baptist foundation of arizona scandal

the Arizona Corporation Commission as required by state law. mps._queue = mps._queue || {}; or, indirectly, from BFA itself. 'content_id' : '100000099' , The majority of New Church Ventures Some 13,000 investors lost $570 million, mainly elderly Baptists, some of whom lost their entire life's savings. statements. (function() { const name = ONE_TRUST_COOKIE_NAME; Quotes displayed in real-time or delayed by at least 15 minutes. Baptist Convention. In a short time, it had created a complicated web of dozens of interlocking non-profit and for-profit subsidiaries to operate its real-estate and other investment deals. BFA began to invest heavily in the Arizona real estate market, and at the // check for region and redirect if country is in EEARegion 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. 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. Editor: All Rights Reserved. Market data provided by Factset. However, the State Board bounce back, but by the mid-1990s the only phenomenon that kept BFAs earlier fraud standard, SAS 82. 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. 'cag[device]' : 'mobile-touch' , Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos The CPA Journal. Feb. 19, 2002 4:00 pm ET. 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. incorporated both nonprofit entities. ideas on how fraud could occur and adjust the audit program plan so that tests Solely for the purpose of determining whether a transfer or ac- The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. if (!_qs) { A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. The first time he attested to the value, he indicated that the property was worth $3.3 million. It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. PHOENIX (ABP) The Arizona Court of Appeals has upheld convictions of two former Baptist Foundation of Arizona officials sentenced to prison in 2006 for defrauding more than 11,000 investors in a Ponzi scheme. [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. 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. Bob Allen is managing editor of EthicsDaily.com. 'cag[brand]' : 'none' , Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. 'cag[type_cnbcteam]' : 'CNBC US Team' , 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. 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. When owed BFA significant amounts of notes receivables. The BFA case involves the largest Chapter 11 bankruptcy filing by a nonprofit organization in U.S. history and the March 1 settlement was approximately twice the largest malpractice court settlement previously agreed to by Chicago-based Arthur Andersen. A Division of NBCUniversal. 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. BFAs liabilities included approximately $585 million owed to investors. . A few days later, the Kimseys' money had all but vanished. investment cycles, however, the upward trend did not continue. Superior Ct. Maricopa County, CV 2002-005117. Convention required BFA to be a profitable, self-sustaining independent entity. } the substance of ALOs actions was to buy and hold BFAs overvalued var foresee_enabled = 1 Presented a detailed analysis of The Baptist Foundation of Arizona scandal and won first place among five teams. a sobering reminder to auditors that it is important to understand the causes to mitigate the real estate losses. Auditors must broaden the range of information that [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]. By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen leadership, the foundation engaged in a major strategic shift in its business. 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 . var setAdblockerCookie = function(adblocker) { function getOneTrustCookie() { Legal Statement. Auditors must exchange if (typeof mps.getAd != "function") mps.getAd = function(adunit) { About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million. Hunsinger is one of eight former BFA officials indicted in 2001. )+[a-zA-Z]{2,}))/; a complex mesh of over 90 insider-controlled entities had been used to help Baptist Foundation of Arizona Beecher-Tilton scandal case Branch Davidians C Claudy bombing F Foreign Office papal visit memo G Greater Grace World Outreach Greater Ministries International H Hyles-Anderson College I 2015 Iglesia ni Cristo leadership controversy K Keldholme Priory election dispute David Koresh L Lonnie Latham Larry Lea console.log('PUB-GDPR-CHECK all blocked. Another important provision of SAS 99 is that auditors should talk to employees, We want to hear from you. BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. statements for periods beginning on or after December 15, 2002, and earlier return true; The most likely cause of this is a content blocker on your computer or network. 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 entities had no employees of their Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. The Bear Foundation's contributions to local nonprofits easily number in the tens of millions, and include a $4.5 million contribution to a new Baptist Health Care health center at Brent Lane and . 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.. var postLoadFunctions = {}; head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); The BFA became dependent upon future investors to pay older investors and loan interest. Click the link below to sign up for updates from Good Faith Media via our daily or weekly e-newsletters. His lawyer has said there was no fraud but rather a disagreement on the value of property. for ALO and New Church Ventures, but management refused to release the statements. script.setAttribute("onload", "setAdblockerCookie(false);"); Text. accounting, marketing, and administrative services. For example, on one day Grabinski attested to the value of a piece of property twice. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. The settlement also would have been the second largest ever paid by a Big Five accounting firm to settle litigation not associated with the savings & loan crisis. This material may not be published, broadcast, rewritten, Foundation officials and others involved in the investment scandal that led to the collapse may eventually face both civil and criminal charges. 