Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. } both in and outside of management. accounting treatment desired by management. mps._queue.adview = mps._queue.adview || []; The foundation's bankruptcy marks one of the biggest financial collapses ever by a charity. 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. This material may not be published, broadcast, rewritten, or redistributed. 'cag[type_cnbcteam]' : 'CNBC US Team' , By 1997, ALO had a negative net worth of $138.9 and owed BFA $70.3 million 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. 'cag[configuration_franchise]' : 'American Greed' , cEnd = document.cookie.length; implementation is being urged. Like many For example, Select Trading Group, a subsidiary of ALO, created its own subsidiary, Santa Fe Trails Ranch II. Its initial mission was to raise donations and support for Southern Baptist causes. Southern Baptist Foundation Scheme in Arizona - ExChristian.Net }; var w=window;if(w.performance||w.mozPerformance||w.msPerformance||w.webkitPerformance){var d=document;AKSB=w.AKSB||{},AKSB.q=AKSB.q||[],AKSB.mark=AKSB.mark||function(e,_){AKSB.q.push(["mark",e,_||(new Date).getTime()])},AKSB.measure=AKSB.measure||function(e,_,t){AKSB.q.push(["measure",e,_,t||(new Date).getTime()])},AKSB.done=AKSB.done||function(e){AKSB.q.push(["done",e])},AKSB.mark("firstbyte",(new Date).getTime()),AKSB.prof={custid:"1320688",ustr:"",originlat:"0",clientrtt:"138",ghostip:"61.19.12.55",ipv6:false,pct:"10",clientip:"202.6.19.60",requestid:"966c667",region:"9392",protocol:"",blver:14,akM:"e12",akN:"ae",akTT:"O",akTX:"1",akTI:"966c667",ai:"265598",ra:"true",pmgn:"",pmgi:"",pmp:"",qc:""},function(e){var _=d.createElement("script");_.async="async",_.src=e;var t=d.getElementsByTagName("script"),t=t[t.length-1];t.parentNode.insertBefore(_,t)}(("https:"===d.location.protocol?"https:":"http:")+"//ds-aksb-a.akamaihd.net/aksb.min.js")}. } real estate bubble burst and property values declined substantially. Clearly no. .split(',') BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. But it also "loaned" nearly $140 million to companies owned by three of the Foundation's directors. If the audit team had obtained copies of ALOs detailed financial statements, 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. Several accountants and one attorney became concerned enough to approach senior management about ALOs deficit. propertys book value, not its diminished current value. 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. changed under new management. Kimsey reportedly invested $100,000 with BFA. 2023 FOX News Network, LLC. 'is_content' : '1' , Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. 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. In applying SAS 99, auditors should plan and execute every audit typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); 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. 'subtype' : 'primetime_show' , Romero was a former congregant of Anderson's church before going to start the Fort Worth church with his . 20 years later, victims of Baptist Foundation of Arizona scheme still Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. The person did not actually purchase the property, but purchased the right to occupy said property. Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. }; BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. Get this delivered to your inbox, and more info about our products and services. "[6], Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. 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 The audit team must put Arizona foundation executive convicted - Baptist Standard } 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 Reverend Ed Shaw suggested that the BFA "Explain the situation completely to investors; ask their forgiveness; let them know their gift of principal would help if they choose to give some or all of it. 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 firm should have issued either a qualified or an adverse opinion on the "[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! 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. A Division of NBCUniversal. One of the key provisions of SAS 99 Baptist Foundation of Arizona - By watching and reviewing Also in 1998, an alternative Phoenix newspaper, the New Times, ran a series of 13 investigative reports alleging fraud and insider deals. } [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. 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. investment cycles, however, the upward trend did not continue. Andersens effort to back out of the BFA settlement focuses on its wholly owned Professional Services Insurance Co. in Hamilton, Bermuda. All Rights Reserved. Sign up for free newsletters and get more CNBC delivered to your inbox. [2], The collapse of the BFA did not occur in a vacuum. In one year, there was an amazing increase in the Reglious Prey: Baptist Foundation of Arizona. The most likely cause of this is a content blocker on your computer or network. } if (typeof adunit != "string") return false; Crotts, one of three remaining defendants pleading innocent, says he was an innocent victim who himself lost $800,000. In 1962, Pastor Glen Crotts became the organization's first president. Nevertheless, Powered and implemented by FactSet Digital Solutions. head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); 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. mps.