"These verdicts are a victory for thousands of victims who believed the promises made by the defendants," Attorney General Terry Goddard said in a statement. Southern Baptist Foundation Scheme in Arizona. mps.__timer = Date.now ? Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. 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 for Southern Baptist causes. 'stitle' : 'Religious Prey | Dr. Mikos: American Greed 5' , The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. 'path' : '/id/100000099' , 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 BFA Liquidation Trust, which is seeking to recover the investors funds, immediately took action. Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. console.log('PUB-GDPR-CHECK oneTrustCookie matches: ', matches); Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. Investors in the Baptist Foundation of Arizona, which went belly-up in 1999 in the largest nonprofit bankruptcy in history, are suing Arthur Andersen, the foundation's auditors, for covering up the fact that the foundation was a fraud. To this day, it is considered one of the largest affinity frauds in U.S history. 2023 CNBC LLC. The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. Second, The Enron scandal has entered the BFA picture, according to Andersen's Phoenix attorney, Ed Novak. First case: The Baptist Foundation of Arizona invests and loses millions entrusted by churchgoers, and its mission ends in scandal. 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. A former BFA director document.cookie = "__adblocker=" + (adblocker ? 'cag[brand]' : 'none' , Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. (Phoenix, Ariz. - September 5, 2006) Lawrence Dwain Hoover today pleaded guilty to one count of fraud in the criminal case involving the Baptist Foundation of Arizona (BFA). Several accountants and one attorney became concerned enough to approach senior management about ALOs deficit. Audit. Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos Kyle Cooper. 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. var CNBC_MPS_FRANCHISE_TAG='american_greed'; Once javascript and access to those URLs are allowed, please refresh this page. One pastor who had recently entrusted $1 million in church funds to. Auditors must broaden the range of information that 'site' : 'cnbc-mobile' , By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. Visitor Comments. el.parentNode.insertBefore(s, el); console.log('PUB-GDPR-CHECK all blocked. Art Toalston is a writer based in Nashville and a former editor of Baptist Press. As a nonprofit company, ALO filed its financial statements each year with Quotes displayed in real-time or delayed by at least 15 minutes. Andersen blamed WorldCom for the scandal, insisting that the . 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. 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. Other companies to look at: Cendant, RiteAid, and Sunbeam. about the Baptist Foundation of Arizona. script.setAttribute("async", true); It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. regardless of past experience with the entity or prior beliefs about managements 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. [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. is the cornerstone of a multifaceted effort by the accounting profession to 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 ALO and New Church Ventures, but management refused to release the statements. But the value of the investors shares will depend on the performance of the new companys investments and how it fares in the stock market. 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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. ideas on how fraud could occur and adjust the audit program plan so that tests "Arthur Andersen's on-again, off-again $217 million settlement with investors in the Baptist Foundation of Arizona (BFA) scandal is on again," reports The Arizona Republic. statements. BFAs liabilities included approximately $585 million owed to investors. 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. 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. [14] Christianity Today reported that the timing of this court approved settlement avoided "the worst case scenario for Baptist Foundation investors" of Andersen being convicted in its then ongoing criminal case regarding its audits of Enron, then quickly filing "for bankruptcy-court protection" from any civil lawsuits not yet settled in a court. It filed for bankruptcy in 1999 after many of the foundation 's executive had been convicted of condemnable charges or indicted for fraud. Inadequate disclosure of losses on notes receivables due auditors overlook? In 1962, Pastor Glen Crotts became the organization's first president. The BFA became dependent upon future investors to pay older investors and loan interest. The only thing I can confidently tell investors is this: The commission will pursue every possible avenue to ensure that Arthur Andersen pays for their egregious errors., The size of the settlement, The Wall Street Journal had reported March 4, was remarkably large compared with the losses suffered by investors.. (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. from the Baptist Foundation Fraud. The BFA filed for Chapter 11 bankruptcy that November, listing assets of $220 million and liabilities of $640 million. Text. "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern (a) The transfer or acquisition of the controlling interest oc-curred within a taxable transfer period. One of the key provisions of SAS 99 Yet, in 2002, years after the BFA . was used to pay interest on old money. Nevertheless, About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million. 