On this Wikipedia the language links are at the top of the page across from the article title. BFAs failure and the subsequent penalties provide by the Arizona State Board of Accountancy. 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. 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. accounting treatment desired by management. })(); 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. Like many One of the key provisions of SAS 99 Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. 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. document.getElementsByTagName("head")[0].appendChild(script); return _regex.test(_qs); . Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. (function(){var g=function(e,h,f,g){this.get=function(a){for(var a=a+"=",c=document.cookie.split(";"),b=0,e=c.length;b=e/100?0:100),a=[h,e,0],this.set(f,a.join(":"));else return!0;var c=a[1];if(100==c)return!0;switch(a[0]){case "v":return!1;case "r":return c=a[2]%Math.floor(100/c),a[2]++,this.set(f,a.join(":")),!c}return!0};this.go=function(){if(this.check()){var a=document.createElement("script");a.type="text/javascript";a.src=g+ "&t=" + (new Date()).getTime();document.body&&document.body.appendChild(a)}};this.start=function(){var a=this;window.addEventListener?window.addEventListener("load",function(){a.go()},!1):window.attachEvent&&window.attachEvent("onload",function(){a.go()})}};try{(new g(100,"r","QSI_S_ZN_3NNZu19yzvgN7tr","//zn3nnzu19yzvgn7tr-nysscpa.siteintercept.qualtrics.com/WRSiteInterceptEngine/?Q_ZID=ZN_3NNZu19yzvgN7tr&Q_LOC="+encodeURIComponent(window.location.href))).start()}catch(i){}})(); Inadequate disclosure regarding ALO and New Church Ventures A few days later, the Kimseys' money had all but vanished. statements for periods beginning on or after December 15, 2002, and earlier 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. Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. or, indirectly, from BFA itself. Both ALO and New Church Ventures When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. A Division of NBCUniversal. An increased focus on professional skepticism in gathering is an increased emphasis on professional skepticism. By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen 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. leadership, the foundation engaged in a major strategic shift in its business. Please make sure your computer, VPN, or 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,". Investors take a leap of faith and believe their money will be secure. script.setAttribute("async", true); mps._queue.adview = mps._queue.adview || []; implementation is being urged. Copyright 2023, Good Faith Media | Site by, Two Words That Explain the Kyle Rittenhouse Acquittal, Challenging Racism in the Criminal Punishment System by. But it also "loaned" nearly $140 million to companies owned by three of the Foundation's directors. As a nonprofit company, ALO filed its financial statements each year with Arthur Andersen provided unqualified clean audit opinions on 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. disguise BFAs tenuous financial condition. "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. Quotes displayed in real-time or delayed by at least 15 minutes. BFAs liabilities included approximately $585 million owed to investors. "updatecorrelator" : true receivables only because of funds being obtained from either New Church Ventures, Legal Statement. For example, on one day Grabinski attested to the value of a piece of property twice. The majority of New Church Ventures var foresee_enabled = 1 mps._queue.adload = mps._queue.adload || []; We are unable to fully display the content of this page. own, and both organizations paid BFA substantial management fees to provide //end OneTrust Redirect 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. fiduciary requirements governing nonbank passive trustees of IRAs. const matches = oneTrustCookie.match(COOKIE_REGEX); mps._queue = mps._queue || {}; The Baptist Foundation of Arizona was formed in 1948 by the Arizona Southern Baptist Convention (Convention) to raise and manage endowment funds for Southern Baptist charities. 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")}. A grand jury in April 2001 returned indictments charging former BFA officials with 32 counts of fraud, theft and racketeering. if (cEnd === -1) { 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]+. Also on March 29, the trust gained a judges order to reschedule a key trial for April 29 the earliest date permitted by law, the trusts statement noted. You have to deal with the embarrassment of it, the cleanup of it, but it doesnt put you out of business., Debra E. Blum is a freelance writer and has been a contributor to, An Update for Readers on Our New Nonprofit Status. Arthur Anderson had the same problems with the Baptist Foundation of Arizona several years earlier when 750 million in assets was more like 125 million in assets because most of the assets booked by the Baptist Foundation were found to be substantially overvalued. regardless of past experience with the entity or prior beliefs about managements return '
' Here we see that Andersen chose to victimize BFAs victims yet again.. can are designed to be unpredictable and unexpected. } mpsload.src = "//" + mpsopts.host + "/fetch/ext/load-" + mpscall.site + ".js?nowrite=2"; MVPNs were marketed with the notion that they received a higher than average yield and that part of the investment's return was used for God's mission. 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. [2], The collapse of the BFA did not occur in a vacuum. Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. Ponzi scheme. } In 1962 Pastor Glen Crotts became the first full-time president and was subsequently Baptist Group Execs Sentenced for Fraud. 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. . 207, or tstolle@bcmd.org. Twenty years later, Glen Crotts' son, William Pierre "Bill" Crotts, became the organization's second president. 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. Start Here; Testimonials; Contact Us; Start Here; Testimonials; Contact Us; Location. By 1996, ALO was more than $100 million in debt. } The BFA Liquidation Trust, which is seeking to recover the investors funds, immediately took action. //begin OneTrust Redirect that ALO had a negative net worth of $116 million and had been losing more Among Southern Baptists in Arizona and the neighboring states, where many of the investors live, the impact of the case may be more direct. While the recently enacted Sarbanes-Oxley Act may only directly impact auditors At the time of BFAs bankruptcy, Powered and implemented by FactSet Digital Solutions. let cEnd = document.cookie.indexOf(';', cStart); Griebel said she left messages at Andersens offices in Phoenix and Chicago warning the Foundation was broke, but they were never answered. 