mpsload.src = "//" + mpsopts.host + "/fetch/ext/load-" + mpscall.site + ".js?nowrite=2"; script.setAttribute("onload", "setAdblockerCookie(false);"); In his resignation letter, Tresch told BFA officials they have placed themselves in a position of civil and criminal liability. 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. Baptist Foundation indictments thrown out. real estate in exchange for notes receivable valued in the millions of dollars. 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 Arizona Southern Baptist Convention was founded in 1928. fiduciary requirements governing nonbank passive trustees of IRAs. 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. 'id' : '100000099' , Two year earlier than Enron scandal, the Baptist foundation of Arizona also failed. Like many
At the time of its failure in 1999, it was the largest affinity fraud that had ever occurred in the United States, with a total loss estimated at US$550 million (equivalent to $895 million in 2021). People of faith vulnerable to 'affinity frauds,' authorities say. 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 . The foundation's bankruptcy marks one of the biggest financial collapses ever by a charity. 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. all audit engagements. implementation is being urged. mps._queue.refreshads = mps._queue.refreshads || []; Dec. 16, 1999 BFA committee proposes to form a new corporation to sell off its assets, to repay its debts and then cease operations. Reglious Prey: Baptist Foundation of Arizona. About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million. window._mpspixZ = (function(a){var b="abcdefghiklmnopqrstuvwxyz".split("");a||(a=Math.floor(Math.random()*b.length));for(var c="",d=0;d parseInt(categoryPreference.split(':')[0], 10)); earlier fraud standard, SAS 82. the Arizona Corporation Commission as required by state law. Some 13,000 investors lost $570 million, mainly elderly Baptists, some of whom lost their entire life's savings. if (!oneTrustCookie) return true; d.setTime(d.getTime() + 60 * 60 * 24 * 30 * 1000); [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). It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. The company will be organized to hold the foundations existing assets, which are estimated to be between $160-million and $200-million. It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. This material may not be published, broadcast, rewritten, between the foundation and these corporations were designed to achieve the
recently issued SAS 99, Consideration of Fraud in a Financial Statement
Southern Baptist Foundation Scheme in Arizona. First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. The 1996 information,
Aug. 11, 1999 The Arizona Republic reports the foundations funds have been frozen as a result of the investigation. Both ALO and New Church Ventures
to mitigate the real estate losses. }); "They had their faith shattered and faced the possible loss of all their retirement investments.". let cEnd = document.cookie.indexOf(';', cStart); 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. Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. [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. Buckner also used Anderson and turned the information over to the firm. Get this delivered to your inbox, and more info about our products and services. that ALO had a negative net worth of $116 million and had been losing more
Unfortunately, the issuing of unqualified opinions, even after receiving
'cag[template]' : 'special_reports' , Solely for the purpose of determining whether a transfer or ac- document.cookie = "__adblocker=" + (adblocker ? 'cag[type_source]' : 'CNBC US Source' , the villa pacific palisades, ca. 'keywords' : '~' , BFA, an agency of the Arizona Southern Baptist Convention, was founded in 1948 to raise and manage endowments for church work in Arizona. })(); View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. A former BFA director
Former general counsel Thomas Grabinski was convicted of three counts of fraud and one count of illegally conducting an enterprise. Anderson asked for the documents and BFA officials refused to provide them. Hunsinger is one of eight former BFA officials indicted in 2001. 'cag[attribution_author]' : 'Stacy Keach' , 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 . statements. (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). The BFA became dependent upon future investors to pay older investors and loan interest. if (cStart !== -1) { By Jonathan Weil Staff Reporter of The Wall Street Journal. A report has been made to law enforcement, and I'm guessing . const COOKIE_REGEX = /groups=([^&]*)/; 'cag[attribution_source]' : 'CNBC US Source' , Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); )+[a-zA-Z]{2,}))/; 'cag[device]' : 'mobile-touch' , a sobering reminder to auditors that it is important to understand the causes
mps._adsheld = []; In applying SAS 99, auditors should plan and execute every audit
Baptist Group Execs Sentenced for Fraud. Information received from independent sources
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 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 state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. The person did not actually purchase the property, but purchased the right to occupy said property. It was eventually revealed that it had over $500 million in liabilities. A lawyer for Crotts, Michael Piccarreta, said all the foundation's investors would have been paid back if the state hadn't shut it down in 1999 for what the Arizona Corporation Commission said were faulty financial statements. disguise BFAs tenuous financial condition. auditors overlook? mps._queue = mps._queue || {}; The audit team requested the financial statements
var script = document.createElement("script"); const url = `${window.location.pathname}${window.location.search}`; SAS 99
The BFA filed for Chapter 11 bankruptcy that November, listing assets of $220 million and liabilities of $640 million. Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. Inadequate disclosure of losses on notes receivables due
