Watch how the . Two year earlier than Enron scandal, the Baptist foundation of Arizona also failed. STRICTLY_NECESSARY: 1, Management responded to the new environment by structuring accounting transactions
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 . Aug. 30, 1999 Pastor Richard A. Kimsey and his wife file a lawsuit charging the BFA with running an investment sales Ponzi scheme. mps.cloneAd = function() { return false; } An increased focus on professional skepticism in gathering
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. The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA. 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. But it also "loaned" nearly $140 million to companies owned by three of the Foundation's directors. 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. Aug. 11, 1999 The Arizona Republic reports the foundations funds have been frozen as a result of the investigation. available for public inspection from the Arizona Corporation Commission, showed
implementation is being urged. 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. Oct. 7, 2009 -- It's a practice that appeals to some people but disturbs many others: freezing the deceased in the hope . 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). var postLoadFunctions = {}; Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern
Mutual Fund and ETF data provided by Refinitiv Lipper. (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
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.. 2023 CNBC LLC. Got a confidential news tip? The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. 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. This material may not be published, broadcast, rewritten, or redistributed. Along with companies like Enron and Worldcom, it was audited by accounting firm Arthur Andersen, giving investors a false sense of security. Baptist Group Execs Sentenced for Fraud. credible tips or complaints are received about management fraud, auditors
mps._adsheld.push(adunit) Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million. regardless of past experience with the entity or prior beliefs about managements
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. BFAs financial statements from 1984 to 1997. When the foundation was closed by the Arizona attorney general's office, it owed $570 million to investors and had assets worth an estimated $220 million. var foresee_enabled = 1 detect fraud. el.parentNode.insertBefore(s, el); mps._urlContainsEmail = function() { too heavily upon management assurances. The Baptist Foundation of California. Oct. 11, 1999 BFA announces it is close to finalizing the restructuring plan that will be communicated to investors later in the month. 'type' : 'mobile: episode' , Profits from investments were supposed to be used to fund the churches' ministries and numerous charitable causes. (function() { Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. 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. . mpsload.src = "//" + mpsopts.host + "/fetch/ext/load-" + mpscall.site + ".js?nowrite=2"; STORAGE: 6, auditors overlook? For example, the Phoenix New Times reported a case wherein an individual wanted to sell a US$1.9M (million) piece of asbestos-contaminated property to the BFA for US$1 as a tax write off. In other words, it had become a classic
In 1992, records indicated that the company had lost $3.2 million due to questionable transactions. be taking place requires a higher degree of due diligence by auditors. Crotts, one of three remaining defendants pleading innocent, says he was an innocent victim who himself lost $800,000. return Object.values(OneTrustCategories).filter((c) => blockedCategories.includes(c)).length > 0; } 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. assets were receivables from the insolvent ALO. Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. the auditors would have discovered that ALO was insolvent. He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. that ALO had a negative net worth of $116 million and had been losing more
To this day, it is considered one of the largest affinity frauds in U.S history. renewed efforts to prevent such accounting failings in the future. . 'path' : '/id/100000099' , plans to church members. It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). let cStart = document.cookie.indexOf(`${name}=`); What clues did the
if (mps._urlContainsEmail()) { mps._queue.adclone = mps._queue.adclone || []; The subsidiary then used that money to purchase the loans from the parent company. Get this delivered to your inbox, and more info about our products and services. New Church Ventures
earlier fraud standard, SAS 82. cEnd = document.cookie.length; [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. Editor:
Management set up independent separate
const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; have a responsibility to expand their work to obtain independent corroborating
'is_content' : '1' , Investors take a leap of faith and believe their money will be secure. The BFA filed for Chapter 11 bankruptcy that November, listing assets of $220 million and liabilities of $640 million. If the audit team had obtained copies of ALOs detailed financial statements,
Legal Statement. The following were among the major GAAP violations alleged by
