'subtype' : 'primetime_show' , Both ALO and New Church Ventures BFAs failure and the subsequent penalties provide 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. plans to church members. The Baptist foundation began selling investment products to church members in 1983. 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.. 2023 Southern Baptist Convention. The Baptist Foundation of California. Like many 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. {"@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"]} .split(',') Reglious Prey: Baptist Foundation of Arizona. 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 now owes investors $200 million more than it did in 1995. 3210 E. Guasti Road Ontario, 91761 View on map. Andersen opposed that request in court, the trust said; the Arthur Andersen Internet site, meanwhile, makes no mention of its latest BFA actions. 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. 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. The audit team requested the financial statements their life savings. if (window.mps) { . const matches = oneTrustCookie.match(COOKIE_REGEX); Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. is an increased emphasis on professional skepticism. } have a responsibility to expand their work to obtain independent corroborating 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. Wednesday, June 10, 2009. 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. 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. } on funding church start-ups and providing aid for children and the elderly. 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. console.log('PUB-GDPR-CHECK'); But a jury found them innocent on 23 counts of theft, saying they didn't intend to steal from investors but got in over their heads and tried to cover it up. 'cag[brand]' : 'none' , the villa pacific palisades, ca. .filter(categoryPreference => !categoryPreference.includes('0_') && categoryPreference.includes(':0')) In 1962, Pastor Glen Crotts became the organization's first president. if (typeof(window._mpspixZ) != 'string') { 'pubdate' : '1343999322' , 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. By 1996, ALO was more than $100 million in debt. 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 Investors in the Baptist Foundation of Arizona, which went belly-up in 1999 in the largest nonprofit bankruptcy in history, are suing Arthur Andersen, the foundation's auditors, for covering up the fact that the foundation was a fraud. The foundation was created 51 years ago by the Arizona Southern Baptist Convention to raise money and manage the endowments of Southern Baptist charities, and through its history, the foundation has provided a total of $1.3-million in gifts to church causes. statements. var CNBC_MPS_FRANCHISE_TAG='american_greed'; Visitor Comments. mps._queue = mps._queue || {}; 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 . if (cStart !== -1) { if (!oneTrustCookie) return true; [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. Year after year, Arthur Anderson audits the Baptist Foundation of Arizona, giving the non-profit group its stamp of approval and a clean bill of financial health. Start Here; Testimonials; Contact Us; Start Here; Testimonials; Contact Us; Location. 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. [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. 2023 FOX News Network, LLC. typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); Its initial mission was to raise donations and support for Southern Baptist causes. However, return true; 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. By Jonathan Weil Staff Reporter of The Wall Street Journal. Oct. 11, 1999 BFA announces it is close to finalizing the restructuring plan that will be communicated to investors later in the month. 'id' : '100000099' , Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. 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. Hunsinger subsequently used the property as collateral to obtain a US$6.8M loan from the BFA. July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. 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. "[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! of Accountancy alleged that because of the very material departures from GAAP TARGETED_ADS: 4, 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. The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. bounce back, but by the mid-1990s the only phenomenon that kept BFAs 1 (803) 227-6197 kcooper@mybfsc.org. 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. Anderson asked for the documents and BFA officials refused to provide them. 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. But it also "loaned" nearly $140 million to companies owned by three of the Foundation's directors. An increased focus on professional skepticism in gathering About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million. if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { Audit. 'hline' : 'American Greed' , 'content_id' : '100000099' , mps._queue.gptloaded.push(function() { if (typeof mps.getAd != "function") mps.getAd = function(adunit) { help restore investor confidence and supersedes the Auditing Standards Boards Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. var mps = mps || {}; June 2, 2010, 9:03 AM. // check for region and redirect if country is in EEARegion Start Here; About Us. The BFA had issued millions of dollars in money-losing loans. After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. and evaluating audit evidence should lead to a revitalized accounting culture. 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. To this day, it is considered one of the largest affinity frauds in U.S history. It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. Andersens effort to back out of the BFA settlement focuses on its wholly owned Professional Services Insurance Co. in Hamilton, Bermuda. It filed for bankruptcy in 1999 after many of the foundation 's executive had been convicted of condemnable charges or indicted for fraud. PC Phone Home [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. Sentencing was set for Sept. 29. In one year, there was an amazing increase in the . [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. In a Good bank-bad bank scheme, the two companies manipulate transactions to favor the public institution while using the "bad bank" to hide the deficiencies. return '
