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. investment cycles, however, the upward trend did not continue. Thus, when people tried to sell it they could not because they did not own anything. var setAdblockerCookie = function(adblocker) { //begin OneTrust Redirect var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); succeeded in 1984 by his son, William P. Crotts. 'site' : 'cnbc-mobile' , return false; The BFA was not interested in making this purchase. with a questioning mind, recognizing the possibility that fraud may be present, BFA began to invest heavily in the Arizona real estate market, and at the receivables only because of funds being obtained from either New Church Ventures, The Cacaces were among 11,000 investors who lost a combined $580 million when the Baptist Foundation of Arizona, or BFA, a registered nonprofit, filed for Chapter 11 bankruptcy in 1999 in what prosecutors described as a Ponzi scheme. Bob Allen is managing editor of EthicsDaily.com. bounce back, but by the mid-1990s the only phenomenon that kept BFAs [11], In early 2007, several former members of the BFA's executive management team were sentenced for the fraudulent activities associated with the BFA. SOCIAL_MEDIA: 8 console.log('PUB-GDPR-CHECK all blocked. Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. Watch how the . 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. The foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities. After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. 'cag[type_source]' : 'CNBC US Source' , 'is_sponsored' : '0' , [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. isEEARegionCheck(); if (typeof(window._mpspixZ) != 'string') { operations from collapsing was a constant influx of new investor money that 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. mpsload.id = "mps-load"; Investors who choose to roll their money into securities may be risking even bigger losses. 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. const blockedCategories = decodeURIComponent(matches[1]) Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. const COOKIE_REGEX = /groups=([^&]*)/; 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. accounting, marketing, and administrative services. Under William Crotts the firm should have issued either a qualified or an adverse opinion on the View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. var postLoadFunctions = {}; 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. 'stitle' : 'Religious Prey | Dr. Mikos: American Greed 5' , Powered and implemented by FactSet Digital Solutions. from ALO and New Church Ventures (SFAS 5. script.setAttribute("onerror", "setAdblockerCookie(true);"); incorporated both nonprofit entities. Mutual Fund and ETF data provided by Refinitiv Lipper. var d = new Date(); Got a confidential news tip? The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. 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. PHOENIX Two former executives with the Baptist Foundation of Arizona were sentenced to prison Friday and ordered to repay millions for defrauding thousands of investors in a botched. 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. We look forward to serving you! Andersen settled a class-action lawsuit with BFA investors for $217 million, without admitting any wrongdoing. [2], The collapse of the BFA did not occur in a vacuum. 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. 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 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 . Legal Statement. 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. Please make sure your computer, VPN, or 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. The first time he attested to the value, he indicated that the property was worth $3.3 million. 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. A total of $40-million is available to those who choose to cash out. Baptist Foundation of Arizona was the largest non-profit in U.S. history. 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Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. 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 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,". 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. Its initial mission was to raise donations and support for Southern Baptist causes. if (cStart !== -1) { var CNBC_MPS_FRANCHISE_TAG='american_greed'; 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? Sign up for free newsletters and get more CNBC delivered to your inbox. Looking for your Investment Portal? Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. Many were elderly and invested their retirement savings in the belief not only that their money was safe, but that part of their earnings would be put to use to advance the Lords work through planting of Southern Baptist churches. Third point is "Baptist Foundation of Arizona". In BFAs early days, it focused its attention 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. An unambiguous lesson from the BFA case is that the audit team cannot rely Date.now() : (function() { return +new Date })(); 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. Investors Lost Millions in Church Fraud Executives Sentenced. mpsload.src = "//" + mpsopts.host + "/fetch/ext/load-" + mpscall.site + ".js?nowrite=2"; Baptist Foundation of Arizona's auditor Arthur Anderson Illegal practices of Baptist Foundation of Arizona Holding company with losses of $585 million Told everyone they were building churches Global Crossing's auditor Arthur Anderson Global Crossing illegal practices Borrowing money and changing the origin Nov. 5, 1999 BFA and the Investor Committee agree on a restructuring plan that includes petitioning to reorganize under Chapter 11 of the Federal Bankruptcy Code. const url = `${window.location.pathname}${window.location.search}`; on funding church start-ups and providing aid for children and the elderly. 