Clearly no. return unescape(document.cookie.substring(cStart, cEnd)); You have to deal with the embarrassment of it, the cleanup of it, but it doesnt put you out of business., Debra E. Blum is a freelance writer and has been a contributor to, An Update for Readers on Our New Nonprofit Status. mps.__timer = Date.now ? To this day, it is considered one of the largest affinity frauds in U.S history. 'cag[project_management_team]' : 'CNBC US Team' , July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. receivables only because of funds being obtained from either New Church Ventures, [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. 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. 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. 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. It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. All rights reserved. [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. 'cag[type_franchise]' : 'American Greed' , } Other companies to look at: Cendant, RiteAid, and Sunbeam. [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. "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. The person did not actually purchase the property, but purchased the right to occupy said property. The Baptist Foundation of Arizona was established with the pretense of serving Southern Baptist causes. Once javascript and access to those URLs are allowed, please refresh this page. 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. } else { 'is_content' : '1' , operations from collapsing was a constant influx of new investor money that 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. Site by Mere. Bob Allen is managing editor of EthicsDaily.com. real estate in exchange for notes receivable valued in the millions of dollars. "true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; Aug. 11, 1999 The Arizona Republic reports the foundations funds have been frozen as a result of the investigation. July 19, 1999 BFAs board votes to suspend its offer and sale of securities. Auditors must broaden the range of information that Romero was a former congregant of Anderson's church before going to start the Fort Worth church with his . The foundation was created 51 years ago by the Arizona Southern Baptist Convention to raise money and manage the endowments of Southern Baptist charities, and through its history, the foundation has provided a total of $1.3-million in gifts to church causes. 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. The BFA became dependent upon future investors to pay older investors and loan interest. The principal allegation of the lawsuit is that Arthur Anderson ignored clear signs and evidence that one of its clientsthe Baptist Foundation of Arizona (BFA)was engaged in ongoing fraud . Its initial mission was to raise donations and support The Baptist Foundation of California. earlier fraud standard, SAS 82. BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. cEnd = document.cookie.length; s.src = "https://fm.cnbc.com/applications/cnbc.com/resources/files/2020/03/28/VisitorAPI.js"; Carleton College Christina Farhart, political science Jonathan Lafky, economics Adam Loy, statistics Andrew Poppick, statistics Sandra Rousseau, French Juliane Schicker, German Ithaca College Kyle Armbrust, performance studies Patricia Capaldi, art Mat Fournier, world languages, literatures and cultures David Hajjar, speech-language pathology and audiology Carly Jo Hosbach-Cannon, speech . 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 Scandals and stock market crashes . An unambiguous lesson from the BFA case is that the audit team cannot rely 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. Got a confidential news tip? 'cag[type_cnbcteam]' : 'CNBC US Team' , } Art Toalston is a writer based in Nashville and a former editor of Baptist Press. Up to $40 million is available for the cash-out plan. 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. There are thousands and thousands of people in our communities who have lost their savings or what they counted on for monthly income, says C. Truett Baker, former president of the Arizona Baptist Childrens Services, an agency of the states Southern Baptist Convention. 2023 FOX News Network, LLC. Investors who choose to roll their money into securities may be risking even bigger losses. 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. 'template' : 'special_reports' , 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. Baptist Convention. 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. These. the Arizona Corporation Commission as required by state law. 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. If the audit team had obtained copies of ALOs detailed financial statements, Site by Mere. to these companies and received notes receivable that were recorded at the One of ALOs primary purposes was to buy and hold non-producing or overvalued investments in real estate so BFA could avoid writing them down as losses. The subsidiary then used that money to purchase the loans from the parent company. var pixelurl = ((document.location.protocol === 'https') ? 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. First case: The Baptist Foundation of Arizona invests and loses millions entrusted by churchgoers, and its mission ends in scandal. First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. mps._queue.mpsloaded.push(function(){ plans to church members. The 1996 information, The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have Reglious Prey: Baptist Foundation of Arizona. Aug. 30, 1999 Pastor Richard A. Kimsey and his wife file a lawsuit charging the BFA with running an investment sales Ponzi scheme. To this day, it is considered one of the largest affinity frauds in U.S history. Anderson asked for the documents and BFA officials refused to provide them. 'keywords' : '~' , Former general counsel Thomas Grabinski was convicted of three counts of fraud and one count of illegally conducting an enterprise. too heavily upon management assurances. and evaluating audit evidence should lead to a revitalized accounting culture. Market data provided by Factset. if (EEA_REGION_COUNTRY_CODES.includes(result.geo.country_code)) { aside any prior beliefs as to managements honesty. real estate bubble burst and property values declined substantially. let cStart = document.cookie.indexOf(`${name}=`); Southern Baptist Foundation Scheme in Arizona. } if (document.cookie.length > 0) { All Rights Reserved. positive results. Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. Robert H. Colson, PhD, CPA Two year earlier than Enron scandal, the Baptist foundation of Arizona also failed. 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. BFAs financial statements from 1984 to 1997. 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 . mps.response.dart.adunits[i].data = ''; The BFA was a church-affiliated charity, one that preyed on the members of its own congregation and operated for years before church fraud detection put a stop to it. 1 (803) 227-6197 kcooper@mybfsc.org. var CNBC_MPS_FRANCHISE_TAG='american_greed'; }; [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. During its history, it did indeed return about $1.3 million to Baptist causes. 