In 1962 Pastor Glen Crotts became the first full-time president and was subsequently mps._debug('[MPS]: email address detected in url, bypass gpt. Legal Statement. "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. Southern Baptist Foundation Scheme in Arizona. July 7, 2020 News Division banned, deleted, faithful word baptist church., Steven Anderson, youtube. 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. Its bankruptcy late in 2001 caused about 4,000 employees to lose their jobs, while stock losses wiped out their retirement savings and prompted many business reforms. Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. Click the link below to sign up for updates from Good Faith Media via our daily or weekly e-newsletters. Text. real estate in exchange for notes receivable valued in the millions of dollars. document.cookie = "__adblocker=" + (adblocker ? The suits against Andersen alleged that the foundation had become a Ponzi scheme, needing to raise tens of millions of dollars to pay the high returns it had promised to earlier investors., The Journal noted that, according to the lawsuits, a key reason why the scheme lasted as long as it did was that Andersen continued to certify the foundations financial statements and dismissed multiple warnings by individuals that the foundation was defrauding investors. 30. 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. Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. var CNBC_Premium = CNBC_Premium || {}; PHOENIX - Two former executives of the Baptist Foundation of Arizona, which collapsed in what has been called the largest nonprofit bankruptcy filing in the nation's history, have been. and New Church Ventures $173.6 million. if (!matches) { The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA. [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. Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. The BFA now owes investors $200 million more than it did in 1995. 2023 FOX News Network, LLC. } return '
' Dec. 16, 1999 BFA committee proposes to form a new corporation to sell off its assets, to repay its debts and then cease operations. mps._ext = mps._ext || {}; Start Here; About Us. Yet, in 2002, years after the BFA . Like many statements for periods beginning on or after December 15, 2002, and earlier A few days later, the Kimseys' money had all but vanished. 'stitle' : 'Religious Prey | Dr. Mikos: American Greed 5' , The BFA carried out a number of illegal activities in perpetrating affinity fraud against Southern Baptist worshipers in Arizona. Watch how the . const COOKIE_REGEX = /groups=([^&]*)/; 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). The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have Prosecutors estimated 11,000 investors, most of them elderly, were defrauded in the 1980s and 1990s. 'template' : 'special_reports' , Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. Please make sure your computer, VPN, or console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. 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. Baptist Foundation indictments thrown out. The audit team requested the financial statements if (mps._urlContainsEmail()) { Anderson asked for the documents and BFA officials refused to provide them. [2], The collapse of the BFA did not occur in a vacuum. 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. investment cycles, however, the upward trend did not continue. We are unable to fully display the content of this page. 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. accounting treatment desired by management. At the time of BFAs bankruptcy, Superior Ct. Maricopa County, CV 2002-005117. 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. Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. Investors who choose to roll their money into securities may be risking even bigger losses. script.setAttribute("onerror", "setAdblockerCookie(true);"); The Baptist Foundation of California. own, and both organizations paid BFA substantial management fees to provide Once javascript and access to those URLs are allowed, please refresh this page. 'pubdate' : '1343999322' , Napolitano and the Arizona Corporation Commission then filed a civil lawsuit against Andersen in January 2001, seeking civil remedies for violations of the Arizona Securities and Consumer Fraud Act. Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. Crotts, one of three remaining defendants pleading innocent, says he was an innocent victim who himself lost $800,000. ', window.location); Money & Investing. For example, on one day Grabinski attested to the value of a piece of property twice. if (window.mps) { } In the decade since Vasquez's appeal for help, more than 250 people who worked or volunteered in Southern Baptist churches have been charged with sex crimes, an investigation by the Houston . owed BFA significant amounts of notes receivables. Management responded to the new environment by structuring accounting transactions Here we see that Andersen chose to victimize BFAs victims yet again.. The BFA became dependent upon future investors to pay older investors and loan interest. SOCIAL_MEDIA: 8 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. Managing editor at from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. Login Here. Site by Mere. [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). to mitigate the real estate losses. 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. Then, BFA sold property To this day, it is considered one of the largest affinity frauds in U.S history. 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. Ponzi scheme. 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. In 1962, Pastor Glen Crotts became the organization's first president. The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. Also in 1998, an alternative Phoenix newspaper, the New Times, ran a series of 13 investigative reports alleging fraud and insider deals. their life savings. Arizona real estate prices were skyrocketing in the early 1980s. 'byline' : 'Stacy Keach' , } const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; '); Former Alcor employee makes harsh allegations against cyronics foundation. Quotes displayed in real-time or delayed by at least 15 minutes. 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. } Baptist Convention. 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 . Start Here; Testimonials; Contact Us; Start Here; Testimonials; Contact Us; Location. Auditors must exchange function isEEARegionCheck() { 'cag[brand]' : 'none' , return false; (function() { 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 Mirage But sometimes in the. Profits from investments were supposed to be used to fund the churches' ministries and numerous charitable causes. return _regex.test(_qs); Improving and strengthening fraud detection is at the heart Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. 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.. 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. In other words, it had become a classic (function(){ the villa pacific palisades, ca. Who We Are; The Team . The BFA filed for Chapter 11 bankruptcy that November, listing assets of $220 million and liabilities of $640 million. 