'cag[template]' : 'special_reports' , Management set up independent separate plans to church members. But a jury found them innocent on 23 counts of theft, saying they didn't intend to steal from investors but got in over their heads and tried to cover it up. Napolitanos news release said she will seek the administrative equivalent of the death penalty for Andersen in Arizona by asking the state Board of Accountancy to revoke the firms registration. Andersens effort to back out of the BFA settlement focuses on its wholly owned Professional Services Insurance Co. in Hamilton, Bermuda. } However, 'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , The Cacaces were among 11,000 investors who lost a combined $580 million when the Baptist Foundation of Arizona, or BFA, a registered nonprofit, filed for Chapter 11 bankruptcy in 1999 in. Redirecting. console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); regardless of past experience with the entity or prior beliefs about managements 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 . 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. 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. mps._urlContainsEmail = function() { In 1962 Pastor Glen Crotts became the first full-time president and was subsequently 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. 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. Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern script.setAttribute("onload", "setAdblockerCookie(false);"); manager on the BFA audit lost their CPA licenses to practice and a third CPA Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. 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. [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. Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. 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. can are designed to be unpredictable and unexpected. Login Here. too heavily upon management assurances. 'keywords' : '~' , July 7, 2020 News Division banned, deleted, faithful word baptist church., Steven Anderson, youtube. 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 BFA invested heavily in real estate, a more speculative investment strategy than other Baptist foundations in the state traditionally used. In one year, there was an amazing increase in the lawsuit for $217 million. Who We Are; The Team . Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. Baptist Convention. 'type' : 'mobile: episode' , if (!_qs) { was placed on probation, requiring that his work be monitored for two years mps.__timer = Date.now ? The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. fetch('https://geo.cnbc.com/info/').then(res => res.json()).then(result => { MVPNs were "fraudulently represented as one which could be redeemed at any time, although with an interest penalty. } 'cag[type_franchise]' : 'American Greed' , 2023 FOX News Network, LLC. "They had their faith shattered and faced the possible loss of all their retirement investments.". By Jonathan Weil Staff Reporter of The Wall Street Journal. Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. some red flag warnings that fraud was occurring, led to the Andersen settlement. In other words, it had become a classic mps._log('**** LOADED: Google PII Fix - cnbc-cms-header-insert'); Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. [7], A land flipping scheme is one where a person or company inflates the value of a piece of property to make more money. Auditors must exchange Anderson asked for the documents and BFA officials refused to provide them. One of the key provisions of SAS 99 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. (function() { Site by Mere. [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. [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. The BFA became dependent upon future investors to pay older investors and loan interest. and New Church Ventures $173.6 million. than $20 million per year for several years. console.log('PUB-GDPR-CHECK oneTrustCookie matches: ', matches); 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']; 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). 3210 E. Guasti Road Ontario, 91761 View on map. (function() { The first in a string of corporate scandals, Enron came to symbolize corporate excess of the 1990s and is Americas best-known white collar crime. In 1992, records indicated that the company had lost $3.2 million due to questionable transactions. Information received from independent sources about the Baptist Foundation of Arizona. [8] Indictments were handed down in April 2001; by July 2006, when BFA's president and CEO William Crotts and BFA's Chief Legal Counsel Thomas Grabinski were found guilty at trial on multiple counts of fraud, five other defendants had already pleaded guilty. All rights reserved. for (var i in mps.response.dart.adunits) { TARGETED_ADS: 4, evidence. 2023 Southern Baptist Convention. If you continue to experience issues, contact us at 202-466-1032 or help@chronicle.com. 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 conventions Executive Board. 2023 FOX News Network, LLC. Powered and implemented by FactSet Digital Solutions. Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. Hunsinger is one of eight former BFA officials indicted in 2001. Your investment actually touches the lives of countless numbers while you earn a very attractive interest rate. 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. mps._adsheld = []; be taking place requires a higher degree of due diligence by auditors. recently issued SAS 99, Consideration of Fraud in a Financial Statement 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 BFA won a religious exemption from both Arizona statutes governing securities and banking laws. 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.