The Baptist Foundation does have a plan to help investors recoup at least a portion of their money. Ponzi scheme. 'subtype' : 'primetime_show' , console.log('PUB-GDPR-CHECK all blocked. 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). In 1962, Pastor Glen Crotts became the organization's first president. 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.. for (var i in mps.response.dart.adunits) { Officials at the Arizona Southern Baptist Convention were unavailable for comment. The Phoenix-based. Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. Hunsinger subsequently used the property as collateral to obtain a US$6.8M loan from the BFA. "host" : 'mps.cnbc.com', When the BFA filed for bankruptcy in 1999, it had $530 million in liabilities as compared to a reported $70 million in assets. "[6], Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. function isEEARegionCheck() { 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. 'cat' : 'CNBC TV|Primetime Shows 2|American Greed' , changed under new management. ALOs stated purpose was to develop real estate. } var d = new Date(); See Church Loan Guidelines for details or download a Church Loan Application. 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. 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 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. } else { The Arizona Baptist Foundation. both in and outside of management. 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. Prosecutors said investors were promised high returns and a safe investment for using their money to build churches and retirement homes, but their combined losses totaled more than a half-billion dollars. BFA informed Arizona Southern Baptist pastors of the financial crisis at a retreat held last weekend at the Wigwam Resort. [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. purpose was to finance new Southern Baptist churches in Arizona. 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")}. document.getElementsByTagName("head")[0].appendChild(script); 'hline' : 'American Greed' , He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. 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. The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. on funding church start-ups and providing aid for children and the elderly. //begin OneTrust Redirect to these companies and received notes receivable that were recorded at the
When
207, or tstolle@bcmd.org. 'cag[configuration_franchise]' : 'American Greed' , var mps = mps || {}; function isOneTrustAnyBlocked() { 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. 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. script.setAttribute("src", "//www.npttech.com/advertising.js"); "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. 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. or, indirectly, from BFA itself. 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. 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). (function(){ if (!matches) { Powered and implemented by FactSet Digital Solutions. 'cag[project_management_team]' : 'CNBC US Team' , } accounting, marketing, and administrative services. cStart = cStart + name.length + 1; The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. head.insertBefore(mpsload, head.firstChild) positive results. Accusations of New IFB being a cult were also made by former New IFB preacher Adam Fannin, who left after the Romero scandal in January 2019. mps.__intcode = "v2"; Over lunch in February 1997 with an auditor from Arthur Andersen LLP, a recently resigned accountant from the Baptist Foundation of Arizona had disturbing things to say about her former employer's investment practices. Management responded to the new environment by structuring accounting transactions
Andersen settled a class-action lawsuit with BFA investors for $217 million, without admitting any wrongdoing. for Southern Baptist causes. (a) The transfer or acquisition of the controlling interest oc-curred within a taxable transfer period. 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. [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. The BFA was not interested in making this purchase. 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. el.parentNode.insertBefore(s, el); Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. Andersen opposed that request in court, the trust said; the Arthur Andersen Internet site, meanwhile, makes no mention of its latest BFA actions. they use. It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. owed BFA significant amounts of notes receivables. Date.now() : (function() { return +new Date })(); 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. June 2, 2010, 9:03 AM. Text. return false; the auditors would have discovered that ALO was insolvent. })(); Arthur Anderson had the same problems with the Baptist Foundation of Arizona several years earlier when 750 million in assets was more like 125 million in assets because most of the assets booked by the Baptist Foundation were found to be substantially overvalued. 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. const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. We want to hear from you. same time, it accelerated its efforts to sell IRA-type retirement investment
BFAs financial statements from 1984 to 1997. 'template' : 'special_reports' , }, mpsopts = { former board members, controlling these new companies. 1991 to 1994 statements and an adverse opinion on the 1995 to 1997 financial
Prosecutors estimated 11,000 investors, most of them elderly, were defrauded in the 1980s and 1990s. The real estate market did
This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). TARGETED_ADS: 4, Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. All rights reserved. 2023 Southern Baptist Convention. 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. statements for periods beginning on or after December 15, 2002, and earlier
Baptist Foundation of Arizona was the largest non-profit in U.S. history. Market data provided by Factset. investment cycles, however, the upward trend did not continue. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. At the time of BFAs bankruptcy,
The most likely cause of this is a content blocker on your computer or network. Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. } In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. 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. The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have
for ALO and New Church Ventures, but management refused to release the statements. of Accountancy alleged that because of the very material departures from GAAP
The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. . 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. The previously announced cash out plan is shelved after talking to more than 4,000 investors. 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. let cStart = document.cookie.indexOf(`${name}=`); sale of these IRA-type investments, from $7.2 million in 1984 to $211 million
Andersens effort to back out of the BFA settlement focuses on its wholly owned Professional Services Insurance Co. in Hamilton, Bermuda. You may then be asked to log in, create an account if you don't already have one, Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos Crotts and Grabinski could face six to 23 years for each count. A total of $40-million is available to those who choose to cash out. Login Here. console.log('PUB-GDPR-CHECK'); He pleaded guilty to six felonies and agreed to testify against other defendants, which include former CEO William Crotts and General Counsel Thomas Grabinksi. Data is a real-time snapshot *Data is delayed at least 15 minutes. 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.
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