baptist foundation of arizona scandal

const url = `${window.location.pathname}${window.location.search}`; 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. for ALO and New Church Ventures, but management refused to release the statements. was used to pay interest on old money. Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. The BFA was not interested in making this purchase. mps.cloneAd = function() { return false; } The lead partner on Andersen's disputed 1985 audit of Lincoln was Jay S. Ozer, who also served as lead auditor of the Baptist Foundation of Arizona. 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 . More specifically, the litigation was brought by Arizona's Corporation Commission (Securities Division), as well as the state's attorney general. 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. Get this delivered to your inbox, and more info about our products and services. accounting treatment desired by management. 2023 FOX News Network, LLC. It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. real estate in exchange for notes receivable valued in the millions of dollars. 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. 'is_sponsored' : '0' , The entities had no employees of their The foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities. 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. document.addEventListener("DOMContentLoaded", function(event) { [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. 'cag[configuration_franchise]' : 'American Greed' , All rights reserved. (function() { Quotes displayed in real-time or delayed by at least 15 minutes. bounce back, but by the mid-1990s the only phenomenon that kept BFAs var s = document.createElement("script"), el = document.getElementsByTagName("script")[0]; The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. const oneTrustCookie = getOneTrustCookie(); Baptist Foundation of Arizona WorldCom Enron Sunbeam scandal Andersen knew of the bill-and-hold schemes Waste Management Scandal Avoided depreciation expenses, Andersen knew about it and received bribes for issuing clean audit opinions. } [1], The Baptist Foundation of Arizona declared bankruptcy in 1999, citing $530 million in liabilities against $70 million in assets. auditors overlook? 'cat' : 'CNBC TV|Primetime Shows 2|American Greed' , if (isOneTrustAnyBlocked()) { assets were receivables from the insolvent ALO. View Jasmine's full profile See who you know in common Get introduced . Investors Lost Millions in Church Fraud Executives Sentenced. renewed efforts to prevent such accounting failings in the future. Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. PHOENIX (BP)The Enron collapse has reared its head in an Arthur Andersen announcement that the accounting firm is backing out of a $217 million settlement with victims of the Baptist Foundation of Arizonas 1999 collapse. Got a confidential news tip? A grand jury in April 2001 returned indictments charging former BFA officials with 32 counts of fraud, theft and racketeering. .filter(categoryPreference => !categoryPreference.includes('0_') && categoryPreference.includes(':0')) His lawyer has said there was no fraud but rather a disagreement on the value of property. 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. between the foundation and these corporations were designed to achieve the The previously announced cash out plan is shelved after talking to more than 4,000 investors. 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. mps.__timer = Date.now ? Among Southern Baptists in Arizona and the neighboring states, where many of the investors live, the impact of the case may be more direct. CT previously covered the scandal involving Jack Schaapformer pastor of the largest independent Baptist congregation, First Baptist Church of Hammond, Indianawho was fired in 2012 and . [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. 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. 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. 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. 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. BFAs failure and the subsequent penalties provide 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.. [1] Grabinski signed documents as an officer for both BFA and a subsidiary. The second time, on the same day, he declared the same piece of property was valued at $960,000.[4]. Text. Legal Statement. if (!matches) { mps._adsheld.push(adunit) Two of the most significant entities set up to hide BFAs nonperforming Baptist Group Ex-Leaders Guilty of Fraud. 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. 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. cStart = cStart + name.length + 1; 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). DIRECTOR OF OPERATIONS. Dec. 16, 1999 BFA committee proposes to form a new corporation to sell off its assets, to repay its debts and then cease operations. 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. Like many [15] At the time, this settlement was the second largest settlement in the nation's history for a Big Five accounting firm that was not related to the Savings and Loan collapses of 1986 to 1995. Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. Other companies to look at: Cendant, RiteAid, and Sunbeam. }); Management responded to the new environment by structuring accounting transactions Southern Baptist Foundation Scheme in Arizona. In applying SAS 99, auditors should plan and execute every audit if (document.cookie.length > 0) { 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. If you continue to experience issues, contact us at 202-466-1032 or help@chronicle.com. Perceiving a lack of response, most resigned. In 1962, Pastor Glen Crotts became the organization's first president. 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. [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. 2023 Southern Baptist Convention. 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. Also in 1998, an alternative Phoenix newspaper, the New Times, ran a series of 13 investigative reports alleging fraud and insider deals. The auditors were Arthur Andersen, the same firm that audited Enron. All rights reserved. var dynamic_yield_enabled = 1 BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. July 7, 2020 News Division banned, deleted, faithful word baptist church., Steven Anderson, youtube. 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. var mpscall = { Audit. Scandals and stock market crashes . for Southern Baptist causes. 