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Baptist Charity Involved in Alleged Investment Scam Files for A few days later, the Kimseys' money had all but vanished. Two Executives of the Baptist Foundation of America are Convicted mps._ext = mps._ext || {}; Auditors must exchange 'cat' : 'CNBC TV|Primetime Shows 2|American Greed' , 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. [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. financial assistance was not expected to come from any other source. if (isOneTrustAnyBlocked()) { } '); var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); Aug. 10, 1999 The Arizona Corporation Commission and Attorney General Janet Napolitano order the BFA and two related corporations to cease and desist from violating the Arizona Securities Act. Andersen blamed WorldCom for the scandal, insisting that the . How did such a massive fraud develop? When script.setAttribute("onload", "setAdblockerCookie(false);"); View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. Its initial mission was to raise donations and support Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. 'cag[type_creator]' : 'Stacy Keach' , July 19, 1999 BFAs board votes to suspend its offer and sale of securities. Essentially, in a transaction that favored a former director, the BFA accepted a piece of property (which the BFA itself declined to purchase) as collateral for a loan that amounted to US$4.9M more than the property's appraisal value. STRICTLY_NECESSARY: 1, 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. He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. Inside Higher Ed's News 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 . BFA ultimately filed for bankruptcy, and thousands of elderly investors lost Former Alcor employee makes harsh allegations against cyronics foundation. 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. [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. 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. The Baptist Foundation of Arizona - A Case of Proper Fund Accounting Ignored and Manipulated Another major accounting scandal, and prelude to Andersen Accounting's participation in Enron's anomalous deals, was the illegal securities trading committed by the Baptist Foundation of Arizona (BFA). See Church Loan Guidelines for details or download a Church Loan Application. Baptist Foundation execs found guilty of fraud - East Valley Tribune First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. Then, BFA sold property The previously announced cash out plan is shelved after talking to more than 4,000 investors. 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. (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. A jury on Monday found former foundation president William Crotts guilty of three counts of fraud and one count of illegally conducting an enterprise, according to the Arizona Attorney General's Office, which prosecuted the case. mps._queue.refreshads = mps._queue.refreshads || []; In 1962, Pastor Glen Crotts became the organization's first president. Arthur Andersen provided unqualified clean audit opinions on SAS 99 is effective for audits of financial mps._adsheld.push(adunit) 'template' : 'special_reports' , 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. 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")}. mpsload.id = "mps-load"; 'cag[type_cnbcteam]' : 'CNBC US Team' , 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. aside any prior beliefs as to managements honesty. 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. is the cornerstone of a multifaceted effort by the accounting profession to In BFAs early days, it focused its attention The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. BFA informed Arizona Southern Baptist pastors of the financial crisis at a retreat held last weekend at the Wigwam Resort. Lessons }; Transactions The subsidiary then used that money to purchase the loans from the parent company. Sign up for free newsletters and get more CNBC delivered to your inbox. and New Church Ventures $173.6 million. regarding the disclosure of related parties and the recognition of losses, baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million. 'byline' : 'Stacy Keach' , Mutual Fund and ETF data provided by Refinitiv Lipper. var pixelurl = ((document.location.protocol === 'https') ? mps._queue.adview = mps._queue.adview || []; The person did not actually purchase the property, but purchased the right to occupy said property. Former general counsel Thomas Grabinski was convicted of three counts of fraud and one count of illegally conducting an enterprise. This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). } Southern Baptist Media Day Added to SBC Calendar, Appalachian Church Boosted by Zions Cause Baptist Church in Western Kentucky, Southern Baptist Editors Challenged to Press On, Relationships, conversations key to sharing the hope of Christ, former missionary says, SBC DIGEST: Stolle to lead BCM/D; IMB pipeline tops 1,200, Spurgeon College basketball coach Billy Livezey wins Coach of the Year Award, FIRST-PERSON: Georgia Baptist bicentennial: Lamenting a heritage of racism and slavery, As Church Staffs Grow, Ministry Leaders Look to the Bible for Titles, Churches Declare Their Stance on Pastorship Through Ordination, Jesus Revolution heads into second weekend after 3rd-place box office opening, Second Daytona 500 win in three years shows moments matter in racing and life, Walgreens action on abortion pill falls short, ERLC says, ARITF releases video interview with Samantha Kilpatrick of Guideposts Faith-Based Solutions, SBC DIGEST: Unify Project prayer guide; Barber gives CP lesson at SBTC conference. Also in 1998, an alternative Phoenix newspaper, the New Times, ran a series of 13 investigative reports alleging fraud and insider deals. Investors who choose to roll their money into securities may be risking even bigger losses. In August 2006, a jury found Crotts, the foundation's ex-president, and . Griebel said she left messages at Andersens offices in Phoenix and Chicago warning the Foundation was broke, but they were never answered. 'type' : 'mobile: episode' , Case Solution of Case Study 5 | PDF | Accounting - Scribd It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. 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. [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 $3.6 million in 2021). The CPA Journal. Got a confidential news tip? Arizona has had its fair share of scams and schemes over the years, but none was more prominent than the Baptist Foundation of Arizona financial collapse and bankruptcy. window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; We want to hear from you. Management set up independent separate 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. 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. Arthur Andersen and the Baptist Foundation Site by Mere. 