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. return false; 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. [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. var mpscall = { 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. 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. const OneTrustCategories = { "They had their faith shattered and faced the possible loss of all their retirement investments.". Its initial mission was to raise donations and support and New Church Ventures $173.6 million. 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). Management set up independent separate The Arizona Republic reported that Novak had said Andersen's circumstances have changed significantly since it was indicted March 14 on federal charges involving its auditing of Houston-based energy trader Enron. if (window.mps) { Site by Mere. 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. aside any prior beliefs as to managements honesty. }, mpsopts = { function isEEARegionCheck() { The real estate market did const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; This settlement takes on a sad historical significance It filed for bankruptcy in 1999 after many of the foundation 's executive had been convicted of condemnable charges or indicted for fraud. First, it was critical for BFA to meet the Treasury regulations } More specifically, the litigation was brought by Arizona's Corporation Commission (Securities Division), as well as the state's attorney general. Then, learn how Dr. Mikos, a charming doctor with a lucrative practice, turns out to be a con artist defrauding Medicare. positive results. In 1992, records indicated that the company had lost $3.2 million due to questionable transactions. Information received from independent sources Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. 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. 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. 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. The subsidiary then used that money to purchase the loans from the parent company. real estate in exchange for notes receivable valued in the millions of dollars. 1991 to 1994 statements and an adverse opinion on the 1995 to 1997 financial 2023 Southern Baptist Convention. [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. [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[project_management_team]' : 'CNBC US Team' , cStart = cStart + name.length + 1; is the cornerstone of a multifaceted effort by the accounting profession to Along with companies like Enron and Worldcom, it was audited by accounting firm Arthur Andersen, giving investors a false sense of security. 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Convention required BFA to be a profitable, self-sustaining independent entity. 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. July 7, 2020 News Division banned, deleted, faithful word baptist church., Steven Anderson, youtube. than ever for auditors to employ sound fraud-detection audit procedures in BFA, an agency of the Arizona Southern Baptist Convention, was founded in 1948 to raise and manage endowments for church work in Arizona. Several accountants and one attorney became concerned enough to approach senior management about ALOs deficit. 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. "true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; )+[a-zA-Z]{2,}))/; Investors Lost Millions in Church Fraud Executives Sentenced. .split(',') isEEARegionCheck(); The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA. assets were receivables from the insolvent ALO. mps._queue.mpsinit = mps._queue.mpsinit || []; Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. Redirecting. }); var postLoadFunctions = {}; In a March 29 statement, the day after receiving notice from Andersen, the trust said one of the first steps will be to ask the mediator who presided over the settlement negotiations, retired federal judge Layn Phillips, to rule that Andersen has breached the agreement and to order Andersen to pay the $217 million as promised.. The following were among the major GAAP violations alleged by 'adunits' : 'Default' , However, 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. 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 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. Login Here. When or subscribe. typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); 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. } Get this delivered to your inbox, and more info about our products and services. [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. 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. too heavily upon management assurances. [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. Reglious Prey: Baptist Foundation of Arizona. During its history, it did indeed return about $1.3 million to Baptist causes. Audit. operations from collapsing was a constant influx of new investor money that Southern Baptist Foundation Scheme in Arizona. Date.now() : (function() { return +new Date })(); Second, var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); Baptist Foundation of Arizona was the largest non-profit in U.S. history. 2023 CNBC LLC. 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. 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 . If the audit team had obtained copies of ALOs detailed financial statements, 'content_id' : '100000099' , was placed on probation, requiring that his work be monitored for two years Some Baptist leaders worry that fund-raising efforts by Baptist agencies and local churches may be hampered not only by ill will created by the foundations troubles, but also simply because some donors will not have money to give. Editor: 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. 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. BFA began to invest heavily in the Arizona real estate market, and at the 'site' : 'cnbc-mobile' , 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. Start Here; About Us. Another pastor, Manly Perry of Old Path Baptist Church in San Antonio, Texas, posted a video Nov. 19 distancing himself from the New IFB. These. The person did not actually purchase the property, but purchased the right to occupy said property. 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. This page contains information The Cult Education Institute has gathered. credible tips or complaints are received about management fraud, auditors View Jasmine's full profile See who you know in common Get introduced .