'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , New Era, which solicited investments largely from Christian institutions, folded in 1995 after taking in about $350-million in what had amounted to a Ponzi scheme. }; Contact (909) 738-4000 info@bfcal.org. It says that a new charity will be established that will be involved in traditional Baptist charitable activities, including, for example, ministries, education, and providing routine trust and estate planning. The new charity, the statement says, will be prohibited from selling debt securities. } s.src = "https://fm.cnbc.com/applications/cnbc.com/resources/files/2020/03/28/VisitorAPI.js"; (a) The transfer or acquisition of the controlling interest oc-curred within a taxable transfer period. 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. if (result && result.geo && result.geo.country_code) { 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. return ''; 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. window._mpspixZ = (function(a){var b="abcdefghiklmnopqrstuvwxyz".split("");a||(a=Math.floor(Math.random()*b.length));for(var c="",d=0;d to mitigate the real estate losses. Feb. 19, 2002 4:00 pm ET. Potential financial losses in the case overshadow the losses accumulated by non-profit groups and donors who gave money to the Foundation for New Era Philanthropy. cEnd = document.cookie.length; mps._queue.gptloaded.push(function() { Under William Crotts } The audit team must put [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. For example, on one day Grabinski attested to the value of a piece of property twice. typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); The new company will, like its not-for-profit predecessor, invest its assets in real estate, venture-capital deals, and some equities. In BFAs early days, it focused its attention Andersens effort to back out of the BFA settlement focuses on its wholly owned Professional Services Insurance Co. in Hamilton, Bermuda. 'cag[template]' : 'special_reports' , 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. Got a confidential news tip? if (typeof window === 'undefined') return; Inside Higher Ed's News [15] At the time, this settlement was the second largest settlement in the nation's history for a Big Five accounting firm that was not related to the Savings and Loan collapses of 1986 to 1995. Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. "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. 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. Deceptive Accounting - 1331 Words | 123 Help Me Payments were being made on the You have to deal with the embarrassment of it, the cleanup of it, but it doesnt put you out of business., Debra E. Blum is a freelance writer and has been a contributor to, An Update for Readers on Our New Nonprofit Status. [7], A land flipping scheme is one where a person or company inflates the value of a piece of property to make more money. Both options for investors have limitations. Hunsinger is one of eight former BFA officials indicted in 2001. [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). SAS 99 is effective for audits of financial } STORAGE: 6, statements for periods beginning on or after December 15, 2002, and earlier 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. The Phoenix-based. The 1996 information, }; 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. Visitor Comments. was used to pay interest on old money. const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; 20 years later, victims of Baptist Foundation of Arizona scheme still } $217 Million New Settlement By Andersen In Baptist Case baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. between the foundation and these corporations were designed to achieve the This page contains information The Cult Education Institute has gathered. if (typeof mps.getAd != "function") mps.getAd = function(adunit) { Oct. 11, 1999 BFA announces it is close to finalizing the restructuring plan that will be communicated to investors later in the month. Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. American Greed: Religious Prey: Baptist Foundation of Arizona - CNBC Watch how the . 'template' : 'special_reports' , Griebel said she left messages at Andersens offices in Phoenix and Chicago warning the Foundation was broke, but they were never answered. sale of these IRA-type investments, from $7.2 million in 1984 to $211 million 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. operations from collapsing was a constant influx of new investor money that Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos BFA, an agency of the Arizona Southern Baptist Convention, was founded in 1948 to raise and manage endowments for church work in Arizona. var mps = mps || {}; Arizona foundation executive convicted - Baptist Standard ALOs stated purpose was to develop real estate. can are designed to be unpredictable and unexpected. 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. credible tips or complaints are received about management fraud, auditors But a jury found them innocent on 23 counts of theft, saying they didn't intend to steal from investors but got in over their heads and tried to cover it up. In order to remove those loans from its books, the BFA secretly funneled money to a subsidiary. Perceiving a lack of response, most resigned. 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. 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 . 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. Investors who choose to roll their money into securities may be risking even bigger losses. To this day, it is considered one of the largest affinity frauds in U.S history. The foundation's bankruptcy marks one of the biggest financial collapses ever by a charity. (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 Baptist Dec. 16, 1999 BFA committee proposes to form a new corporation to sell off its assets, to repay its debts and then cease operations. Appeals court upholds convictions of Baptist Foundation of Arizona What clues did the One pastor who had recently entrusted $1 million in church funds to. 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. "I just hope they realize they defied (God's) word by mishandling money that people entrusted to them," said Virginia Branch, 77, of Prescott, who lost $400,000 she said would have helped her grandchildren pay for college. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. 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 newspaper also quoted Arizona Corporation Commission Chairman Bill Mundell as saying, How do you break the news to an elderly couple who risked their life savings? A Division of NBCUniversal. 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. 