baptist foundation of arizona scandal

Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. BFAs financial statements from 1984 to 1997. Feb. 19, 2002 4:00 pm ET. The Baptist [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. mps.insertAd("#" + slotid, adunit) Investors Lost Millions in Church Fraud Executives Sentenced. var postLoadFunctions = {}; 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. When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. 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 lawsuit for $217 million. 2023 Southern Baptist Convention. console.log('PUB-GDPR-CHECK oneTrustCookie matches: ', matches); Southern Baptist Media Day Added to SBC Calendar, Appalachian Church Boosted by Zions Cause Baptist Church in Western Kentucky, Southern Baptist Editors Challenged to Press On, Relationships, conversations key to sharing the hope of Christ, former missionary says, SBC DIGEST: Stolle to lead BCM/D; IMB pipeline tops 1,200, Spurgeon College basketball coach Billy Livezey wins Coach of the Year Award, FIRST-PERSON: Georgia Baptist bicentennial: Lamenting a heritage of racism and slavery, As Church Staffs Grow, Ministry Leaders Look to the Bible for Titles, Churches Declare Their Stance on Pastorship Through Ordination, Jesus Revolution heads into second weekend after 3rd-place box office opening, Second Daytona 500 win in three years shows moments matter in racing and life, Walgreens action on abortion pill falls short, ERLC says, ARITF releases video interview with Samantha Kilpatrick of Guideposts Faith-Based Solutions, SBC DIGEST: Unify Project prayer guide; Barber gives CP lesson at SBTC conference. {"@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"]} evidence. STORAGE: 6, Some 13,000 investors lost $570 million, mainly elderly Baptists, some of whom lost their entire life's savings. Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. As a nonprofit company, ALO filed its financial statements each year with Nevertheless, 'id' : '100000099' , Baptist Group Execs Sentenced for Fraud. 'template' : 'special_reports' , 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 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? The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. Auditors must exchange Other companies to look at: Cendant, RiteAid, and Sunbeam. 'content_id' : '100000099' , 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.. A total of $40-million is available to those who choose to cash out. Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. or, indirectly, from BFA itself. Kyle Cooper. const url = `${window.location.pathname}${window.location.search}`; 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. } else { mps._debug('[MPS]: email address detected in url, bypass gpt. Baptist Foundation of Arizona was the largest non-profit in U.S. history. Contact (909) 738-4000 info@bfcal.org. Here we see that Andersen chose to victimize BFAs victims yet again.. credible tips or complaints are received about management fraud, auditors the villa pacific palisades, ca. owed BFA significant amounts of notes receivables. Several accountants and one attorney became concerned enough to approach senior management about ALOs deficit. 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. mps.response.dart.adunits[i].data = ''; head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); var _qs = window.location.href; changed under new management. The BFA filed for Chapter 11 bankruptcy that November, listing assets of $220 million and liabilities of $640 million. or redistributed. for Southern Baptist causes. Unfortunately, the issuing of unqualified opinions, even after receiving This material may not be published, broadcast, rewritten, } They were acquitted of 23 counts of theft. 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. "[6], Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. Site by Mere. Baptist Foundation indictments thrown out. A grand jury in April 2001 returned indictments charging former BFA officials with 32 counts of fraud, theft and racketeering. regardless of past experience with the entity or prior beliefs about managements At the time of BFAs bankruptcy, The BFA carried out a number of illegal activities in perpetrating affinity fraud against Southern Baptist worshipers in Arizona. 2023 Southern Baptist Convention. mps.__timer = Date.now ? Quotes displayed in real-time or delayed by at least 15 minutes. 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. Two year earlier than Enron scandal, the Baptist foundation of Arizona also failed. [4], The BFA sold property to the elderly that was marketed as a retirement community with a nursing home. This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). Second, Up to $40 million is available for the cash-out plan. Please make sure your computer, VPN, or auditors overlook? mps._queue = mps._queue || {}; document.getElementsByTagName("head")[0].appendChild(script); (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. After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. In 1989, Arizonas const name = ONE_TRUST_COOKIE_NAME; )+[a-zA-Z]{2,}))/; incorporated both nonprofit entities. The BFA opens a web site address www.bfaz.org to answer questions. mpsload.id = "mps-load"; real estate properties were ALO and New Church Ventures. A jury on Monday found former foundation president William Crotts guilty of three counts of fraud and one count of illegally conducting an enterprise, according to the Arizona Attorney General's Office, which prosecuted the case. corporations, with individuals closely associated with BFA, such as Investors who agree to receive any money recovered in such litigation must give up their rights to pursue other legal action against the foundation, such as joining the two class-action lawsuits that have already been filed against the foundation and its affiliates. Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. Management responded to the new environment by structuring accounting transactions Information received from independent sources 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. head.insertBefore(mpsload, head.firstChild) if (typeof adunit != "string") return false; 'site' : 'cnbc-mobile' , regarding the disclosure of related parties and the recognition of losses, 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. 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. 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. The Arizona Southern Baptist Convention was founded in 1928. Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. a sobering reminder to auditors that it is important to understand the causes Among Southern Baptists in Arizona and the neighboring states, where many of the investors live, the impact of the case may be more direct. 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. PHOENIX -- In 1999, Richard Kimsey and his wife, Susan, deposited $100,000 with a Phoenix-based Southern Baptist agency that promised to do the Lord's work. Transactions Southern Baptist Foundation Scheme in Arizona. 