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. If the audit team had obtained copies of ALOs detailed financial statements, } script.setAttribute("onerror", "setAdblockerCookie(true);"); 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. incorporated both nonprofit entities. The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA. network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. However, the State Board own, and both organizations paid BFA substantial management fees to provide Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. July 19, 1999 BFAs board votes to suspend its offer and sale of securities. aside any prior beliefs as to managements honesty. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. mps._ext = mps._ext || {}; }; We want to hear from you. a complex mesh of over 90 insider-controlled entities had been used to help Login Here. In other words, it had become a classic "[3] Instead the BFA decided to hide its debt and began a series of dubious activities. Legal Statement. In August 2006, a jury found Crotts, the foundation's ex-president, and . mpsload.src = "//" + mpsopts.host + "/fetch/ext/load-" + mpscall.site + ".js?nowrite=2"; statements. The BFA carried out a number of illegal activities in perpetrating affinity fraud against Southern Baptist worshipers in Arizona. evidence. 'cag[attribution_source]' : 'CNBC US Source' , BFA informed Arizona Southern Baptist pastors of the financial crisis at a retreat held last weekend at the Wigwam Resort. 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. 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.. of fraud and even more critical to engage in effective audit procedures to 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. Start Here; Testimonials; Contact Us; Start Here; Testimonials; Contact Us; Location. than $20 million per year for several years. Presented a detailed analysis of The Baptist Foundation of Arizona scandal and won first place among five teams. 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). While the recently enacted Sarbanes-Oxley Act may only directly impact auditors can are designed to be unpredictable and unexpected. 'subtype' : 'primetime_show' , too heavily upon management assurances. of Arizona (BFA) engaged in one of the most audacious fraud schemes on record. During its history, it did indeed return about $1.3 million to Baptist causes. 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 . 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. 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. In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. } 207, or tstolle@bcmd.org. Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. } else { The real estate market did by the Arizona State Board of Accountancy. STORAGE: 6, The company will be organized to hold the foundations existing assets, which are estimated to be between $160-million and $200-million. Some 13,000 investors lost $570 million, mainly elderly Baptists, some of whom lost their entire life's savings. Market data provided by Factset. have a responsibility to expand their work to obtain independent corroborating 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. 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 . A total of $40-million is available to those who choose to cash out. The Baptist Foundation of Arizona was founded in 1948 to raise money to back up Baptist causes and to pay a return for investors. 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. 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. Then, BFA sold property financial assistance was not expected to come from any other source. 'cag[brand]' : 'none' , 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']; 'byline' : 'Stacy Keach' , In 1998 Deeann Greibel, a financial planner and CPA in Mesa, Ariz., looked into BFA finances on behalf of a client and found it was heavily underwritten with IOUs. with a questioning mind, recognizing the possibility that fraud may be present, const matches = oneTrustCookie.match(COOKIE_REGEX); cEnd = document.cookie.length; s.src = "https://fm.cnbc.com/applications/cnbc.com/resources/files/2020/03/28/VisitorAPI.js"; You may then be asked to log in, create an account if you don't already have one, earlier fraud standard, SAS 82. This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). })(); if (EEA_REGION_COUNTRY_CODES.includes(result.geo.country_code)) { 'template' : 'special_reports' , For example, on one day Grabinski attested to the value of a piece of property twice. Baptist Foundation of Arizona was the largest non-profit in U.S. history. [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. var w=window;if(w.performance||w.mozPerformance||w.msPerformance||w.webkitPerformance){var d=document;AKSB=w.AKSB||{},AKSB.q=AKSB.q||[],AKSB.mark=AKSB.mark||function(e,_){AKSB.q.push(["mark",e,_||(new Date).getTime()])},AKSB.measure=AKSB.measure||function(e,_,t){AKSB.q.push(["measure",e,_,t||(new Date).getTime()])},AKSB.done=AKSB.done||function(e){AKSB.q.push(["done",e])},AKSB.mark("firstbyte",(new Date).getTime()),AKSB.prof={custid:"1320688",ustr:"",originlat:"0",clientrtt:"138",ghostip:"61.19.12.55",ipv6:false,pct:"10",clientip:"202.6.19.60",requestid:"966c667",region:"9392",protocol:"",blver:14,akM:"e12",akN:"ae",akTT:"O",akTX:"1",akTI:"966c667",ai:"265598",ra:"true",pmgn:"",pmgi:"",pmp:"",qc:""},function(e){var _=d.createElement("script");_.async="async",_.src=e;var t=d.getElementsByTagName("script"),t=t[t.length-1];t.parentNode.insertBefore(_,t)}(("https:"===d.location.protocol?"https:":"http:")+"//ds-aksb-a.akamaihd.net/aksb.min.js")}. succeeded in 1984 by his son, William P. Crotts. be taking place requires a higher degree of due diligence by auditors. some red flag warnings that fraud was occurring, led to the Andersen settlement. Buckner also used Anderson and turned the information over to the firm. The subsidiary then used that money to purchase the loans from the parent company. } 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. Watch how the . 'cag[project_management_team]' : 'CNBC US Team' , Arizona has had its fair share of scams and schemes over the years, but none was more prominent than the Baptist Foundation of Arizona financial collapse and bankruptcy. An increased focus on professional skepticism in gathering The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. "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.

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