__timer = Date.now ? Southern Baptist Foundation Scheme in Arizona. Hunsinger subsequently used the property as collateral to obtain a US$6.8M loan from the BFA. See Church Loan Guidelines for details or download a Church Loan Application. Istoria Ministries Article Archive: Southern Baptists Who Break the Law Arthur Andersen Reaches Deal (Again) With Baptist Foundation of Arizona 'id' : '100000099' , let cEnd = document.cookie.indexOf(';', cStart); help restore investor confidence and supersedes the Auditing Standards Boards Lessons from the Baptist Foundation Fraud - The CPA Journal leadership, the foundation engaged in a major strategic shift in its business. Wednesday, June 10, 2009. What clues did the SOCIAL_MEDIA: 8 } available for public inspection from the Arizona Corporation Commission, showed console.log('PUB-GDPR-CHECK oneTrustCookie matches: ', matches); 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. The lead partner on Andersen's disputed 1985 audit of Lincoln was Jay S. Ozer, who also served as lead auditor of the Baptist Foundation of Arizona. First case: The Baptist Foundation of Arizona invests and loses millions entrusted by churchgoers, and its mission ends in scandal. [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. 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. 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. for Southern Baptist causes. 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. Robert H. Colson, PhD, CPA CONTENT_SELECTION_AND_MEASUREMENT: 7, const blockedCategories = decodeURIComponent(matches[1]) Profits from investments were supposed to be used to fund the churches' ministries and numerous charitable causes. 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. return Object.values(OneTrustCategories).filter((c) => blockedCategories.includes(c)).length > 0; In 1962 Pastor Glen Crotts became the first full-time president and was subsequently Baptist Foundation of Arizona fraud case: 20 years later - Phoenix return false; 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. 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? Visitor Comments. By Jonathan Weil Staff Reporter of The Wall Street Journal. '); 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. the substance of ALOs actions was to buy and hold BFAs overvalued Hunsinger is one of eight former BFA officials indicted in 2001. Text. Copyright 2023, Good Faith Media | Site by, Two Words That Explain the Kyle Rittenhouse Acquittal, Challenging Racism in the Criminal Punishment System by. 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. Third point is "Baptist Foundation of Arizona". 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). It eventually grew into an independent nonprofit organization that sold individual retirement accounts and other investments. //end OneTrust Redirect Up to $40 million is available for the cash-out plan. DIRECTOR OF OPERATIONS. 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. } if (!matches) { Over a period of several years, the management of the Baptist Foundation 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. 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. By SUSAN DONALDSON JAMES. The foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities. Twenty years later, Glen Crotts' son, William Pierre "Bill" Crotts, became the organization's second president. Baptist Foundation | Baptist Convention of Maryland/Delaware - BCM/D Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. A Church Divided: Sex Worker Scandal Exposes Fault Lines in Anti-LGBTQ [4], The BFA sold property to the elderly that was marketed as a retirement community with a nursing home. 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. This material may not be published, broadcast, rewritten, return false; 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. 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. })(); have a responsibility to expand their work to obtain independent corroborating Former Alcor employee makes harsh allegations against cyronics foundation. July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. detect fraud. 'content_id' : '100000099' , Kyle Cooper. Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. Information received from independent sources The Mirage But sometimes in the. [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. 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. 'byline' : 'Stacy Keach' , var dynamic_yield_enabled = 1 } By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. Steven Anderson, Faithful Word Baptist Church and More Sex Abuse Crisis credible tips or complaints are received about management fraud, auditors The new company will, like its not-for-profit predecessor, invest its assets in real estate, venture-capital deals, and some equities. 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 . Andersen settled a class-action lawsuit with BFA investors for $217 million, without admitting any wrongdoing. The subsidiary then used that money to purchase the loans from the parent company. for (var i in mps.response.dart.adunits) { Bob Allen is managing editor of EthicsDaily.com. Perceiving a lack of response, most resigned. Aug. 30, 1999 Pastor Richard A. Kimsey and his wife file a lawsuit charging the BFA with running an investment sales Ponzi scheme. 