var _qs = window.location.href; const COOKIE_REGEX = /groups=([^&]*)/; on funding church start-ups and providing aid for children and the elderly. 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. "[3] Instead the BFA decided to hide its debt and began a series of dubious activities. Nevertheless, Payments were being made on the How did such a massive fraud develop? Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. earlier fraud standard, SAS 82. DIRECTOR OF OPERATIONS. script.setAttribute("src", "//www.npttech.com/advertising.js"); fetch('https://geo.cnbc.com/info/').then(res => res.json()).then(result => { 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 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 . 'https' : 'http') + '://pix.nbcuni.com/a-pii.gif?X=piiblock&S=' + mps.pagevars.instance + '&P=' + mps.pagevars.mpsid + '&A=' + i + '&U=' + encodeURIComponent(window.location.href) + '&_=' + window._mpspixZ; help restore investor confidence and supersedes the Auditing Standards Boards Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. The BFA carried out a number of illegal activities in perpetrating affinity fraud against Southern Baptist worshipers in Arizona. In one year, there was an amazing increase in the var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); Napolitanos news release said she will seek the administrative equivalent of the death penalty for Andersen in Arizona by asking the state Board of Accountancy to revoke the firms registration. function isEEARegionCheck() { The following were among the major GAAP violations alleged by One BFA subsidiary, Arizona Southern Baptist New Church Ventures, had a stated purpose of financing new Southern Baptist churches in Arizona. head.insertBefore(mpsload, head.firstChild) .split(',') 'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , The foundation says it will pay up to $5-million into a trust intended to pay legal fees to pursue claims against what a spokesman called any third parties that could be held liable for the foundations troubles. The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. let cStart = document.cookie.indexOf(`${name}=`); console.log('PUB-GDPR-CHECK'); Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. return true; Foundation officials and others involved in the investment scandal that led to the collapse may eventually face both civil and criminal charges. PC Phone Home Investors take a leap of faith and believe their money will be secure. These. BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. 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. Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. Potential financial losses in the case overshadow the losses accumulated by non-profit groups and donors who gave money to the Foundation for New Era Philanthropy. 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 villa pacific palisades, ca. function getOneTrustCookie() { [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. ALOs stated purpose was to develop real estate. 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. mps.insertAd("#" + slotid, adunit) Twenty years later, Glen Crotts' son, William Pierre "Bill" Crotts, became the organization's second president. We look forward to serving you! statements. 'cag[attribution_source]' : 'CNBC US Source' , Management set up independent separate var script = document.createElement("script"); } } Jalma Hunsinger, President and Director of Church Ventures (a company whose stated purpose was to build churches), paid $150,000 (equivalent to $196,000 in 2021). incorporated both nonprofit entities. receivables only because of funds being obtained from either New Church Ventures, 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']; The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. Kyle Cooper. Click the link below to sign up for updates from Good Faith Media via our daily or weekly e-newsletters. 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 largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. }; if (!oneTrustCookie) return true; 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. BFAs failure and the subsequent penalties provide July 19, 1999 BFAs board votes to suspend its offer and sale of securities. 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. Clearly no. PHOENIX (ABP) The Arizona Court of Appeals has upheld convictions of two former Baptist Foundation of Arizona officials sentenced to prison in 2006 for defrauding more than 11,000 investors in a Ponzi scheme. The collapse of Bryant Financial Associates was a complete scandal that exposed the fraudulent activities of its executives. Auditors must broaden the range of information that [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. 'cag[type_cnbcteam]' : 'CNBC US Team' , 2 Case Study Two Part 1: Baptist Foundation Summary and Research The Baptist Foundation of Arizona was caught hiding important information about its financials when it filed for bankruptcy in 1999. View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. 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. The Baptist Foundation of Arizona was founded in 1948 to raise money to back up Baptist causes and to pay a return for investors. is an increased emphasis on professional skepticism. At the center of the scandal is Crotts, a charismatic 53-year-old lawyer, who took over the BFA from his father in 1982. When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. 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. 2023 Southern Baptist Convention. SAS 99 is effective for audits of financial 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. changed under new management. 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. By Jonathan Weil Staff Reporter of The Wall Street Journal. The audit team requested the financial statements their life savings. The Baptist Foundation of California. Please make sure your computer, VPN, or [11], In early 2007, several former members of the BFA's executive management team were sentenced for the fraudulent activities associated with the BFA. Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. 1 (803) 227-6197 kcooper@mybfsc.org. (function() { 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.. return _regex.test(_qs); More specifically, the litigation was brought by Arizona's Corporation Commission (Securities Division), as well as the state's attorney general. Its initial mission was to raise donations and support for Southern Baptist causes. 'cag[related_primary]' : '' , } New Church Ventures 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. People of faith vulnerable to 'affinity frauds,' authorities say. 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). By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. a complex mesh of over 90 insider-controlled entities had been used to help 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. The person did not actually purchase the property, but purchased the right to occupy said property. July 22, 1999 BFAs board accepts the offers of President Bill Crotts, General Counsel Tom Grabinski and Controller Don Deardorff to relinquish their BFA responsibilities although remain as BFA employees. Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. "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. BFA invested heavily in real estate, a more speculative investment strategy than other Baptist foundations in the state traditionally used. Like many if (cEnd === -1) { 'cag[attribution_author]' : 'Stacy Keach' , cStart = cStart + name.length + 1; regarding the disclosure of related parties and the recognition of losses, }; . This settlement takes on a sad historical significance Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. (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. . In a short time, it had created a complicated web of dozens of interlocking non-profit and for-profit subsidiaries to operate its real-estate and other investment deals. A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. 'cag[configuration_franchise]' : 'American Greed' , 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. purpose was to finance new Southern Baptist churches in Arizona. Also, as a condition to the court-approved arrangement, the partner and the aside any prior beliefs as to managements honesty. Sign up for free newsletters and get more CNBC delivered to your inbox. They can either cash out of the foundation, receiving 20 per cent of the value of their investments and the interest due to them, or elect to receive shares of stock in a new for-profit company that will be publicly traded. It says that a new charity will be established that will be involved in traditional Baptist charitable activities, including, for example, ministries, education, and providing routine trust and estate planning. The new charity, the statement says, will be prohibited from selling debt securities. "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.
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