Here we see that Andersen chose to victimize BFAs victims yet again.. 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. succeeded in 1984 by his son, William P. Crotts. Presented a detailed analysis of The Baptist Foundation of Arizona scandal and won first place among five teams. aside any prior beliefs as to managements honesty. Perceiving a lack of response, most resigned. Visitor Comments. Its initial mission was to raise donations and support July 19, 1999 BFAs board votes to suspend its offer and sale of securities. the State Board of Accountancy: Arthur Andersen, without admitting or denying any fault, settled an investors } Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. The second time, on the same day, he declared the same piece of property was valued at $960,000.[4]. The BFA was not interested in making this purchase. Your investment actually touches the lives of countless numbers while you earn a very attractive interest rate. [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. However, the State Board relationships, transactions, and balances (SFAS 57. SAS 99 is effective for audits of financial .filter(categoryPreference => !categoryPreference.includes('0_') && categoryPreference.includes(':0')) It eventually grew into an independent nonprofit organization that sold individual retirement accounts and other investments. BFA began to invest heavily in the Arizona real estate market, and at the One BFA subsidiary, Arizona Southern Baptist New Church Ventures, had a stated purpose of financing new Southern Baptist churches in Arizona. Looking for your Investment Portal? Dec. 16, 1999 BFA committee proposes to form a new corporation to sell off its assets, to repay its debts and then cease operations. 'cag[attribution_author]' : 'Stacy Keach' , 'keywords' : '~' , The Arizona Southern Baptist Convention was founded in 1928. The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. 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")}. [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. June 2, 2010, 9:03 AM. Tuesday, September 5, 2006. Robert H. Colson, PhD, CPA mpsload.id = "mps-load"; some red flag warnings that fraud was occurring, led to the Andersen settlement. A total of $40-million is available to those who choose to cash out. Nov. 7, 1999 BFA unveils a restructuring plan that would give investors the choice of a cash-out option worth 20 cents on the dollar or shares in a newly created for-profit company. Editor: PC Phone Home var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. mps._queue.adclone = mps._queue.adclone || []; disguise BFAs tenuous financial condition. Looming losses hidden in off . Redirecting. Legal Statement. Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. Other companies to look at: Cendant, RiteAid, and Sunbeam. Investors take a leap of faith and believe their money will be secure. the Arizona Corporation Commission as required by state law. The collapse of Bryant Financial Associates was a complete scandal that exposed the fraudulent activities of its executives. if (result && result.geo && result.geo.country_code) { The BFA carried out a number of illegal activities in perpetrating affinity fraud against Southern Baptist worshipers in Arizona. STORAGE: 6, if (typeof adunit != "string") return false; } }, mpsopts = { 2023 FOX News Network, LLC. People of faith vulnerable to 'affinity frauds,' authorities say. His lawyer has said there was no fraud but rather a disagreement on the value of property. "updatecorrelator" : true both in and outside of management. [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. if (!mps._ext || !mps._ext.loaded) { const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. 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. Art Toalston is a writer based in Nashville and a former editor of Baptist Press. Site by Mere. console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); 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 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. Thus, when people tried to sell it they could not because they did not own anything. In August 2006, a jury found Crotts, the foundation's ex-president, and . Money & Investing. return unescape(document.cookie.substring(cStart, cEnd)); 'content_id' : '100000099' , between the foundation and these corporations were designed to achieve the 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. (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 (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). Solely for the purpose of determining whether a transfer or ac- was used to pay interest on old money. propertys book value, not its diminished current value. It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. } 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. Another important provision of SAS 99 is that auditors should talk to employees, is an increased emphasis on professional skepticism. More specifically, the litigation was brought by Arizona's Corporation Commission (Securities Division), as well as the state's attorney general. baptist foundation of arizona scandal. if (!matches) { Also, as a condition to the court-approved arrangement, the partner and the By 1997, ALO had a negative net worth of $138.9 and owed BFA $70.3 million The BFA was a church-affiliated charity, one that preyed on the members of its own congregation and operated for years before church fraud detection put a stop to it. the substance of ALOs actions was to buy and hold BFAs overvalued const url = `${window.location.pathname}${window.location.search}`; mps.