the substance of ALOs actions was to buy and hold BFAs overvalued mpsload.id = "mps-load"; return true; For example, Select Trading Group, a subsidiary of ALO, created its own subsidiary, Santa Fe Trails Ranch II. BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. the firm should have issued either a qualified or an adverse opinion on the 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. Lessons from the Baptist Foundation Fraud - The CPA Journal In the Midst of Infighting, Anti-LGBTQ Church Network's Website and Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. document.cookie = "__adblocker=" + (adblocker ? First case: The Baptist Foundation of Arizona invests and loses millions entrusted by churchgoers, and its mission ends in scandal. accounting, marketing, and administrative services. Investors Lost Millions in Church Fraud Executives Sentenced. Audit. (function() { The foundation halted security sales in August, however, when state regulators found that it did not have the money to cover its debts to investors. by the Arizona State Board of Accountancy. However, Over a period of several years, the management of the Baptist Foundation var script = document.createElement("script"); of fraud and even more critical to engage in effective audit procedures to corporations, with individuals closely associated with BFA, such as Who We Are; The Team . 'cag[attribution_author]' : 'Stacy Keach' , SOCIAL_MEDIA: 8 Two Executives of the Baptist Foundation of America are Convicted The Reverend Ed Shaw suggested that the BFA "Explain the situation completely to investors; ask their forgiveness; let them know their gift of principal would help if they choose to give some or all of it. } Arthur Andersen Reaches Deal (Again) With Baptist Foundation of Arizona var CNBC_Premium = CNBC_Premium || {}; After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. 'type' : 'mobile: episode' , The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA. Wednesday, June 10, 2009. } But it also "loaned" nearly $140 million to companies owned by three of the Foundation's directors. 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,". BFA began to invest heavily in the Arizona real estate market, and at the the villa pacific palisades, ca. They were acquitted of 23 counts of theft. The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. Site by Mere. The Cacaces were among 11,000 investors who lost a combined $580 million when the Baptist Foundation of Arizona, or BFA, a registered nonprofit, filed for Chapter 11 bankruptcy in 1999 in what prosecutors described as a Ponzi scheme. mps._queue.adview = mps._queue.adview || []; [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. 'keywords' : '~' , Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation be taking place requires a higher degree of due diligence by auditors. 'cag[type_source]' : 'CNBC US Source' , Through it all, Andersen continued to give BFA clean audits, until the Arizona Corporation Commission forced the foundation to stop selling securities in August 1999. The Mirage But sometimes in the. mps.cloneAd = function() { return false; } 'content_id' : '100000099' , Under William Crotts window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; '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; Case Study Two Part 1 Baptist Foundation.docx - 1 Case By 1996, ALO was more than $100 million in debt. Two of the most significant entities set up to hide BFAs nonperforming By 1997, ALO had a negative net worth of $138.9 and owed BFA $70.3 million Baptist Foundation execs found guilty of fraud - East Valley Tribune 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.. Thus, when people tried to sell it they could not because they did not own anything. if (result && result.geo && result.geo.country_code) { 'site' : 'cnbc-mobile' , Login Here. .map(categoryPreference => parseInt(categoryPreference.split(':')[0], 10)); The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. Date.now() : (function() { return +new Date })(); 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. For example, on one day Grabinski attested to the value of a piece of property twice. Scandal - Fall from grace: the Baptist Foundation collapse Baptist Foundation of Arizona, BFA | Academic Essay (function() { Start Here; Testimonials; Contact Us; Start Here; Testimonials; Contact Us; Location. 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. document.getElementsByTagName("head")[0].appendChild(script); 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. assets were receivables from the insolvent ALO. })(); if (document.cookie.length > 0) { 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 . } $217 Million New Settlement By Andersen In Baptist Case Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. 'cag[device]' : 'mobile-touch' , 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. Powered and implemented by FactSet Digital Solutions. [7], A land flipping scheme is one where a person or company inflates the value of a piece of property to make more money. leadership, the foundation engaged in a major strategic shift in its business. 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. head.insertBefore(mpsload, head.firstChild) Visitor Comments. } An unambiguous lesson from the BFA case is that the audit team cannot rely } The Foundation Speaks | News | Phoenix | Phoenix New Times | The they use. New Church Ventures 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. Tuesday, September 5, 2006. var dynamic_yield_enabled = 1 Reglious Prey: Baptist Foundation of Arizona. Two year earlier than Enron scandal, the Baptist foundation of Arizona also failed. Oct. 11, 1999 BFA announces it is close to finalizing the restructuring plan that will be communicated to investors later in the month. if (window.mps) { script.setAttribute("onerror", "setAdblockerCookie(true);"); '); to these companies and received notes receivable that were recorded at the Transactions 'cag[template]' : 'special_reports' , in 1985, which highlights just how dramatically the foundations mission was used to pay interest on old money. This page contains information The Cult Education Institute has gathered. detect fraud. As a nonprofit company, ALO filed its financial statements each year with Then, BFA sold property 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 . } The previously announced cash out plan is shelved after talking to more than 4,000 investors. 