mpsload.id = "mps-load"; 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. [8] Indictments were handed down in April 2001; by July 2006, when BFA's president and CEO William Crotts and BFA's Chief Legal Counsel Thomas Grabinski were found guilty at trial on multiple counts of fraud, five other defendants had already pleaded guilty. console.log('PUB-GDPR-CHECK'); In 1962 Pastor Glen Crotts became the first full-time president and was subsequently
return ''; [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). "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. var _qs = window.location.href; PHOENIX (BP)Following is a time table outlining the major events surrounding the embattled Baptist Foundation of Arizona: April 1996 Foundation attorney L. Kyle Tresch resigns. Payments were being made on the
The Baptist Foundation of Arizona was established with the pretense of serving Southern Baptist causes. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. ideas on how fraud could occur and adjust the audit program plan so that tests
succeeded in 1984 by his son, William P. Crotts. } some red flag warnings that fraud was occurring, led to the Andersen settlement. 'https' : 'http') + '://pix.nbcuni.com/a-pii.gif?X=piiblock&S=' + mps.pagevars.instance + '&P=' + mps.pagevars.mpsid + '&A=' + i + '&U=' + encodeURIComponent(window.location.href) + '&_=' + window._mpspixZ; .map(categoryPreference => parseInt(categoryPreference.split(':')[0], 10)); Griebel said she left messages at Andersens offices in Phoenix and Chicago warning the Foundation was broke, but they were never answered. 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. const matches = oneTrustCookie.match(COOKIE_REGEX); A Division of NBCUniversal. ALOs stated purpose was to develop real estate. 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. Robert H. Colson, PhD, CPA
The Mirage But sometimes in the. or subscribe. The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. mps._queue.mpsinit = mps._queue.mpsinit || []; 3210 E. Guasti Road Ontario, 91761 View on map. to mitigate the real estate losses. Visitor Comments. Crotts and Grabinski could face six to 23 years for each count. The BFA became dependent upon future investors to pay older investors and loan interest. 2023 FOX News Network, LLC. Improving and strengthening fraud detection is at the heart
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. A report has been made to law enforcement, and I'm guessing . On this Wikipedia the language links are at the top of the page across from the article title. '); var CNBC_MPS_FRANCHISE_TAG='american_greed'; Ponzi scheme. purpose was to finance new Southern Baptist churches in Arizona. In BFAs early days, it focused its attention
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. // execute By 1996, ALO was more than $100 million in debt. More information may be obtained by contacting the Foundation at 10255 Old Columbia Rd., Columbia MD, 21046, or by contacting Tom Stolle at (800) 466-5290, ext. (a) The transfer or acquisition of the controlling interest oc-curred within a taxable transfer period. Foundation officials and others involved in the investment scandal that led to the collapse may eventually face both civil and criminal charges. 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. script.setAttribute("async", true); was used to pay interest on old money. His lawyer has said there was no fraud but rather a disagreement on the value of property. In applying SAS 99, auditors should plan and execute every audit
'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , DIRECTOR OF OPERATIONS. 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. Audit. head.insertBefore(mpsload, head.firstChild) return true; var CNBC_Premium = CNBC_Premium || {}; disguise BFAs tenuous financial condition. 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,". 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. ', window.location); network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. helped to further accelerate the demise of a once prestigious and great firm. When the BFA filed for bankruptcy in 1999, it had $530 million in liabilities as compared to a reported $70 million in assets. 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. 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. Legal Statement. 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. 'cag[configuration_franchise]' : 'American Greed' , PHOENIX (BP)The Enron collapse has reared its head in an Arthur Andersen announcement that the accounting firm is backing out of a $217 million settlement with victims of the Baptist Foundation of Arizonas 1999 collapse. 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. 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 foundations bankruptcy marks one of the biggest financial collapses ever by a charity. with a questioning mind, recognizing the possibility that fraud may be present,