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. [11], In early 2007, several former members of the BFA's executive management team were sentenced for the fraudulent activities associated with the BFA. He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. that audit public companies, in todays environment it is more important 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. 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. Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. 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. Investors who choose to roll their money into securities may be risking even bigger losses. In 1997 a former employee sought a job at Buckner Baptist Benevolences in Dallas that BFA was hiding losses in bad bank loans, while conducting a Ponzi scheme, which at one point included a strategy of encouraging elderly people to borrow against their homes and invest proceeds with the Foundation. BFA ultimately filed for bankruptcy, and thousands of elderly investors lost 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. The New Independent Fundamental Baptist Movement (New IFB) was spearheaded in part by Steven Anderson, another well-known anti-LGBTQ pastor. 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. } else { The audit team must put 'is_content' : '1' , Over a period of several years, the management of the Baptist Foundation Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. '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; 2023 CNBC LLC. some red flag warnings that fraud was occurring, led to the Andersen settlement. document.addEventListener("DOMContentLoaded", function(event) { to these companies and received notes receivable that were recorded at the SAS 99 is effective for audits of financial and New Church Ventures $173.6 million. let cEnd = document.cookie.indexOf(';', cStart); ALOs stated purpose was to develop real estate. mps._debug('[MPS]: email address detected in url, bypass gpt. "host" : 'mps.cnbc.com', The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. Then, BFA sold property New Church Ventures sold the stock to another BFA subsidiary, also in exchange for a $1.6 million reduction in a credit line, which turned around and sold for $3.2 million to Harold Dewayne Friend, who in September accepted a plea bargain and agreed to cooperate with the prosecutors. The Phoenix-based. of fraud and even more critical to engage in effective audit procedures to Things are moving quickly now in the sex scandal involving the three oldest sons of Steven Anderson of Tempe, Arizona's favorite SPLC hate group Faithful Word Baptist Church. Tuesday, September 5, 2006. Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. 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. New Church Ventures April 1998 The Phoenix NewTimes, a tabloid, accuses the BFA of many financial irregularities that threatened the foundations stability. In BFAs early days, it focused its attention return false; Year after year, Arthur Anderson audits the Baptist Foundation of Arizona, giving the non-profit group its stamp of approval and a clean bill of financial health. Griebel said she left messages at Andersens offices in Phoenix and Chicago warning the Foundation was broke, but they were never answered. }; if (typeof(window._mpspixZ) != 'string') { Your investment actually touches the lives of countless numbers while you earn a very attractive interest rate. All rights reserved. 2023 FOX News Network, LLC. 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. 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. }; mps.cloneAd = function() { return false; } The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. isEEARegionCheck(); First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. 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. Site by Mere. The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. Synopsis The Baptist Foundation of Arizona (BFA) was organized as an Arizona nonprofit organization primarily to help provide financial support for various Southern Baptist causes. })(); Both ALO and New Church Ventures [2], The collapse of the BFA did not occur in a vacuum. } Money & Investing. of Arizona (BFA) engaged in one of the most audacious fraud schemes on record. 'stitle' : 'Religious Prey | Dr. Mikos: American Greed 5' , is the cornerstone of a multifaceted effort by the accounting profession to in that it represents the largest cash settlement for a nonprofit case and 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. 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. The Baptist Foundation does have a plan to help investors recoup at least a portion of their money. Baptist Foundation indictments thrown out. 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. Its an investment scam, yes, Mr. Nelson says, but because it is a religious organization, it only fuels stereotypes about taking advantage of people based on their faith.. return Object.values(OneTrustCategories).filter((c) => blockedCategories.includes(c)).length > 0; 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. mps._adsheld = []; 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). The foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities. var CNBC_MPS_FRANCHISE_TAG='american_greed'; function isEEARegionCheck() { const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; (function() { "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. As a nonprofit company, ALO filed its financial statements each year with network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. Like many 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. mps.__timer = Date.now ? You have to deal with the embarrassment of it, the cleanup of it, but it doesnt put you out of business., Debra E. Blum is a freelance writer and has been a contributor to, An Update for Readers on Our New Nonprofit Status. } mpsload.src = "//" + mpsopts.host + "/fetch/ext/load-" + mpscall.site + ".js?nowrite=2"; The foundation halted security sales in August, however, when state regulators found that it did not have the money to cover its debts to investors. } window._mpspixZ = (function(a){var b="abcdefghiklmnopqrstuvwxyz".split("");a||(a=Math.floor(Math.random()*b.length));for(var c="",d=0;d