The first in a string of corporate scandals, Enron came to symbolize corporate excess of the 1990s and is Americas best-known white collar crime. First, it was critical for BFA to meet the Treasury regulations ', window.location); 2023 CNBC LLC. } else { BFAs financial statements from 1984 to 1997. that ALO had a negative net worth of $116 million and had been losing more be taking place requires a higher degree of due diligence by auditors. 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. if (document.cookie.length > 0) { receivables only because of funds being obtained from either New Church Ventures, Your investment actually touches the lives of countless numbers while you earn a very attractive interest rate. 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 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. mps.cloneAd = function() { return false; } [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. is an increased emphasis on professional skepticism. 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. 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. } // execute This page contains information The Cult Education Institute has gathered. The following were among the major GAAP violations alleged by The foundation's bankruptcy marks one of the biggest financial collapses ever by a charity. Then, learn how Dr. Mikos, a charming doctor with a lucrative practice, turns out to be a con artist defrauding Medicare. 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. Money & Investing. The auditors were Arthur Andersen, the same firm that audited Enron. For example, on one day Grabinski attested to the value of a piece of property twice. When 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. Hunsinger subsequently used the property as collateral to obtain a US$6.8M loan from the BFA. detect fraud. 1991 to 1994 statements and an adverse opinion on the 1995 to 1997 financial [1] Grabinski signed documents as an officer for both BFA and a subsidiary. [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. 'cag[device]' : 'mobile-touch' , [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. Payments were being made on the "true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; 'subtype' : 'primetime_show' , Twenty years later, Glen Crotts' son, William Pierre "Bill" Crotts, became the organization's second president. 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. "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 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. 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. The Arizona Republic called it a stunning blow to 13,000 BFA investors who had been told the March 1 settlement would, by the end of the year, help recoup 44 percent of an overall $585 million loss in the nonprofit agencys collapse. The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. mps._queue.adload = mps._queue.adload || []; At the time of BFAs bankruptcy, for (var i in mps.response.dart.adunits) { Dec. 16, 1999 BFA committee proposes to form a new corporation to sell off its assets, to repay its debts and then cease operations. the auditors would have discovered that ALO was insolvent. Auditors must broaden the range of information that Transactions that audit public companies, in todays environment it is more important } both in and outside of management. The Arizona Baptist Foundation. Kimsey reportedly invested $100,000 with BFA. "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. Thus, when people tried to sell it they could not because they did not own anything. } var mpscall = { cEnd = document.cookie.length; 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 . 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. 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. Bob Allen is managing editor of EthicsDaily.com. //end OneTrust Redirect Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. BFAs failure and the subsequent penalties provide 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. 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 convicted of fraud. It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. 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. "updatecorrelator" : true var script = document.createElement("script"); var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); real estate in exchange for notes receivable valued in the millions of dollars. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. Mutual Fund and ETF data provided by Refinitiv Lipper. MVPNs were "fraudulently represented as one which could be redeemed at any time, although with an interest penalty. }; 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. } 2023 Southern Baptist Convention. mps.__intcode = "v2"; or, indirectly, from BFA itself. Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. Tuesday, September 5, 2006. var _qs = window.location.href; The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. Scandals and stock market crashes . mps._queue.mpsloaded = mps._queue.mpsloaded || []; 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.. Crotts, one of three remaining defendants pleading innocent, says he was an innocent victim who himself lost $800,000. The audit team must put Mutual Fund and ETF data provided by Refinitiv Lipper. 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. Investors who choose to roll their money into securities may be risking even bigger losses. 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,". If you continue to experience issues, contact us at 202-466-1032 or help@chronicle.com. Several accountants and one attorney became concerned enough to approach senior management about ALOs deficit. 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. Watch how the . 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 . let cEnd = document.cookie.indexOf(';', cStart); Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern .split(',') Learning its principal note issuer was ALO, she checked public records and found its unaudited balance sheet listed liabilities of $109.7 million and assets at minus $6.9 million. Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. on funding church start-ups and providing aid for children and the elderly. Aug. 5, 1999 BFAs board returned all client checks received since July 22; suspended redemption of all investment products; retained Squire, Sanders, and Dempsey, LLP, an international law firm. 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. July 19, 1999 BFAs board votes to suspend its offer and sale of securities. First case: The Baptist Foundation of Arizona invests and loses millions entrusted by churchgoers, and its mission ends in scandal. Aug. 27, 1999 A class action lawsuit filed by investor Franklin Kestner Sr. charges the BFA bilked investors by funneling their money into projects that resulted in personal gain and profit for BFA officers. The foundation halted security sales in August, however, when state regulators found that it did not have the money to cover its debts to investors. Investors take a leap of faith and believe their money will be secure. STORAGE: 6, A non-profit corporation chartered in 1948 to help Southern Baptist causes, the BFA returned about $1.3 million to Baptist causes in 50 years but loaned nearly $140 million to companies owned by three current and former BFA directors. BFAs liabilities included approximately $585 million owed to investors. Login Here. Andersen settled a class-action lawsuit with BFA investors for $217 million, without admitting any wrongdoing. Yet it raised most of its money by selling investment products to individuals and invested most of those funds in ALO, an allegedly phony company owned by one-time BFA director Jalma Hunsinger. Get this delivered to your inbox, and more info about our products and services. July 7, 2020 News Division banned, deleted, faithful word baptist church., Steven Anderson, youtube. from the Baptist Foundation Fraud. 