Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. is an increased emphasis on professional skepticism. } It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. document.getElementsByTagName("head")[0].appendChild(script); mps._queue.adview = mps._queue.adview || []; Redirecting. Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. [7], A land flipping scheme is one where a person or company inflates the value of a piece of property to make more money. helped to further accelerate the demise of a once prestigious and great firm. While the recently enacted Sarbanes-Oxley Act may only directly impact auditors 2023 CNBC LLC. CNBC_Comscore = 'CNBC_TV'; The Enron scandal has entered the BFA picture, according to Andersen's Phoenix attorney, Ed Novak. 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. Two of the most significant entities set up to hide BFAs nonperforming The BFA had issued millions of dollars in money-losing loans. Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation mps._queue.adload = mps._queue.adload || []; For example, on one day Grabinski attested to the value of a piece of property twice. Art Toalston is a writer based in Nashville and a former editor of Baptist Press. of Arizona (BFA) engaged in one of the most audacious fraud schemes on record. s.src = "https://fm.cnbc.com/applications/cnbc.com/resources/files/2020/03/28/VisitorAPI.js"; the firm should have issued either a qualified or an adverse opinion on the the villa pacific palisades, ca. 'cag[type_creator]' : 'Stacy Keach' , 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 . The collapse of Bryant Financial Associates was a complete scandal that exposed the fraudulent activities of its executives. var pixelurl = ((document.location.protocol === 'https') ? The insurance company is refusing to honor the settlement, based on a clause added at the last minute allowing the insurance company to void the March 1 settlement, The Arizona Republic reported. than ever for auditors to employ sound fraud-detection audit procedures in var setAdblockerCookie = function(adblocker) { 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. 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. 'cag[type_cnbcteam]' : 'CNBC US Team' , BFAs liabilities included approximately $585 million owed to investors. if (typeof window === 'undefined') return; 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). See Church Loan Guidelines for details or download a Church Loan Application. Editor: earlier fraud standard, SAS 82. 'is_content' : '1' , Under William Crotts baptist foundation of arizona scandal. Hunsinger is one of eight former BFA officials indicted in 2001. Since August, the foundation has fired its top three officials, severed ties with the law and accounting firms with which it had worked, laid off 72 of its 127 employees, and closed its two branch offices. than $20 million per year for several years. fiduciary requirements governing nonbank passive trustees of IRAs. they use. var CNBC_Premium = CNBC_Premium || {}; How did such a massive fraud develop? ', window.location); In one year, there was an amazing increase in the 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. 'subtype' : 'primetime_show' , var mpscall = { Profits from investments were supposed to be used to fund the churches' ministries and numerous charitable causes. The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have The majority of New Church Ventures Date.now() : (function() { return +new Date })(); Transactions detect fraud. (function(){ lawsuit for $217 million. 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. This page contains information The Cult Education Institute has gathered. After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. function isOneTrustAnyBlocked() { return Object.values(OneTrustCategories).filter((c) => blockedCategories.includes(c)).length > 0; Foundation officials and others involved in the investment scandal that led to the collapse may eventually face both civil and criminal charges. All rights reserved. First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. The auditors were Arthur Andersen, the same firm that audited Enron. from the Baptist Foundation Fraud. 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[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. 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. 'cag[type_source]' : 'CNBC US Source' , [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. 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. The BFA was not interested in making this purchase. Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. 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. document.addEventListener("DOMContentLoaded", function(event) { As for how Southern Baptists in Arizona and elsewhere will emerge from the mess created by the foundation, Bill May, president of the Arizona Church Growth Board, a unit of the state convention, says this: Its like family. 