"true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; The Baptist Foundation of Arizona was founded in 1948 to raise money to back up Baptist causes and to pay a return for investors. 1 (803) 227-6197 kcooper@mybfsc.org. investment cycles, however, the upward trend did not continue. var pixelurl = ((document.location.protocol === 'https') ? Several accountants and one attorney became concerned enough to approach senior management about ALOs deficit. "[6], Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. The BFA opens a web site address www.bfaz.org to answer questions. 'cag[template]' : 'special_reports' , both in and outside of management. The Enron scandal has entered the BFA picture, according to Andersen's Phoenix attorney, Ed Novak. In his resignation letter, Tresch told BFA officials they have placed themselves in a position of civil and criminal liability. It filed for bankruptcy in 1999 after many of the foundation 's executive had been convicted of condemnable charges or indicted for fraud. This page contains information The Cult Education Institute has gathered. 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. Solely for the purpose of determining whether a transfer or ac- if (EEA_REGION_COUNTRY_CODES.includes(result.geo.country_code)) { [1] Grabinski signed documents as an officer for both BFA and a subsidiary. return unescape(document.cookie.substring(cStart, cEnd)); for ALO and New Church Ventures, but management refused to release the statements. was placed on probation, requiring that his work be monitored for two years
or redistributed. The audit team must put
mps._queue.mpsloaded.push(function(){ } 'cag[type_source]' : 'CNBC US Source' , Under William Crotts
} Officials at the Arizona Southern Baptist Convention were unavailable for comment. console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); if (!oneTrustCookie) return true; }); Site by Mere. } the State Board of Accountancy: Arthur Andersen, without admitting or denying any fault, settled an investors
document.cookie = "__adblocker=" + (adblocker ? [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. } 2023 FOX News Network, LLC. By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. 2023 Southern Baptist Convention. All eyes are on Houston this week, as jury selection gets underway for the long-awaited criminal trials of former Enron leaders Kenneth Lay and Jeffrey Skilling on charges of corporate fraud. As a nonprofit company, ALO filed its financial statements each year with
Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. During its history, it did indeed return about $1.3 million to Baptist causes. Dec. 16, 1999 BFA committee proposes to form a new corporation to sell off its assets, to repay its debts and then cease operations. fiduciary requirements governing nonbank passive trustees of IRAs. The New Independent Fundamental Baptist Movement (New IFB) was spearheaded in part by Steven Anderson, another well-known anti-LGBTQ pastor. 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. Data is a real-time snapshot *Data is delayed at least 15 minutes. for (var i in mps.response.dart.adunits) { At the center of the scandal is Crotts, a charismatic 53-year-old lawyer, who took over the BFA from his father in 1982. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. 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. "[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! mps.insertAd("#" + slotid, adunit) if (isOneTrustAnyBlocked()) { mps._debug('[MPS]: email address detected in url, bypass gpt. 'cag[related_primary]' : '' , 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 $1.3-million in gifts to church causes. The Arizona Southern Baptist Convention was founded in 1928. Baptist Group Ex-Leaders Guilty of Fraud. With what are they going to make donations?. In 1998 Deeann Greibel, a financial planner and CPA in Mesa, Ariz., looked into BFA finances on behalf of a client and found it was heavily underwritten with IOUs. "[3] Instead the BFA decided to hide its debt and began a series of dubious activities. TARGETED_ADS: 4, window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; Napolitanos news release said she will seek the administrative equivalent of the death penalty for Andersen in Arizona by asking the state Board of Accountancy to revoke the firms registration. } 'byline' : 'Stacy Keach' , 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. Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. 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. 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. } } mps.response.dart.adunits[i].data = ''; 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 . A former BFA director
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. 'site' : 'cnbc-mobile' , on funding church start-ups and providing aid for children and the elderly. The real estate market did
mps._ext = mps._ext || {}; Its an investment scam, yes, Mr. Nelson says, but because it is a religious organization, it only fuels stereotypes about taking advantage of people based on their faith.. } 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. }).catch(() => {}); 'content_id' : '100000099' , )+[a-zA-Z]{2,}))/; 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 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. BFAs failure and the subsequent penalties provide
The foundation was created in 1948 by the Southern Baptist Convention to administer endowments to the church. outside an entity that suggests the possibility that management fraud may
} financial assistance was not expected to come from any other source. BFA management was highly motivated not to show any losses and to report only
Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos The second time, on the same day, he declared the same piece of property was valued at $960,000.[4]. mps.__timer = Date.now ? The foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities.
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