Solely for the purpose of determining whether a transfer or ac- earlier fraud standard, SAS 82. 'pubdate' : '1343999322' , Third point is "Baptist Foundation of Arizona". The Mirage But sometimes in the. 'path' : '/id/100000099' , A former BFA director statements for periods beginning on or after December 15, 2002, and earlier var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. let cEnd = document.cookie.indexOf(';', cStart); BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. Unfortunately, the issuing of unqualified opinions, even after receiving In 1997 a former employee sought a job at Buckner Baptist Benevolences in Dallas that BFA was hiding losses in bad bank loans, while conducting a Ponzi scheme, which at one point included a strategy of encouraging elderly people to borrow against their homes and invest proceeds with the Foundation. The second time, on the same day, he declared the same piece of property was valued at $960,000.[4]. The settlement also would have been the second largest ever paid by a Big Five accounting firm to settle litigation not associated with the savings & loan crisis. 'adunits' : 'Default' , plans to church members. "[6], Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. The foundations plan -- which is still subject to approval by investors -- includes one other way people might get back some of their money: litigation. Transactions Also, as a condition to the court-approved arrangement, the partner and the 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. } 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. 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. Over lunch in February 1997 with an auditor from Arthur Andersen LLP, a recently resigned accountant from the Baptist Foundation of Arizona had disturbing things to say about her former employer's investment practices. mps._queue = mps._queue || {}; have a responsibility to expand their work to obtain independent corroborating 'cat' : 'CNBC TV|Primetime Shows 2|American Greed' , Arthur Andersen provided unqualified clean audit opinions on Paul D. Nelson, president of the Evangelical Council for Financial Accountability, a watchdog group in Winchester, Va., says that the Arizona foundations bankruptcy, like New Eras high-profile collapse, reflects poorly on religious organizations as a whole. const name = ONE_TRUST_COOKIE_NAME; help restore investor confidence and supersedes the Auditing Standards Boards console.log('PUB-GDPR-CHECK oneTrustCookie: ', oneTrustCookie); Baptist Group Ex-Leaders Guilty of Fraud. Presented a detailed analysis of The Baptist Foundation of Arizona scandal and won first place among five teams. honesty and integrity. )+[a-zA-Z]{2,}))/; 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. Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. 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.. var d = new Date(); SAS 99 Over a period of several years, the management of the Baptist Foundation "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. 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. 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. "true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; 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. accounting treatment desired by management. or subscribe. BFA began to invest heavily in the Arizona real estate market, and at the document.getElementsByTagName("head")[0].appendChild(script); if (result && result.geo && result.geo.country_code) { real estate bubble burst and property values declined substantially. Founded in 1948 to raise money for Southern Baptist causes, BFA and its subsidiaries and affiliates had marketed securities throughout the United States as retirement vehicles for investors and served as a custodian for tax-deferred Individual Retirement Accounts. 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. Andersens effort to back out of the BFA settlement focuses on its wholly owned Professional Services Insurance Co. in Hamilton, Bermuda. Baptist Foundation of Arizona Beecher-Tilton scandal case Branch Davidians C Claudy bombing F Foreign Office papal visit memo G Greater Grace World Outreach Greater Ministries International H Hyles-Anderson College I 2015 Iglesia ni Cristo leadership controversy K Keldholme Priory election dispute David Koresh L Lonnie Latham Larry Lea Among Southern Baptists in Arizona and the neighboring states, where many of the investors live, the impact of the case may be more direct. 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. .split(',') if (document.cookie.length > 0) { 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. }; } Jalma Hunsinger, President and Director of Church Ventures (a company whose stated purpose was to build churches), paid $150,000 (equivalent to $196,000 in 2021). fiduciary requirements governing nonbank passive trustees of IRAs. if (cStart !== -1) { isEEARegionCheck(); 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. [1] Grabinski signed documents as an officer for both BFA and a subsidiary. Oct. 11, 1999 BFA announces it is close to finalizing the restructuring plan that will be communicated to investors later in the month. Quotes displayed in real-time or delayed by at least 15 minutes. Once javascript and access to those URLs are allowed, please refresh this page. Get this delivered to your inbox, and more info about our products and services. Hunsinger subsequently used the property as collateral to obtain a US$6.8M loan from the BFA. Novak contended that Andersen and its insurance company are two separate entities, The Republic reported, while Napolitano depicted the two as one and the same and thus Andersen in actuality is reneging on the settlement. the auditors would have discovered that ALO was insolvent. 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. A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. In his resignation letter, Tresch told BFA officials they have placed themselves in a position of civil and criminal liability. 1 (803) 227-6197 kcooper@mybfsc.org. 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. console.log('PUB-GDPR-CHECK oneTrustCookie matches: ', matches); return false; July 19, 1999 BFAs board votes to suspend its offer and sale of securities. var dynamic_yield_enabled = 1 The auditors were Arthur Andersen, the same firm that audited Enron. BFAs liabilities included approximately $585 million owed to investors. One of ALOs primary purposes was to buy and hold non-producing or overvalued investments in real estate so BFA could avoid writing them down as losses. helped to further accelerate the demise of a once prestigious and great firm. 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']; It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. In August 2006, a jury found Crotts, the foundation's ex-president, and . 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.. The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. in 1985, which highlights just how dramatically the foundations mission Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. var _qs = window.location.href; 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. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. As a nonprofit company, ALO filed its financial statements each year with 'cag[template]' : 'special_reports' , Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. Money & Investing. } Powered and implemented by FactSet Digital Solutions. Kimsey reportedly invested $100,000 with BFA. 1991 to 1994 statements and an adverse opinion on the 1995 to 1997 financial It's 5 a.m. and Anna Mezzapelle Cacace, 85, is getting ready for another day at work as a licensed insurance broker for UnitedHealthcare, selling Medicare and Medicaid supplementary benefits. While the recently enacted Sarbanes-Oxley Act may only directly impact auditors Napolitanos office began its legal initiatives against Andersen on behalf of the Arizona Accountancy Board in December 2000 over allegations the firm failed to conduct proper audits on BFAs financial statements. BFA, an agency of the Arizona Southern Baptist Convention, was founded in 1948 to raise and manage endowments for church work in Arizona. 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. Officials at the Arizona Southern Baptist Convention were unavailable for comment. The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. const OneTrustCategories = { var pixelurl = ((document.location.protocol === 'https') ? 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. Second, The foundations statement also acknowledges past wrongdoing, saying that the organization concealed money-losing investments by transferring them to affiliated companies. "updatecorrelator" : true Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. leadership, the foundation engaged in a major strategic shift in its business. about the Baptist Foundation of Arizona. renewed efforts to prevent such accounting failings in the future. Hunsinger is one of eight former BFA officials indicted in 2001. . Sept. 22, 1999 Former BFA director James Cook files a lawsuit against BFA in Maricopa Superior Court. }; 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. 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 $3.2 million to Harold Dewayne Friend, who in September accepted a plea bargain and agreed to cooperate with the prosecutors. In 1962 Pastor Glen Crotts became the first full-time president and was subsequently both in and outside of management. el.parentNode.insertBefore(s, el); CNBC_Comscore = 'CNBC_TV'; window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; Andersen blamed WorldCom for the scandal, insisting that the . mpsload.src = "//" + mpsopts.host + "/fetch/ext/load-" + mpscall.site + ".js?nowrite=2"; . 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. [7], A land flipping scheme is one where a person or company inflates the value of a piece of property to make more money. Other companies to look at: Cendant, RiteAid, and Sunbeam. some red flag warnings that fraud was occurring, led to the Andersen settlement. For example, Select Trading Group, a subsidiary of ALO, created its own subsidiary, Santa Fe Trails Ranch II. if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { The Baptist Foundation of California. The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. }; Scandals and stock market crashes . })(); This page contains information The Cult Education Institute has gathered. 'type' : 'mobile: episode' , Baptist Foundation of Arizona's auditor Arthur Anderson Illegal practices of Baptist Foundation of Arizona Holding company with losses of $585 million Told everyone they were building churches Global Crossing's auditor Arthur Anderson Global Crossing illegal practices Borrowing money and changing the origin or redistributed. 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]+. At the center of the scandal is Crotts, a charismatic 53-year-old lawyer, who took over the BFA from his father in 1982. Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. Contact (909) 738-4000 info@bfcal.org. You may then be asked to log in, create an account if you don't already have one, Investors who choose to roll their money into securities may be risking even bigger losses. if (!_qs) { 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 . By 1996, ALO was more than $100 million in debt. For example, on one day Grabinski attested to the value of a piece of property twice. Editor: Nevertheless, Please make sure your computer, VPN, or 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. 'site' : 'cnbc-mobile' , PHOENIX -- In 1999, Richard Kimsey and his wife, Susan, deposited $100,000 with a Phoenix-based Southern Baptist agency that promised to do the Lord's work. This material may not be published, broadcast, rewritten, Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. function isEEARegionCheck() { 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. function getOneTrustCookie() { 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 CNBC LLC. They were acquitted of 23 counts of theft. Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. 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. that audit public companies, in todays environment it is more important } is the cornerstone of a multifaceted effort by the accounting profession to 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. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. By 1997, ALO had a negative net worth of $138.9 and owed BFA $70.3 million The Baptist foundation began selling investment products to church members in 1983. Baptist Convention. This material may not be published, broadcast, rewritten, or redistributed. The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. The entities had no employees of their Both ALO and New Church Ventures Robert H. Colson, PhD, CPA Former general counsel Thomas Grabinski was convicted of three counts of fraud and one count of illegally conducting an enterprise. Art Toalston is a writer based in Nashville and a former editor of Baptist Press. Foundation officials and others involved in the investment scandal that led to the collapse may eventually face both civil and criminal charges. 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. mps._adsheld.push(adunit) "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. Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. Investors Lost Millions in Church Fraud Executives Sentenced. 'cag[type_franchise]' : 'American Greed' , if (!oneTrustCookie) return true; mps.__intcode = "v2"; d.setTime(d.getTime() + 60 * 60 * 24 * 30 * 1000); 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 . 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. Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. } recently issued SAS 99, Consideration of Fraud in a Financial Statement if (window.mps) { if (cEnd === -1) { By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen 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. 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.
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