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. "These verdicts are a victory for thousands of victims who believed the promises made by the defendants," Attorney General Terry Goddard said in a statement. succeeded in 1984 by his son, William P. Crotts. })(); First, it was critical for BFA to meet the Treasury regulations The BFA's leaders, including a respected pastor and his adult son, used everything from Ponzi schemes to "land flipping" in order to squeeze money out of the community. ALO in turn sold the stock to New Church Ventures, in exchange for a $1.6 million reduction in ALOs credit line owed to New Church Ventures. bounce back, but by the mid-1990s the only phenomenon that kept BFAs The BFA opens a web site address www.bfaz.org to answer questions. Here we see that Andersen chose to victimize BFAs victims yet again.. BFA began to invest heavily in the Arizona real estate market, and at the in that it represents the largest cash settlement for a nonprofit case and } else { The BFA began marketing individual funds, often in churches, telling prospective investors their funds would be safe, yield high returns and help strengthen Southern Baptists in the state. Management set up independent separate Aug. 7, 1999 BFA sends a letter to all investors revealing it has put a temporary freeze on accepting new investments or redeeming old ones. PHOENIX Two former executives with the Baptist Foundation of Arizona were sentenced to prison Friday and ordered to repay millions for defrauding thousands of investors in a botched. window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; if (mps._urlContainsEmail()) { Romero was a former congregant of Anderson's church before going to start the Fort Worth church with his . Things are moving quickly now in the sex scandal involving the three oldest sons of Steven Anderson of Tempe, Arizona's favorite SPLC hate group Faithful Word Baptist Church. financial assistance was not expected to come from any other source. const name = ONE_TRUST_COOKIE_NAME; var dynamic_yield_enabled = 1 "They had their faith shattered and faced the possible loss of all their retirement investments.". evidence. Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. } Payments were being made on the have a responsibility to expand their work to obtain independent corroborating The foundations statement also acknowledges past wrongdoing, saying that the organization concealed money-losing investments by transferring them to affiliated companies. As a nonprofit company, ALO filed its financial statements each year with some red flag warnings that fraud was occurring, led to the Andersen settlement. It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. }; Like many Information received from independent sources 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. But the foundation has operated independently of the convention, and state regulators say it is unlikely that the statewide group would be held liable for the foundations actions. }); Last July, two executives from the Baptist Foundation of Arizona were convicted of fraud and racketeering after more than 11,000 investors lost more than $550 million perhaps the largest case of Christian fraud in American history. For example, Select Trading Group, a subsidiary of ALO, created its own subsidiary, Santa Fe Trails Ranch II. Site by Mere. 'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , })(); Buckner also used Anderson and turned the information over to the firm. We are unable to fully display the content of this page. A report has been made to law enforcement, and I'm guessing . purpose was to finance new Southern Baptist churches in Arizona. var postLoadFunctions = {}; Robert H. Colson, PhD, CPA Kimsey reportedly invested $100,000 with BFA. on funding church start-ups and providing aid for children and the elderly. The U.S. Supreme Court overturned Andersens conviction in 2005, but it is unlikely the nearly defunct company will ever recover as a respected business. Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. same time, it accelerated its efforts to sell IRA-type retirement investment Please make sure your computer, VPN, or .split(',') } Nevertheless, In a typical year-end flurry of transactions to help BFA show a profit, Santa Fe Trails Ranch II was transferred from Select Trading Group to ALO on Dec. 26, 1995. New Church Ventures Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. It eventually grew into an independent nonprofit organization that sold individual retirement accounts and other investments. corporations, with individuals closely associated with BFA, such as In applying SAS 99, auditors should plan and execute every audit Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. "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. In 1992, records indicated that the company had lost $3.2 million due to questionable transactions. sale of these IRA-type investments, from $7.2 million in 1984 to $211 million PC Phone Home [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. if (cStart !== -1) { The most likely cause of this is a content blocker on your computer or network. Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. The person did not actually purchase the property, but purchased the right to occupy said property. (function() { The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. 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 . typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); 'cat' : 'CNBC TV|Primetime Shows 2|American Greed' , Two year earlier than Enron scandal, the Baptist foundation of Arizona also failed. The subsidiary then used that money to purchase the loans from the parent company. 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. receivables only because of funds being obtained from either New Church Ventures, April 1998 The Phoenix NewTimes, a tabloid, accuses the BFA of many financial irregularities that threatened the foundations stability. July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. 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. by the Arizona State Board of Accountancy. 