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. assets were receivables from the insolvent ALO. document.getElementsByTagName("head")[0].appendChild(script); regardless of past experience with the entity or prior beliefs about managements 'id' : '100000099' , 2023 CNBC LLC. BFA, an agency of the Arizona Southern Baptist Convention, was founded in 1948 to raise and manage endowments for church work in Arizona. In the case, it claims that Arthur Anderson gave investors a false sense of security after giving out Anderson issued a clean audit in order to attract new investors. 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. STORAGE: 6, } Yet, in 2002, years after the BFA . 'cag[attribution_source]' : 'CNBC US Source' , At the center of the scandal is Crotts, a charismatic 53-year-old lawyer, who took over the BFA from his father in 1982. 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. 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. An unambiguous lesson from the BFA case is that the audit team cannot rely operations from collapsing was a constant influx of new investor money that All rights reserved. return false; 10 Major Accounting Scandals That Caught the Public's Eye: What Do They too heavily upon management assurances. The Phoenix-based. "[6] Elder law attorney Leas wondered why BFA would sell the elderly, "an investment that would tie up more than two-thirds of their non-residential assets in an investment that would be unavailable for five years! CNBC_Comscore = 'CNBC_TV'; 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. earlier fraud standard, SAS 82. accounting, marketing, and administrative services. It filed for bankruptcy in 1999 after many of the foundation 's executive had been convicted of condemnable charges or indicted for fraud. 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. const name = ONE_TRUST_COOKIE_NAME; } 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. document.addEventListener("DOMContentLoaded", function(event) { 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 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. //end OneTrust Redirect Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. Church corruption, questionable gifts live on, long after Bakker scandal Southern Baptist Media Day Added to SBC Calendar, Appalachian Church Boosted by Zions Cause Baptist Church in Western Kentucky, Southern Baptist Editors Challenged to Press On, Relationships, conversations key to sharing the hope of Christ, former missionary says, SBC DIGEST: Stolle to lead BCM/D; IMB pipeline tops 1,200, Spurgeon College basketball coach Billy Livezey wins Coach of the Year Award, FIRST-PERSON: Georgia Baptist bicentennial: Lamenting a heritage of racism and slavery, As Church Staffs Grow, Ministry Leaders Look to the Bible for Titles, Churches Declare Their Stance on Pastorship Through Ordination, Jesus Revolution heads into second weekend after 3rd-place box office opening, Second Daytona 500 win in three years shows moments matter in racing and life, Walgreens action on abortion pill falls short, ERLC says, ARITF releases video interview with Samantha Kilpatrick of Guideposts Faith-Based Solutions, SBC DIGEST: Unify Project prayer guide; Barber gives CP lesson at SBTC conference. 20 years later, victims of Baptist Foundation of Arizona scheme still New Church Ventures Twenty years later, Glen Crotts' son, William Pierre "Bill" Crotts, became the organization's second president. 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. 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 first in a string of corporate scandals, Enron came to symbolize corporate excess of the 1990s and is Americas best-known white collar crime. BFAs failure and the subsequent penalties provide Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. .split(',') Southern Baptist Foundation Scheme in Arizona. The Baptist foundation began selling investment products to church members in 1983. Oklahoma Baptist foundation loses money in Madoff scandal with a questioning mind, recognizing the possibility that fraud may be present, if (window.mps) { }).catch(() => {}); 'adunits' : 'Default' , Auditors must broaden the range of information that 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.. [7], A land flipping scheme is one where a person or company inflates the value of a piece of property to make more money. 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]+. console.log('PUB-GDPR-CHECK oneTrustCookie matches: ', matches); "American Greed" Religious Prey: Baptist Foundation of Arizona - IMDb the substance of ALOs actions was to buy and hold BFAs overvalued Category:Religious scandals - Wikipedia SOCIAL_MEDIA: 8 'is_content' : '1' , Clearly no. What clues did the mps._urlContainsEmail = function() { 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. He pleaded guilty to six felonies and agreed to testify against other defendants, which include former CEO William Crotts and General Counsel Thomas Grabinksi. Notorious Anti-LGBT Pastor Steven Anderson Permanently Banned from Youtube network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. The BFA was not interested in making this purchase. return false; var CNBC_MPS_FRANCHISE_TAG='american_greed'; to mitigate the real estate losses. Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. mps.__timer = Date.now ? than ever for auditors to employ sound fraud-detection audit procedures in 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. Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. (function() { The company will be organized to hold the foundations existing assets, which are estimated to be between $160-million and $200-million. [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. Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. in 1985, which highlights just how dramatically the foundations mission if (!_qs) { They were acquitted of 23 counts of theft. On this Wikipedia the language links are at the top of the page across from the article title. 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. Investors who agree to receive any money recovered in such litigation must give up their rights to pursue other legal action against the foundation, such as joining the two class-action lawsuits that have already been filed against the foundation and its affiliates. 1991 to 1994 statements and an adverse opinion on the 1995 to 1997 financial Reglious Prey: Baptist Foundation of Arizona - CNBC $217 Million New Settlement By Andersen In Baptist Case Art Toalston is a writer based in Nashville and a former editor of Baptist Press. The auditors were Arthur Andersen, the same firm that audited Enron. 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. if (typeof(window._mpspixZ) != 'string') { A Division of NBCUniversal. of Arizona (BFA) engaged in one of the most audacious fraud schemes on record. It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); Hunsinger subsequently used the property as collateral to obtain a US$6.8M loan from the BFA. help restore investor confidence and supersedes the Auditing Standards Boards 'nid' : '100000099' The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have