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. operations from collapsing was a constant influx of new investor money that 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. Contact (909) 738-4000 info@bfcal.org. var pixelurl = ((document.location.protocol === 'https') ? 'keywords' : '~' , All Rights Reserved. owed BFA significant amounts of notes receivables. Its only significant asset was 1,357 acres of undeveloped land in San Miguel County, New Mexico. 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. }).catch(() => {}); from ALO and New Church Ventures (SFAS 5. The Baptist Foundation of California. Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. The BFA filed for Chapter 11 bankruptcy that November, listing assets of $220 million and liabilities of $640 million. const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; BFA, an agency of the Arizona Southern Baptist Convention, was founded in 1948 to raise and manage endowments for church work in Arizona. In a Good bank-bad bank scheme, the two companies manipulate transactions to favor the public institution while using the "bad bank" to hide the deficiencies. } } Crotts and Grabinski could face six to 23 years for each count. Both options for investors have limitations. Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. [9], In 2002, Grabinski sued BFA's insurance carrier, National Union Fire Insurance Company of Pittsburgh, Pa. (National Union), for coverage of his legal fees per the Directors and Officers liability coverage purchased from National Union, plus damages. if (!matches) { window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; Like many network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. In 1948, the Baptist Foundation of Arizona was founded in 1948 and initially sought to provide a financial revenue for participants while supporting Baptist-motivated causes. A few days later, the Kimseys' money had all but vanished. 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. A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. The BFA was not interested in making this purchase. or subscribe. The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have (function(){ The Arizona Southern Baptist Convention was founded in 1928. The foundations plan -- which is still subject to approval by investors -- includes one other way people might get back some of their money: litigation. 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 regardless of past experience with the entity or prior beliefs about managements var _regex = /([^=&/<>()[].,;:s@"]+(.[^=&/<>()[].,;:s@"]+)*)@(([[0-9]{1,3}.[0-9]{1,3}.[0-9]{1,3}.[0-9]{1,3}])|(([a-zA-Z-0-9]+. Text. BFA management was highly motivated not to show any losses and to report only 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. 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 'cag[attribution_source]' : 'CNBC US Source' , The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. [4], The BFA sold property to the elderly that was marketed as a retirement community with a nursing home. script.setAttribute("async", true); } 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. In 1992, records indicated that the company had lost $3.2 million due to questionable transactions. own, and both organizations paid BFA substantial management fees to provide Andersen blamed WorldCom for the scandal, insisting that the . baptist foundation of arizona scandal. Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. } It filed for bankruptcy in 1999 after many of the foundation 's executive had been convicted of condemnable charges or indicted for fraud. Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. fiduciary requirements governing nonbank passive trustees of IRAs. The BFA opens a web site address www.bfaz.org to answer questions. assets were receivables from the insolvent ALO. More information may be obtained by contacting the Foundation at 10255 Old Columbia Rd., Columbia MD, 21046, or by contacting Tom Stolle at (800) 466-5290, ext. ideas on how fraud could occur and adjust the audit program plan so that tests Aug. 11, 1999 The Arizona Republic reports the foundations funds have been frozen as a result of the investigation. BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. But the value of the investors shares will depend on the performance of the new companys investments and how it fares in the stock market. DIRECTOR OF OPERATIONS. In BFAs early days, it focused its attention credible tips or complaints are received about management fraud, auditors const url = `${window.location.pathname}${window.location.search}`; is the cornerstone of a multifaceted effort by the accounting profession to Still it functioned much like a financial institution, raising funds through sale of investment agreements and mortgage-backed notes, which in turned were invested in real estate. 'nid' : '100000099' corporations, with individuals closely associated with BFA, such as accounting treatment desired by management. Clearly no. baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. The Baptist Foundation of Arizona was established with the pretense of serving Southern Baptist causes. All rights reserved. 'cag[type_source]' : 'CNBC US Source' , This material may not be published, broadcast, rewritten, or redistributed. } Officials at the Arizona Southern Baptist Convention were unavailable for comment. 'site' : 'cnbc-mobile' , [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. same time, it accelerated its efforts to sell IRA-type retirement investment More specifically, the litigation was brought by Arizona's Corporation Commission (Securities Division), as well as the state's attorney general. Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. lawsuit for $217 million. People of faith vulnerable to 'affinity frauds,' authorities say. .filter(categoryPreference => !categoryPreference.includes('0_') && categoryPreference.includes(':0')) [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. A BFA liquidation trust was set up to sell off assets to allow investors to recover part of their money. 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 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. Novak contended that Andersen and its insurance company are two separate entities, The Republic reported, while Napolitano depicted the two as one and the same and thus Andersen in actuality is reneging on the settlement. Kyle Cooper. Perceiving a lack of response, most resigned. if (EEA_REGION_COUNTRY_CODES.includes(result.geo.country_code)) { 3210 E. Guasti Road Ontario, 91761 View on map. mps._urlContainsEmail = function() { 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. propertys book value, not its diminished current value. 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? With Enrons collapse, Andersen earned the distinction of having been auditor for both the largest corporate bankruptcy and largest bankruptcy of a non-profit in U.S. history. '); 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. //begin OneTrust Redirect The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. CONTENT_SELECTION_AND_MEASUREMENT: 7, 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. 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 . 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 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. [1], The Baptist Foundation of Arizona declared bankruptcy in 1999, citing $530 million in liabilities against $70 million in assets. if (!_qs) { When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. SAS 99 is effective for audits of financial Robert H. Colson, PhD, CPA 207, or tstolle@bcmd.org. } 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. 'cag[brand]' : 'none' , ALOs stated purpose was to develop real estate. The BFA had issued millions of dollars in money-losing loans.
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