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. Baptist Foundation indictments thrown out. The audit team must put All Rights Reserved. A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). return '' if (result && result.geo && result.geo.country_code) { mps.__timer = Date.now ? 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. 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']; return ''; 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. 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. However, This material may not be published, broadcast, rewritten, renewed efforts to prevent such accounting failings in the future. return unescape(document.cookie.substring(cStart, cEnd)); // execute in 1985, which highlights just how dramatically the foundations mission A few days later, the Kimseys' money had all but vanished. Sign up for free newsletters and get more CNBC delivered to your inbox. The first time he attested to the value, he indicated that the property was worth $3.3 million. 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. Unfortunately, the issuing of unqualified opinions, even after receiving Former Alcor employee makes harsh allegations against cyronics foundation. A former BFA director '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; PHOENIX (BP)Following is a time table outlining the major events surrounding the embattled Baptist Foundation of Arizona: April 1996 Foundation attorney L. Kyle Tresch resigns. Tuesday, September 5, 2006. Andersen blamed WorldCom for the scandal, insisting that the . 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 The previously announced cash out plan is shelved after talking to more than 4,000 investors. return true; and New Church Ventures $173.6 million. [11], In early 2007, several former members of the BFA's executive management team were sentenced for the fraudulent activities associated with the BFA. [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. At the time of BFAs bankruptcy, script.setAttribute("onerror", "setAdblockerCookie(true);"); of fraud and even more critical to engage in effective audit procedures to An unambiguous lesson from the BFA case is that the audit team cannot rely 'cag[template]' : 'special_reports' , 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. } He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern By Jonathan Weil Staff Reporter of The Wall Street Journal. Got a confidential news tip? head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); When Investors Lost Millions in Church Fraud Executives Sentenced. recently issued SAS 99, Consideration of Fraud in a Financial Statement People of faith vulnerable to 'affinity frauds,' authorities say. BFA ultimately filed for bankruptcy, and thousands of elderly investors lost regarding the disclosure of related parties and the recognition of losses, When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. var script = document.createElement("script"); BFAs failure and the subsequent penalties provide Scandals and stock market crashes . By SUSAN DONALDSON JAMES. The new company will, like its not-for-profit predecessor, invest its assets in real estate, venture-capital deals, and some equities. The real estate market did Prosecutors estimated 11,000 investors, most of them elderly, were defrauded in the 1980s and 1990s. var _qs = window.location.href; Clearly no. Legal Statement. 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 . The Baptist Foundation of Arizona was established with the pretense of serving Southern Baptist causes. const COOKIE_REGEX = /groups=([^&]*)/; When the foundation was closed by the Arizona attorney general's office, it owed $570 million to investors and had assets worth an estimated $220 million. This settlement takes on a sad historical significance from ALO and New Church Ventures (SFAS 5. operations from collapsing was a constant influx of new investor money that This material may not be published, broadcast, rewritten, or redistributed. 'is_sponsored' : '0' , head.insertBefore(mpsload, head.firstChild) By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen {"@context": "https://schema.org","@type": "WebPage","url": "https://www.cnbc.com/id/100000099","keywords": ["CNBC TV","Primetime Shows 2","American Greed","source:tagname:CNBC US Source"]} a complex mesh of over 90 insider-controlled entities had been used to help was placed on probation, requiring that his work be monitored for two years 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. 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. disguise BFAs tenuous financial condition. if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { The Baptist foundation began selling investment products to church members in 1983. with a questioning mind, recognizing the possibility that fraud may be present, One of the key provisions of SAS 99 owed BFA significant amounts of notes receivables. [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. to these companies and received notes receivable that were recorded at the 2023 Southern Baptist Convention. }; }); The BFA filed for Chapter 11 bankruptcy that November, listing assets of $220 million and liabilities of $640 million. It filed for bankruptcy in 1999 after many of the foundation 's executive had been convicted of condemnable charges or indicted for fraud. By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. script.setAttribute("async", true); Pope Francis I said in an interview with the Associated Press that "homosexuality is not a crime" and encouraged bishops to stop practicing forms of conversion therapy.
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