and thousands of elderly investors lost 2023 FOX News Network, LLC. The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. 207, or tstolle@bcmd.org. 'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , assets were receivables from the insolvent ALO. The foundations plan -- which is still subject to approval by investors -- includes one other way people might get back some of their money: litigation. The majority of New Church Ventures mps.response.dart.adunits[i].data = ''; The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak.
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