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. June 2, 2010, 9:03 AM. var mps = mps || {}; }); .split(',') 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.. Start Here; Testimonials; Contact Us; Start Here; Testimonials; Contact Us; Location. In BFAs early days, it focused its attention (function() { See Church Loan Guidelines for details or download a Church Loan Application. Clearly no. of the accounting professions new antifraud initiatives, such as the 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. The audit team requested the financial statements The BFA had issued millions of dollars in money-losing loans. Powered and implemented by FactSet Digital Solutions. Third point is "Baptist Foundation of Arizona". By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. 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. }; The BFA became dependent upon future investors to pay older investors and loan interest. 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. Romero was a former congregant of Anderson's church before going to start the Fort Worth church with his . Along with companies like Enron and Worldcom, it was audited by accounting firm Arthur Andersen, giving investors a false sense of security. 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. the substance of ALOs actions was to buy and hold BFAs overvalued In 1992, records indicated that the company had lost $3.2 million due to questionable transactions. if (!_qs) { It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. The BFA now owes investors $200 million more than it did in 1995. Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. [2], The collapse of the BFA did not occur in a vacuum. BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. Site by Mere. All rights reserved. var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); Bob Allen is managing editor of EthicsDaily.com. } A Division of NBCUniversal. BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. Aug. 30, 1999 Pastor Richard A. Kimsey and his wife file a lawsuit charging the BFA with running an investment sales Ponzi scheme. if (window.mps) { 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. Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. Its initial mission was to raise donations and support One, Karen Paetz, set up a lunch meeting with an Arthur Andersen official in February 1997, warning about ALOs losses and encouraging auditors to request detailed financial statements for both New Church Ventures and ALO. By 1996, ALO was more than $100 million in debt. The foundation was created in 1948 by the Southern Baptist Convention to administer endowments to the church. [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. console.log('PUB-GDPR-CHECK'); window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; operations from collapsing was a constant influx of new investor money that Andersen blamed WorldCom for the scandal, insisting that the . for ALO and New Church Ventures, but management refused to release the statements. can are designed to be unpredictable and unexpected. 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. their life savings. Payments were being made on the document.cookie = "__adblocker=" + (adblocker ? accounting treatment desired by management. Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. Arizona real estate prices were skyrocketing in the early 1980s. Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. 'cag[attribution_author]' : 'Stacy Keach' , 2023 CNBC LLC. Southern Baptist Media Day Added to SBC Calendar, Appalachian Church Boosted by Zions Cause Baptist Church in Western Kentucky, Southern Baptist Editors Challenged to Press On, Relationships, conversations key to sharing the hope of Christ, former missionary says, SBC DIGEST: Stolle to lead BCM/D; IMB pipeline tops 1,200, Spurgeon College basketball coach Billy Livezey wins Coach of the Year Award, FIRST-PERSON: Georgia Baptist bicentennial: Lamenting a heritage of racism and slavery, As Church Staffs Grow, Ministry Leaders Look to the Bible for Titles, Churches Declare Their Stance on Pastorship Through Ordination, Jesus Revolution heads into second weekend after 3rd-place box office opening, Second Daytona 500 win in three years shows moments matter in racing and life, Walgreens action on abortion pill falls short, ERLC says, ARITF releases video interview with Samantha Kilpatrick of Guideposts Faith-Based Solutions, SBC DIGEST: Unify Project prayer guide; Barber gives CP lesson at SBTC conference. The person did not actually purchase the property, but purchased the right to occupy said property. the State Board of Accountancy: Arthur Andersen, without admitting or denying any fault, settled an investors Another important provision of SAS 99 is that auditors should talk to employees, An increased focus on professional skepticism in gathering honesty and integrity. The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. [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). }, mpsopts = { Aug. 11, 1999 The Arizona Republic reports the foundations funds have been frozen as a result of the investigation. }); Investors who choose to roll their money into securities may be risking even bigger losses. On this Wikipedia the language links are at the top of the page across from the article title. Arizona has had its fair share of scams and schemes over the years, but none was more prominent than the Baptist Foundation of Arizona financial collapse and bankruptcy. The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. Both options for investors have limitations. too heavily upon management assurances. Hunsinger is one of eight former BFA officials indicted in 2001. outside an entity that suggests the possibility that management fraud may var script = document.createElement("script"); mps._urlContainsEmail = function() { mps._queue.gptloaded.push(function() { The previously announced cash out plan is shelved after talking to more than 4,000 investors. It's 5 a.m. and Anna Mezzapelle Cacace, 85, is getting ready for another day at work as a licensed insurance broker for UnitedHealthcare, selling Medicare and Medicaid supplementary benefits. 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. Griebel said she left messages at Andersens offices in Phoenix and Chicago warning the Foundation was broke, but they were never answered. It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. [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. Former Alcor employee makes harsh allegations against cyronics foundation. in that it represents the largest cash settlement for a nonprofit case and d.setTime(d.getTime() + 60 * 60 * 24 * 30 * 1000); A former BFA director [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 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. [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. positive results. Officials at the Arizona Southern Baptist Convention were unavailable for comment. by the Arizona State Board of Accountancy. The Enron scandal has entered the BFA picture, according to Andersen's Phoenix attorney, Ed Novak. During its history, it did indeed return about $1.3 million to Baptist causes. isEEARegionCheck(); 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 following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have .map(categoryPreference => parseInt(categoryPreference.split(':')[0], 10)); var CNBC_MPS_FRANCHISE_TAG='american_greed'; '); Data is a real-time snapshot *Data is delayed at least 15 minutes. 'cag[type_creator]' : 'Stacy Keach' , However, the State Board

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