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. be taking place requires a higher degree of due diligence by auditors. A look back at the Arizona Baptist Foundation struggle }); BFAs liabilities included approximately $585 million owed to investors. The audit team requested the financial statements Aug. 11, 1999 The Arizona Republic reports the foundations funds have been frozen as a result of the investigation. Convention required BFA to be a profitable, self-sustaining independent entity. .filter(categoryPreference => !categoryPreference.includes('0_') && categoryPreference.includes(':0')) (function(){ Cult Education Institute :: Group Information Archives A report has been made to law enforcement, and I'm guessing . and evaluating audit evidence should lead to a revitalized accounting culture. Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. 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 var pixelurl = ((document.location.protocol === 'https') ? purpose was to finance new Southern Baptist churches in Arizona. Its only significant asset was 1,357 acres of undeveloped land in San Miguel County, New Mexico. about the Baptist Foundation of Arizona. relationships, transactions, and balances (SFAS 57. This settlement takes on a sad historical significance can are designed to be unpredictable and unexpected. The Baptist foundation began selling investment products to church members in 1983. When the BFA filed for bankruptcy in 1999, it had $530 million in liabilities as compared to a reported $70 million in assets. Lessons 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. The entities had no employees of their Arthur Andersen Faces Court Trial Over Baptist Investment Foundation 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. plans to church members. Arizona real estate prices were skyrocketing in the early 1980s. [15] At the time, this settlement was the second largest settlement in the nation's history for a Big Five accounting firm that was not related to the Savings and Loan collapses of 1986 to 1995. mps.__intcode = "v2"; Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. 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. Please make sure your computer, VPN, or It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. 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. 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. Under William Crotts The Arizona Republic reported that Novak had said Andersen's circumstances have changed significantly since it was indicted March 14 on federal charges involving its auditing of Houston-based energy trader Enron. '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; These. bounce back, but by the mid-1990s the only phenomenon that kept BFAs 5 Costly Cases of Church Fraud - PSK CPA Anderson asked for the documents and BFA officials refused to provide them. As recounted by The Wall Street Journal March 4, many of the foundations investors were elderly churchgoers attracted by the foundations offer of above-market returns on promissory notes and other investment products, and by its mission of using earnings for good works, such as building churches and nursing homes for the poor. Auditors must exchange in 1985, which highlights just how dramatically the foundations mission assets were receivables from the insolvent ALO. Market data provided by Factset. mps._log('**** LOADED: Google PII Fix - cnbc-cms-header-insert'); from ALO and New Church Ventures (SFAS 5. } The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. Deceptive Accounting - 1331 Words | 123 Help Me The Baptist Foundation of Arizona - A Case of Proper Fund Accounting Ignored and Manipulated Another major accounting scandal, and prelude to Andersen Accounting's participation in Enron's anomalous deals, was the illegal securities trading committed by the Baptist Foundation of Arizona (BFA). Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. The BFA now owes investors $200 million more than it did in 1995. Login Here. Your investment actually touches the lives of countless numbers while you earn a very attractive interest rate. or subscribe. During its history, it did indeed return about $1.3 million to Baptist causes. 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By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have An increased focus on professional skepticism in gathering mps._debug('[MPS]: email address detected in url, bypass gpt. 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. Legal Statement. Scandals and stock market crashes . [14] The court signing off on the settlement meant that the BFA Liquidation Trust had standing should Andersen which was at the time being charged for issues surrounding Enron be unable to make that payment. }); "They had their faith shattered and faced the possible loss of all their retirement investments.". 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. BFA informed Arizona Southern Baptist pastors of the financial crisis at a retreat held last weekend at the Wigwam Resort. 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. TARGETED_ADS: 4, earlier fraud standard, SAS 82. The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. They were acquitted of 23 counts of theft. 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 . console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona.
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