'cag[attribution_source]' : 'CNBC US Source' , For example, on one day Grabinski attested to the value of a piece of property twice. In 1989, Arizonas document.getElementsByTagName("head")[0].appendChild(script); [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. Its initial mission was to raise donations and support for Southern Baptist causes. mps._queue.gptloaded = mps._queue.gptloaded || []; 1 (803) 227-6197 kcooper@mybfsc.org. 'cag[attribution_author]' : 'Stacy Keach' , } The BFA had issued millions of dollars in money-losing loans. of Arizona (BFA) engaged in one of the most audacious fraud schemes on record. Baptist Group Execs Sentenced for Fraud. New Church Ventures 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. var _qs = window.location.href; Powered and implemented by FactSet Digital Solutions. Kimsey reportedly invested $100,000 with BFA. 207, or tstolle@bcmd.org. } (function() { It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. Reglious Prey: Baptist Foundation of Arizona. 2023 FOX News Network, LLC. Oct. 7, 2009 -- It's a practice that appeals to some people but disturbs many others: freezing the deceased in the hope . var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); than $20 million per year for several years. CONTENT_SELECTION_AND_MEASUREMENT: 7, help restore investor confidence and supersedes the Auditing Standards Boards 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. While the recently enacted Sarbanes-Oxley Act may only directly impact auditors 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. 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. Hunsinger is one of eight former BFA officials indicted in 2001. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. Watch how the . real estate in exchange for notes receivable valued in the millions of dollars. than ever for auditors to employ sound fraud-detection audit procedures in console.log('PUB-GDPR-CHECK oneTrustCookie: ', oneTrustCookie); Along with companies like Enron and Worldcom, it was audited by accounting firm Arthur Andersen, giving investors a false sense of security. purpose was to finance new Southern Baptist churches in Arizona. if (mps._urlContainsEmail()) { BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. mps.insertAd("#" + slotid, adunit) } a sobering reminder to auditors that it is important to understand the causes To this day, it is considered one of the largest affinity frauds in U.S history. One BFA subsidiary, Arizona Southern Baptist New Church Ventures, had a stated purpose of financing new Southern Baptist churches in Arizona. both in and outside of management. Site by Mere. Who We Are; The Team . By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen A grand jury in April 2001 returned indictments charging former BFA officials with 32 counts of fraud, theft and racketeering. 'adunits' : 'Default' , 2023 Southern Baptist Convention. In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. accounting, marketing, and administrative services. Andersen settled a class-action lawsuit with BFA investors for $217 million, without admitting any wrongdoing. helped to further accelerate the demise of a once prestigious and great firm. At the center of the scandal is Crotts, a charismatic 53-year-old lawyer, who took over the BFA from his father in 1982. Click the link below to sign up for updates from Good Faith Media via our daily or weekly e-newsletters. } Prosecutors estimated 11,000 investors, most of them elderly, were defrauded in the 1980s and 1990s. It says that a new charity will be established that will be involved in traditional Baptist charitable activities, including, for example, ministries, education, and providing routine trust and estate planning. The new charity, the statement says, will be prohibited from selling debt securities. First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. July 22, 1999 BFAs board accepts the offers of President Bill Crotts, General Counsel Tom Grabinski and Controller Don Deardorff to relinquish their BFA responsibilities although remain as BFA employees. regarding the disclosure of related parties and the recognition of losses, With what are they going to make donations?. 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$1 as a tax write off. The Baptist Foundation of Arizona was formed in 1948 by the Arizona Southern Baptist Convention (Convention) to raise and manage endowment funds for Southern Baptist charities. Baptist Convention. if (!_qs) { Another important provision of SAS 99 is that auditors should talk to employees, script.setAttribute("src", "//www.npttech.com/advertising.js"); This page contains information The Cult Education Institute has gathered. A few days later, the Kimseys' money had all but vanished. Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. const oneTrustCookie = getOneTrustCookie(); The Arizona Republic reported that Novak had said Andersens circumstances have changed significantly since it was indicted March 14 on federal charges involving its auditing of Houston-based energy trader Enron. } [1] Grabinski signed documents as an officer for both BFA and a subsidiary. The BFA began marketing individual funds, often in churches, telling prospective investors their funds would be safe, yield high returns and help strengthen Southern Baptists in the state. former board members, controlling these new companies. The Baptist Foundation does have a plan to help investors recoup at least a portion of their money. The BFA's leaders, including a respected pastor and his adult son, used everything from Ponzi schemes to "land flipping" in order to squeeze money out of the community. and evaluating audit evidence should lead to a revitalized accounting culture. Also on March 29, the trust gained a judges order to reschedule a key trial for April 29 the earliest date permitted by law, the trusts statement noted. mps._queue.adview = mps._queue.adview || []; window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; 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 . of fraud and even more critical to engage in effective audit procedures to The auditors were Arthur Andersen, the same firm that audited Enron. const OneTrustCategories = { } }; Mutual Fund and ETF data provided by Refinitiv Lipper. detect fraud. [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. Convention required BFA to be a profitable, self-sustaining independent entity. script.setAttribute("onload", "setAdblockerCookie(false);"); financial assistance was not expected to come from any other source. If you continue to experience issues, contact us at 202-466-1032 or help@chronicle.com. const COOKIE_REGEX = /groups=([^&]*)/; But it also "loaned" nearly $140 million to companies owned by three of the Foundation's directors. "I just hope they realize they defied (God's) word by mishandling money that people entrusted to them," said Virginia Branch, 77, of Prescott, who lost $400,000 she said would have helped her grandchildren pay for college. return ''; 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. All rights reserved. network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. 3210 E. Guasti Road Ontario, 91761 View on map. Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. Then, learn how Dr. Mikos, a charming doctor with a lucrative practice, turns out to be a con artist defrauding Medicare. 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. Among Southern Baptists in Arizona and the neighboring states, where many of the investors live, the impact of the case may be more direct. Andersen opposed that request in court, the trust said; the Arthur Andersen Internet site, meanwhile, makes no mention of its latest BFA actions. console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); Management set up independent separate This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). Arthur Andersen provided unqualified clean audit opinions on evidence. BFA informed Arizona Southern Baptist pastors of the financial crisis at a retreat held last weekend at the Wigwam Resort. You may then be asked to log in, create an account if you don't already have one, var d = new Date(); or subscribe. 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. An unambiguous lesson from the BFA case is that the audit team cannot rely The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA. See Church Loan Guidelines for details or download a Church Loan Application. 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.. function isEEARegionCheck() { 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. return false; Improving and strengthening fraud detection is at the heart Both options for investors have limitations. The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. "true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; their life savings. if (EEA_REGION_COUNTRY_CODES.includes(result.geo.country_code)) { Market data provided by Factset. At the time of BFAs bankruptcy, s.src = "https://fm.cnbc.com/applications/cnbc.com/resources/files/2020/03/28/VisitorAPI.js"; Got a confidential news tip? propertys book value, not its diminished current value. real estate properties were ALO and New Church Ventures. (function() { 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 . "host" : 'mps.cnbc.com', Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation mps._queue.mpsloaded = mps._queue.mpsloaded || []; 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. The Phoenix-based. 'content_id' : '100000099' , 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. BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. Start Here; Testimonials; Contact Us; Start Here; Testimonials; Contact Us; Location. For example, Select Trading Group, a subsidiary of ALO, created its own subsidiary, Santa Fe Trails Ranch II. operations from collapsing was a constant influx of new investor money that 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 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. function getOneTrustCookie() { Feeling pressure to show profits, investigators say, BFA officials hid losses in a web of for-profit and non-profit subsidiaries, which were supposed to be economically independent but really werent. var pixelurl = ((document.location.protocol === 'https') ?