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. (function(){ Management set up independent separate var _qs = window.location.href; //end OneTrust Redirect in 1985, which highlights just how dramatically the foundations mission } was placed on probation, requiring that his work be monitored for two years The foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities. 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). Redirecting. But a jury found them innocent on 23 counts of theft, saying they didn't intend to steal from investors but got in over their heads and tried to cover it up. console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); Mutual Fund and ETF data provided by Refinitiv Lipper. Ponzi scheme. 'cag[device]' : 'mobile-touch' , 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 A written statement from the foundation says that at the completion of the bankruptcy proceedings and the creation of a new for-profit company, the Baptist Foundation of Arizona will no longer exist. if (typeof adunit != "string") return false; Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. mps._urlContainsEmail = function() { [7], A land flipping scheme is one where a person or company inflates the value of a piece of property to make more money. return ''; regarding the disclosure of related parties and the recognition of losses, In applying SAS 99, auditors should plan and execute every audit var CNBC_Premium = CNBC_Premium || {}; baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. }; June 7, 2022 . Controversial Arizona pastor Steven Anderson, the firebrand KJV-Onlyist from Faithful word Baptist Church in Tempe, AZ, has been permanently banned from Youtube, having his entire operation shout down from multiple accounts. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. for Southern Baptist causes. BFA ultimately filed for bankruptcy, and thousands of elderly investors lost all audit engagements. The BFA opens a web site address www.bfaz.org to answer questions. Its an investment scam, yes, Mr. Nelson says, but because it is a religious organization, it only fuels stereotypes about taking advantage of people based on their faith.. People of faith vulnerable to 'affinity frauds,' authorities say. )+[a-zA-Z]{2,}))/; Baptist Group Ex-Leaders Guilty of Fraud. Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos The BFA had issued millions of dollars in money-losing loans. Editor: The previously announced cash out plan is shelved after talking to more than 4,000 investors. 'content_id' : '100000099' , A BFA liquidation trust was set up to sell off assets to allow investors to recover part of their money. In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. At the time of BFAs bankruptcy, If you continue to experience issues, contact us at 202-466-1032 or help@chronicle.com. What clues did the financial assistance was not expected to come from any other source. mps._queue.adclone = mps._queue.adclone || []; succeeded in 1984 by his son, William P. Crotts. The foundation was created in 1948 by the Southern Baptist Convention to administer endowments to the church. 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. [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. The following were among the major GAAP violations alleged by Another important provision of SAS 99 is that auditors should talk to employees, window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. help restore investor confidence and supersedes the Auditing Standards Boards Year after year, Arthur Anderson audits the Baptist Foundation of Arizona, giving the non-profit group its stamp of approval and a clean bill of financial health. Officials at the Arizona Southern Baptist Convention were unavailable for comment. The New Independent Fundamental Baptist Movement (New IFB) was spearheaded in part by Steven Anderson, another well-known anti-LGBTQ pastor. BFA, an agency of the Arizona Southern Baptist Convention, was founded in 1948 to raise and manage endowments for church work in Arizona. Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. (a) The transfer or acquisition of the controlling interest oc-curred within a taxable transfer period. Andersen settled a class-action lawsuit with BFA investors for $217 million, without admitting any wrongdoing. Who We Are; The Team . evidence. "[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! First, it was critical for BFA to meet the Treasury regulations auditors overlook? a sobering reminder to auditors that it is important to understand the causes 2023 CNBC LLC. In 1962 Pastor Glen Crotts became the first full-time president and was subsequently that ALO had a negative net worth of $116 million and had been losing more In order to remove those loans from its books, the BFA secretly funneled money to a subsidiary. statements for periods beginning on or after December 15, 2002, and earlier Oct. 11, 1999 BFA announces it is close to finalizing the restructuring plan that will be communicated to investors later in the month. 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. } })(); 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. baptist foundation of arizona scandal. "[3] Instead the BFA decided to hide its debt and began a series of dubious activities. At the time BFA filed for bankruptcy in November 1999, it had total liabilities of approximately $650 million and listed assets of approximately $290 million. He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. document.getElementsByTagName("head")[0].appendChild(script); 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. 'pubdate' : '1343999322' , Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; How did such a massive fraud develop? Mutual Fund and ETF data provided by Refinitiv Lipper. both in and outside of management. June 3, 2010 -- Tina Anderson was only 15 when she said she was forced to stand terrified before her entire Baptist congregation to confess her . about the Baptist Foundation of Arizona. Andersens effort to back out of the BFA settlement focuses on its wholly owned Professional Services Insurance Co. in Hamilton, Bermuda. or redistributed. } In other words, it had become a classic We look forward to serving you! On this Wikipedia the language links are at the top of the page across from the article title. and New Church Ventures $173.6 million. return true; "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. Unfortunately, the issuing of unqualified opinions, even after receiving Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. A grand jury in April 2001 returned indictments charging former BFA officials with 32 counts of fraud, theft and racketeering. In 1992, records indicated that the company had lost $3.2 million due to questionable transactions. window._mpspixZ = (function(a){var b="abcdefghiklmnopqrstuvwxyz".split("");a||(a=Math.floor(Math.random()*b.length));for(var c="",d=0;d