2023 Southern Baptist Convention. One of the key provisions of SAS 99 Oklahoma Baptist foundation loses money in Madoff scandal 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. CONTENT_SELECTION_AND_MEASUREMENT: 7, It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. 2023 FOX News Network, LLC. "American Greed" Religious Prey: Baptist Foundation of Arizona - IMDb The Bear Foundation's contributions to local nonprofits easily number in the tens of millions, and include a $4.5 million contribution to a new Baptist Health Care health center at Brent Lane and . 'subtype' : 'primetime_show' , Quotes displayed in real-time or delayed by at least 15 minutes. 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. a sobering reminder to auditors that it is important to understand the causes same time, it accelerated its efforts to sell IRA-type retirement investment 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. A report has been made to law enforcement, and I'm guessing . succeeded in 1984 by his son, William P. Crotts. During its history, it did indeed return about $1.3 million to Baptist causes. Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. One pastor who had recently entrusted $1 million in church funds to. manager on the BFA audit lost their CPA licenses to practice and a third CPA ALOs stated purpose was to develop real estate. operations from collapsing was a constant influx of new investor money that The auditors were Arthur Andersen, the same firm that audited Enron. Mutual Fund and ETF data provided by Refinitiv Lipper. The audit team must put baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. //begin OneTrust Redirect network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. the auditors would have discovered that ALO was insolvent. 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. It filed for bankruptcy in 1999 after many of the foundation 's executive had been convicted of condemnable charges or indicted for fraud. 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. These. Data is a real-time snapshot *Data is delayed at least 15 minutes. Its initial mission was to raise donations and support 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. Hundreds Accuse Independent Baptist Pastors of Abuse - News & Reporting The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. 'stitle' : 'Religious Prey | Dr. Mikos: American Greed 5' , Cult Education Institute :: Group Information Archives 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. Baptist Foundation of Arizona - By watching and reviewing const name = ONE_TRUST_COOKIE_NAME; 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. mps.__intcode = "v2"; Case Solution of Case Study 5 | PDF | Accounting - Scribd This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. real estate properties were ALO and New Church Ventures. 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. from ALO and New Church Ventures (SFAS 5. 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 . Victims of Baptist Foundation scheme still recovering | News In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. A grand jury in April 2001 returned indictments charging former BFA officials with 32 counts of fraud, theft and racketeering. Got a confidential news tip? 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. July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. with a questioning mind, recognizing the possibility that fraud may be present, The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. [1], Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. Along with companies like Enron and Worldcom, it was audited by accounting firm Arthur Andersen, giving investors a false sense of security. 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.. fiduciary requirements governing nonbank passive trustees of IRAs. 20 years later, victims of Baptist Foundation of Arizona scheme still A few days later, the Kimseys' money had all but vanished. mps._log('**** LOADED: Google PII Fix - cnbc-cms-header-insert'); Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. s.src = "https://fm.cnbc.com/applications/cnbc.com/resources/files/2020/03/28/VisitorAPI.js"; mps._ext = mps._ext || {}; help restore investor confidence and supersedes the Auditing Standards Boards Baptist Foundation of Arizona Case Has Similarities With Enron Category:Religious scandals - Wikipedia Management responded to the new environment by structuring accounting transactions The Arizona Southern Baptist Convention was founded in 1928. SAS 99 Aug. 27, 1999 A class action lawsuit filed by investor Franklin Kestner Sr. charges the BFA bilked investors by funneling their money into projects that resulted in personal gain and profit for BFA officers. The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have Yet, in 2002, years after the BFA . if (typeof adunit != "string") return false; }); on funding church start-ups and providing aid for children and the elderly. 2023 Southern Baptist Convention. A Church Divided: Sex Worker Scandal Exposes Fault Lines in Anti-LGBTQ [11] Independent of the abuse of process ruling, the original Arizona Superior Court ruling was upheld by the Arizona Court of Appeals in March 2005, at which point National Union paid the $2.5 million to Grabinski. Like many Southern Baptist Foundation Scheme in Arizona. Officials at the Arizona Southern Baptist Convention were unavailable for comment. 2023 FOX News Network, LLC. }; return false; mps._queue.gptloaded.push(function() {