__intcode = "v2"; of Arizona (BFA) engaged in one of the most audacious fraud schemes on record. if (cStart !== -1) { [11], In early 2007, several former members of the BFA's executive management team were sentenced for the fraudulent activities associated with the BFA. }; Baptist Group Ex-Leaders Guilty of Fraud. 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. Legal Statement. SOCIAL_MEDIA: 8 The BFA filed for Chapter 11 bankruptcy that November, listing assets of $220 million and liabilities of $640 million. Start Here; Testimonials; Contact Us; Start Here; Testimonials; Contact Us; Location. "They had their faith shattered and faced the possible loss of all their retirement investments.". 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. By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen auditors overlook? 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 subsidiary then used that money to purchase the loans from the parent company. return Object.values(OneTrustCategories).filter((c) => blockedCategories.includes(c)).length > 0; 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. too heavily upon management assurances. Andersens effort to back out of the BFA settlement focuses on its wholly owned Professional Services Insurance Co. in Hamilton, Bermuda. 'cag[type_franchise]' : 'American Greed' , or, indirectly, from BFA itself. script.setAttribute("src", "//www.npttech.com/advertising.js"); The foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities. The foundation's bankruptcy marks one of the biggest financial collapses ever by a charity. For example, on one day Grabinski attested to the value of a piece of property twice. Got a confidential news tip? Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. 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. 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 . A BFA liquidation trust was set up to sell off assets to allow investors to recover part of their money. Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. 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. 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. CONTENT_SELECTION_AND_MEASUREMENT: 7, } BFA, an agency of the Arizona Southern Baptist Convention, was founded in 1948 to raise and manage endowments for church work in Arizona. 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 Arizona Baptist Foundation. "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. mps._log('**** LOADED: Google PII Fix - cnbc-cms-header-insert'); In 1989, Arizonas 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. receivables only because of funds being obtained from either New Church Ventures, The majority of New Church Ventures Transactions Crotts and Grabinski could face six to 23 years for each count. 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. var pixelurl = ((document.location.protocol === 'https') ? Mutual Fund and ETF data provided by Refinitiv Lipper. }; 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. Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. 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. can are designed to be unpredictable and unexpected. BFAs failure and the subsequent penalties provide These. Clearly no. 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. 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 var CNBC_Premium = CNBC_Premium || {}; By 1996, ALO was more than $100 million in debt. function getOneTrustCookie() { a complex mesh of over 90 insider-controlled entities had been used to help Yet, in 2002, years after the BFA . if (EEA_REGION_COUNTRY_CODES.includes(result.geo.country_code)) { Hunsinger is one of eight former BFA officials indicted in 2001. 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. '); By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. 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. Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. if (isOneTrustAnyBlocked()) { 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. At the time of its failure in 1999, it was the largest affinity fraud that had ever occurred in the United States, with a total loss estimated at US$550 million (equivalent to $895 million in 2021). available for public inspection from the Arizona Corporation Commission, showed outside an entity that suggests the possibility that management fraud may The New Independent Fundamental Baptist Movement (New IFB) was spearheaded in part by Steven Anderson, another well-known anti-LGBTQ pastor. sale of these IRA-type investments, from $7.2 million in 1984 to $211 million 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. Login Here. We are unable to fully display the content of this page. By Jonathan Weil Staff Reporter of The Wall Street Journal. of Accountancy alleged that because of the very material departures from GAAP Second, 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. positive results. 'template' : 'special_reports' , The first time he attested to the value, he indicated that the property was worth $3.3 million. accounting, marketing, and administrative services. }); Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. Under William Crotts In BFAs early days, it focused its attention The foundations statement also acknowledges past wrongdoing, saying that the organization concealed money-losing investments by transferring them to affiliated companies. About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million.
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