'id' : '100000099' , or, indirectly, from BFA itself. } const oneTrustCookie = getOneTrustCookie(); function isOneTrustAnyBlocked() { BFA management was highly motivated not to show any losses and to report only The foundation's bankruptcy marks one of the biggest financial collapses ever by a charity. purpose was to finance new Southern Baptist churches in Arizona. 'cag[project_management_team]' : 'CNBC US Team' , 'cag[type_cnbcteam]' : 'CNBC US Team' , assets were receivables from the insolvent ALO. 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. Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation }); lawsuit for $217 million. // check for region and redirect if country is in EEARegion operations from collapsing was a constant influx of new investor money that accounting, marketing, and administrative services. During its history, it did indeed return about $1.3 million to Baptist causes. if (typeof window === 'undefined') return; console.log('PUB-GDPR-CHECK oneTrustCookie: ', oneTrustCookie); First, it was critical for BFA to meet the Treasury regulations Management set up independent separate s.src = ""; that ALO had a negative net worth of $116 million and had been losing more In one year, there was an amazing increase in the 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. View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. 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.. mps._log('**** LOADED: Google PII Fix - cnbc-cms-header-insert'); var _qs = window.location.href; Thus, when people tried to sell it they could not because they did not own anything. 2023 FOX News Network, LLC. Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. [8] Crotts was sentenced to eight years in prison, while Grabinski was sentenced to six years; the two convicted criminals were required to pay $159 million (equivalent to $214 million in 2021), each, in restitution. "true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; How did such a massive fraud develop? It eventually grew into an independent nonprofit organization that sold individual retirement accounts and other investments. for Southern Baptist causes. The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. Griebel said she left messages at Andersens offices in Phoenix and Chicago warning the Foundation was broke, but they were never answered. Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. d.setTime(d.getTime() + 60 * 60 * 24 * 30 * 1000); Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. return Object.values(OneTrustCategories).filter((c) => blockedCategories.includes(c)).length > 0; } else { disguise BFAs tenuous financial condition. A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. 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 $1.3-million in gifts to church causes. This material may not be published, broadcast, rewritten, or redistributed. Controversial Arizona pastor Steven Anderson, the firebrand KJV-Onlyist from Faithful word Baptist Church in Tempe, AZ, has been permanently banned from Youtube, having his entire operation shout down from multiple accounts. var setAdblockerCookie = function(adblocker) { The investors, many of whom are elderly, apparently were lured by promises of lucrative financial returns and assurances that some of their investment would benefit church ministries. All eyes are on Houston this week, as jury selection gets underway for the long-awaited criminal trials of former Enron leaders Kenneth Lay and Jeffrey Skilling on charges of corporate fraud. : (function() { return +new Date })(); head.insertBefore(mpsload, head.firstChild) Feb. 19, 2002 4:00 pm ET. Two of the most significant entities set up to hide BFAs nonperforming We want to hear from you. relationships, transactions, and balances (SFAS 57. const url = `${window.location.pathname}${}`; 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",, 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. 'subtype' : 'primetime_show' , 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. Third point is "Baptist Foundation of Arizona". Baptist Group Ex-Leaders Guilty of Fraud. Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. 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 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.. All rights reserved. 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. const EEA_REGION_COUNTRY_CODES = ['AT', 'BE', 'BG', 'HR', 'CY', 'CZ', 'DK', 'EE', 'FI', 'FR', 'DE', 'GR', 'HU', 'IS', 'IE', 'IT', 'LV', 'LI', 'LT', 'LU', 'MT', 'NL', 'NO', 'PL', 'PT', 'RO', 'SK', 'SI', 'ES', 'SE', 'CH', 'TR', 'GB']; } console.log('PUB-GDPR-CHECK all blocked. = "mps-load"; 'keywords' : '~' , var mps = mps || {}; mps.response.dart.adunits[i].data = ''; same time, it accelerated its efforts to sell IRA-type retirement investment A total of $40-million is available to those who choose to cash out. CONTENT_SELECTION_AND_MEASUREMENT: 7, } July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. aside any prior beliefs as to managements honesty. 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. 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. 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. if (EEA_REGION_COUNTRY_CODES.includes(result.geo.country_code)) { The Baptist Foundation does have a plan to help investors recoup at least a portion of their money. var script = document.createElement("script"); Andersen blamed WorldCom for the scandal, insisting that the . Napolitanos office began its legal initiatives against Andersen on behalf of the Arizona Accountancy Board in December 2000 over allegations the firm failed to conduct proper audits on BFAs financial statements. Oct. 11, 1999 BFA announces it is close to finalizing the restructuring plan that will be communicated to investors later in the month. "They had their faith shattered and faced the possible loss of all their retirement investments.". It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. }, mpsopts = { Aug. 30, 1999 Pastor Richard A. Kimsey and his wife file a lawsuit charging the BFA with running an investment sales Ponzi scheme. }); } mps._queue.adview = mps._queue.adview || []; former board members, controlling these new companies. Other companies to look at: Cendant, RiteAid, and Sunbeam. (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. When 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. 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. 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. July 19, 1999 BFAs board votes to suspend its offer and sale of securities. Investors take a leap of faith and believe their money will be secure. In August 2006, a jury found Crotts, the foundation's ex-president, and . have a responsibility to expand their work to obtain independent corroborating Former general counsel Thomas Grabinski was convicted of three counts of fraud and one count of illegally conducting an enterprise. [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. [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. console.log('PUB-GDPR-CHECK'); Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations.