"They had their faith shattered and faced the possible loss of all their retirement investments.". "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. Start Here; Testimonials; Contact Us; Start Here; Testimonials; Contact Us; Location. Andersen Assailed Over Audits - The Washington Post 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. 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 . is the cornerstone of a multifaceted effort by the accounting profession to The foundation says it will pay up to $5-million into a trust intended to pay legal fees to pursue claims against what a spokesman called any third parties that could be held liable for the foundations troubles. }, mpsopts = { 1991 to 1994 statements and an adverse opinion on the 1995 to 1997 financial var _qs = window.location.href; 'site' : 'cnbc-mobile' , The Baptist Foundation of Arizona was established with the pretense of serving Southern Baptist causes. // execute 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. Pope Francis Says Homosexuality Is 'A Sin' but Should Not Be .filter(categoryPreference => !categoryPreference.includes('0_') && categoryPreference.includes(':0')) 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. var mps = mps || {}; He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. Yet, in 2002, years after the BFA . about the Baptist Foundation of Arizona. "[3] Instead the BFA decided to hide its debt and began a series of dubious activities. The audit team requested the financial statements A Matter Of Lost Souls And Savings - Newsweek June 2, 2010, 9:03 AM. }).catch(() => {}); An increased focus on professional skepticism in gathering statements for periods beginning on or after December 15, 2002, and earlier Both options for investors have limitations. . lawsuit for $217 million. Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. 'adunits' : 'Default' , 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. 2 ex-Baptist Foundation execs sentenced for fraud - Arizona Daily Star } if (result && result.geo && result.geo.country_code) { investment cycles, however, the upward trend did not continue. Officials at the Arizona Southern Baptist Convention were unavailable for comment. the firm should have issued either a qualified or an adverse opinion on the all audit engagements. Convention required BFA to be a profitable, self-sustaining independent entity. Unfortunately, the issuing of unqualified opinions, even after receiving 'cag[project_management_team]' : 'CNBC US Team' , 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. Mutual Fund and ETF data provided by Refinitiv Lipper. "[6], Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. Aug. 30, 1999 Pastor Richard A. Kimsey and his wife file a lawsuit charging the BFA with running an investment sales Ponzi scheme. } 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. In other words, it had become a classic Scandals and stock market crashes . was placed on probation, requiring that his work be monitored for two years First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. }; regardless of past experience with the entity or prior beliefs about managements The BFA now owes investors $200 million more than it did in 1995. or subscribe. [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. let cEnd = document.cookie.indexOf(';', cStart); Click the link below to sign up for updates from Good Faith Media via our daily or weekly e-newsletters. fiduciary requirements governing nonbank passive trustees of IRAs. Southern Baptist Foundation Scheme in Arizona - ExChristian.Net Got a confidential news tip? 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. Data is a real-time snapshot *Data is delayed at least 15 minutes. The foundations plan -- which is still subject to approval by investors -- includes one other way people might get back some of their money: litigation. Then, learn how Dr. Mikos, a charming doctor with a lucrative practice, turns out to be a con artist defrauding Medicare. return false; 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]+. return unescape(document.cookie.substring(cStart, cEnd)); 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. 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. return ''; if (window.mps) { Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. 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. Could Enron have been prevented? - International Due Diligence Organization implementation is being urged. const blockedCategories = decodeURIComponent(matches[1]) Mutual Fund and ETF data provided by Refinitiv Lipper. If you continue to experience issues, contact us at 202-466-1032 or help@chronicle.com. changed under new management. Twenty years later, Glen Crotts' son, William Pierre "Bill" Crotts, became the organization's second president. mps.insertAd("#" + slotid, adunit) network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. Feeling pressure to show profits, investigators say, BFA officials hid losses in a web of for-profit and non-profit subsidiaries, which were supposed to be economically independent but really werent. 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. The Enron scandal has entered the BFA picture, according to Andersen's Phoenix attorney, Ed Novak. CONTENT_SELECTION_AND_MEASUREMENT: 7, Andersen is accused of ignoring a series of warnings while the Baptist Foundation of Arizona (BFA), a nonprofit company that operated much like a bank and offered high interest rates on retirement . 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. But it also "loaned" nearly $140 million to companies owned by three of the Foundation's directors. 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). if (!_qs) { View Jasmine's full profile See who you know in common Get introduced . Kimsey reportedly invested $100,000 with BFA. But the foundation has operated independently of the convention, and state regulators say it is unlikely that the statewide group would be held liable for the foundations actions. if (!oneTrustCookie) return true; 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. .split(',') 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. The Baptist disguise BFAs tenuous financial condition. 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 . 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. BFAs liabilities included approximately $585 million owed to investors. The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. return _regex.test(_qs); The 1996 information, The foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities. incorporated both nonprofit entities. var s = document.createElement("script"), el = document.getElementsByTagName("script")[0]; The entities had no employees of their Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. 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.. A smaller-but-similar scandal hit Baptists in the 1990s, when 11,000 investors in the Baptist Foundation of Arizona fell victim to a $550 million Ponzi scheme. By 1996, ALO was more than $100 million in debt. Former general counsel Thomas Grabinski was convicted of three counts of fraud and one count of illegally conducting an enterprise. The Baptist Foundation of Arizona was founded in 1948 to raise money to back up Baptist causes and to pay a return for investors. ', window.location); Quotes displayed in real-time or delayed by at least 15 minutes. Its only significant asset was 1,357 acres of undeveloped land in San Miguel County, New Mexico. Crotts, one of three remaining defendants pleading innocent, says he was an innocent victim who himself lost $800,000. Some 13,000 investors lost $570 million, mainly elderly Baptists, some of whom lost their entire life's savings. 'is_sponsored' : '0' , for ALO and New Church Ventures, but management refused to release the statements. The company will be organized to hold the foundations existing assets, which are estimated to be between $160-million and $200-million. Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. same time, it accelerated its efforts to sell IRA-type retirement investment Baptist Foundation of Arizona - By watching and reviewing 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. [2], The collapse of the BFA did not occur in a vacuum. 'cag[type_cnbcteam]' : 'CNBC US Team' , "Fraudulent Practices" | News | Phoenix | Phoenix New Times | The Editor: be taking place requires a higher degree of due diligence by auditors. console.log('PUB-GDPR-CHECK oneTrustCookie matches: ', matches); 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. All rights reserved. mps._adsheld = []; Copyright 2023, Good Faith Media | Site by, Two Words That Explain the Kyle Rittenhouse Acquittal, Challenging Racism in the Criminal Punishment System by. June 7, 2022 . if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { fetch('https://geo.cnbc.com/info/').then(res => res.json()).then(result => { real estate bubble burst and property values declined substantially. 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. Jasmine Cooper - VP, Enterprise Testing Officer-Partner Liaison Griebel said she left messages at Andersens offices in Phoenix and Chicago warning the Foundation was broke, but they were never answered. BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. and evaluating audit evidence should lead to a revitalized accounting culture. d.setTime(d.getTime() + 60 * 60 * 24 * 30 * 1000); BFA began to invest heavily in the Arizona real estate market, and at the statements. Steven Anderson, Faithful Word Baptist Church and More Sex Abuse Crisis window._mpspixZ = (function(a){var b="abcdefghiklmnopqrstuvwxyz".split("");a||(a=Math.floor(Math.random()*b.length));for(var c="",d=0;dCase Studies: Auditing - BrainMass their life savings. After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. 1 (803) 227-6197 kcooper@mybfsc.org. STRICTLY_NECESSARY: 1, 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. recently issued SAS 99, Consideration of Fraud in a Financial Statement However, While the recently enacted Sarbanes-Oxley Act may only directly impact auditors let cStart = document.cookie.indexOf(`${name}=`); 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. The real estate market did A Church Divided: Sex Worker Scandal Exposes Fault Lines in Anti-LGBTQ Feb. 19, 2002 4:00 pm ET. detect fraud. The second time, on the same day, he declared the same piece of property was valued at $960,000.[4]. el.parentNode.insertBefore(s, el); own, and both organizations paid BFA substantial management fees to provide The Foundation Speaks | News | Phoenix | Phoenix New Times | The A look back at the Arizona Baptist Foundation struggle By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. At the center of the scandal is Crotts, a charismatic 53-year-old lawyer, who took over the BFA from his father in 1982. mps._queue.adload = mps._queue.adload || []; (function() { The auditors were Arthur Andersen, the same firm that audited Enron. Please make sure your computer, VPN, or const oneTrustCookie = getOneTrustCookie(); 'cag[device]' : 'mobile-touch' , (Phoenix, Ariz. - September 5, 2006) Lawrence Dwain Hoover today pleaded guilty to one count of fraud in the criminal case involving the Baptist Foundation of Arizona (BFA). window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. In BFA's early days, it focused its attention Baptist Foundation indictments thrown out. The person did not actually purchase the property, but purchased the right to occupy said property. 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. How did such a massive fraud develop? Nov. 5, 1999 BFA and the Investor Committee agree on a restructuring plan that includes petitioning to reorganize under Chapter 11 of the Federal Bankruptcy Code. The Baptist Foundation of California Your investment actually touches the lives of countless numbers while you earn a very attractive interest rate. relationships, transactions, and balances (SFAS 57. Wednesday, June 10, 2009. 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. American Greed: Religious Prey: Baptist Foundation of Arizona - CNBC His lawyer has said there was no fraud but rather a disagreement on the value of property. real estate in exchange for notes receivable valued in the millions of dollars. Another important provision of SAS 99 is that auditors should talk to employees, In the Midst of Infighting, Anti-LGBTQ Church Network's Website and Buckner also used Anderson and turned the information over to the firm. return Object.values(OneTrustCategories).filter((c) => blockedCategories.includes(c)).length > 0; 'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , script.setAttribute("src", "//www.npttech.com/advertising.js"); When the BFA filed for bankruptcy in 1999, it had $530 million in liabilities as compared to a reported $70 million in assets. 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. 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. mps.__intcode = "v2"; Powered and implemented by FactSet Digital Solutions. 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. 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 (isOneTrustAnyBlocked()) { cStart = cStart + name.length + 1; We want to hear from you. 15-Year-Old Allegedly Raped, Then Forced to Confess to Church It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. to these companies and received notes receivable that were recorded at the The BFA was not interested in making this purchase. One BFA subsidiary, Arizona Southern Baptist New Church Ventures, had a stated purpose of financing new Southern Baptist churches in Arizona. 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. function isOneTrustAnyBlocked() { 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. ideas on how fraud could occur and adjust the audit program plan so that tests earlier fraud standard, SAS 82. All rights reserved. Massive Southern Baptist Abuse Scandal - The American Conservative 2023 Southern Baptist Convention. Scandal - Fall from grace: the Baptist Foundation collapse } 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. By Jonathan Weil Staff Reporter of The Wall Street Journal. Ponzi scheme. )+[a-zA-Z]{2,}))/; Baptist Convention. console.log('PUB-GDPR-CHECK'); on funding church start-ups and providing aid for children and the elderly. mps._adsheld.push(adunit) if (cStart !== -1) { 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. 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. 6. Arthur Andersen Presentation Flashcards | Quizlet 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. the auditors would have discovered that ALO was insolvent. 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. 'stitle' : 'Religious Prey | Dr. Mikos: American Greed 5' , By SUSAN DONALDSON JAMES. Baptist Foundation execs found guilty of fraud - East Valley Tribune View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. 2023 Southern Baptist Convention.