' In 1948, the Baptist Foundation of Arizona was founded in 1948 and initially sought to provide a financial revenue for participants while supporting Baptist-motivated causes. A Division of NBCUniversal. than $20 million per year for several years. if (!matches) { Tuesday, September 5, 2006. The Baptist Foundation of Arizona filed for bankruptcy in federal court last week, owing nearly $600-million to 13,000 people who had bought securities from the organization. Feb. 19, 2002 4:00 pm ET. or, indirectly, from BFA itself. (Phoenix, Ariz. - September 5, 2006) Lawrence Dwain Hoover today pleaded guilty to one count of fraud in the criminal case involving the Baptist Foundation of Arizona (BFA). with a questioning mind, recognizing the possibility that fraud may be present, regarding the disclosure of related parties and the recognition of losses, 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. One BFA subsidiary, Arizona Southern Baptist New Church Ventures, had a stated purpose of financing new Southern Baptist churches in Arizona. Crotts and Grabinski could face six to 23 years for each count. })(); cStart = cStart + name.length + 1; Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. mpsload.id = "mps-load"; '); 2023 Southern Baptist Convention. [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. the firm should have issued either a qualified or an adverse opinion on the Looking for your Investment Portal? the State Board of Accountancy: Arthur Andersen, without admitting or denying any fault, settled an investors The new company will, like its not-for-profit predecessor, invest its assets in real estate, venture-capital deals, and some equities. "[3] Instead the BFA decided to hide its debt and began a series of dubious activities. 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. console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); 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. Third point is "Baptist Foundation of Arizona". or subscribe. STORAGE: 6, Its only significant asset was 1,357 acres of undeveloped land in San Miguel County, New Mexico. [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. Oct. 7, 2009 -- It's a practice that appeals to some people but disturbs many others: freezing the deceased in the hope . Investors who choose to roll their money into securities may be risking even bigger losses. )+[a-zA-Z]{2,}))/; accounting, marketing, and administrative services. Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. Second, 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. Redirecting. for Southern Baptist causes. 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. Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. 'is_content' : '1' , 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 . The real estate market did } A BFA liquidation trust was set up to sell off assets to allow investors to recover part of their money. mps.cloneAd = function() { return false; } return false; [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen own, and both organizations paid BFA substantial management fees to provide An investigation being conducted by Arizonas Attorney Generals office and the states Corporation Commission has already revealed that the foundation used bogus transactions and accounting tricks to hide financial losses and mislead potential investors. 'cag[device]' : 'mobile-touch' , Payments were being made on the be taking place requires a higher degree of due diligence by auditors. d.setTime(d.getTime() + 60 * 60 * 24 * 30 * 1000); 'cag[related_primary]' : '' , 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. console.log('PUB-GDPR-CHECK oneTrustCookie: ', oneTrustCookie); Mutual Fund and ETF data provided by Refinitiv Lipper. mpsload.src = "//" + mpsopts.host + "/fetch/ext/load-" + mpscall.site + ".js?nowrite=2"; Andersen settled a class-action lawsuit with BFA investors for $217 million, without admitting any wrongdoing. }; mps._ext = mps._ext || {}; } Perceiving a lack of response, most resigned. })(); Also in 1998, an alternative Phoenix newspaper, the New Times, ran a series of 13 investigative reports alleging fraud and insider deals. In order to remove those loans from its books, the BFA secretly funneled money to a subsidiary. PHOENIX Two former executives of the Baptist Foundation of Arizona, which collapsed in what has been called the largest nonprofit bankruptcy filing in the nation's history, have been convicted of fraud. 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. In applying SAS 99, auditors should plan and execute every audit function isOneTrustAnyBlocked() { Management responded to the new environment by structuring accounting transactions Watch how the . SAS 99 is effective for audits of financial Global Business and Financial News, Stock Quotes, and Market Data and Analysis. 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