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. "They had their faith shattered and faced the possible loss of all their retirement investments.". var CNBC_MPS_FRANCHISE_TAG='american_greed'; Andersen reneges on $217M settlement with Ariz. Baptist foundation Like many Nevertheless, script.setAttribute("src", "//www.npttech.com/advertising.js"); Baptist Foundation execs found guilty of fraud - East Valley Tribune "updatecorrelator" : true (function() { var pixelurl = ((document.location.protocol === 'https') ? Baptist Foundation of Arizona was the largest non-profit in U.S. history. 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 The lead partner on Andersen's disputed 1985 audit of Lincoln was Jay S. Ozer, who also served as lead auditor of the Baptist Foundation of Arizona. 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. The auditors were Arthur Andersen, the same firm that audited Enron. [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. a complex mesh of over 90 insider-controlled entities had been used to help The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. In the case, it claims that Arthur Anderson gave investors a false sense of security after giving out Anderson issued a clean audit in order to attract new investors. mps._queue = mps._queue || {}; Investors Lost Millions in Church Fraud Executives Sentenced. The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have 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 relationships, transactions, and balances (SFAS 57. network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. Jasmine Cooper - VP, Enterprise Testing Officer-Partner Liaison It eventually grew into an independent nonprofit organization that sold individual retirement accounts and other investments. Market data provided by Factset. [14], In 2007, the first story on the episode "Religious Prey: Baptist Foundation Of Arizona / Medical Scams: Dr. Mikos", of the television series American Greed, covered the fraudulent behavior of the Baptist Foundation of Arizona.[16]. By 1996, ALO was more than $100 million in debt. The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church. We want to hear from you. Its initial mission was to raise donations and support Since August, the foundation has fired its top three officials, severed ties with the law and accounting firms with which it had worked, laid off 72 of its 127 employees, and closed its two branch offices. 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. Data is a real-time snapshot *Data is delayed at least 15 minutes. Mutual Fund and ETF data provided by Refinitiv Lipper. if (!mps._ext || !mps._ext.loaded) { const name = ONE_TRUST_COOKIE_NAME; Romero was a former congregant of Anderson's church before going to start the Fort Worth church with his . To this day, it is considered one of the largest affinity frauds in U.S history. 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. Money & Investing. "true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; }, mpsopts = { } "[3] Instead the BFA decided to hide its debt and began a series of dubious activities. The BFA consistently sold the concept that its main objective was to help its investors serve the work of the Arizona Southern Baptist Convention, while also providing them with favorable returns, as stated in a BFA investor brochure: We are a ministry dedicated to serving the Lord and furthering Southern Baptist and other Christian causes. Hundreds Accuse Independent Baptist Pastors of Abuse - News & Reporting })(); 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. The first time he attested to the value, he indicated that the property was worth $3.3 million. June 7, 2022 . function getOneTrustCookie() { On this Wikipedia the language links are at the top of the page across from the article title. script.setAttribute("onload", "setAdblockerCookie(false);"); available for public inspection from the Arizona Corporation Commission, showed } Former Alcor employee makes harsh allegations against cyronics foundation. Crotts and Grabinski could face six to 23 years for each count. 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. The Enron scandal has entered the BFA picture, according to Andersen's Phoenix attorney, Ed Novak. 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 conventions Executive Board. 'cag[device]' : 'mobile-touch' , Some 13,000 investors lost $570 million, mainly elderly Baptists, some of whom lost their entire life's savings. Case Study: Arthur Andersen V. Arthur Anderson - 660 Words | Cram This settlement takes on a sad historical significance Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. 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. Baptist Group Execs Sentenced for Fraud. console.log('PUB-GDPR-CHECK'); [9], In 2002, Grabinski sued BFA's insurance carrier, National Union Fire Insurance Company of Pittsburgh, Pa. (National Union), for coverage of his legal fees per the Directors and Officers liability coverage purchased from National Union, plus damages. SAS 99 Once javascript and access to those URLs are allowed, please refresh this page. This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). Editor: Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. Oct. 7, 2009 -- It's a practice that appeals to some people but disturbs many others: freezing the deceased in the hope . DIRECTOR OF OPERATIONS. Its initial mission was to raise donations and support for Southern Baptist causes. The New Independent Fundamental Baptist Movement (New IFB) was spearheaded in part by Steven Anderson, another well-known anti-LGBTQ pastor. Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. 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. on funding church start-ups and providing aid for children and the elderly. 'pubdate' : '1343999322' , If you continue to experience issues, contact us at 202-466-1032 or help@chronicle.com. 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. Two of the most significant entities set up to hide BFAs nonperforming In 1962 Pastor Glen Crotts became the first full-time president and was subsequently 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. console.log('PUB-GDPR-CHECK all blocked. Superior Ct. Maricopa County, CV 2002-005117. By Jonathan Weil Staff Reporter of The Wall Street Journal. 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. 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. The Foundation Speaks | News | Phoenix | Phoenix New Times | The Andersen opposed that request in court, the trust said; the Arthur Andersen Internet site, meanwhile, makes no mention of its latest BFA actions. the State Board of Accountancy: Arthur Andersen, without admitting or denying any fault, settled an investors 'site' : 'cnbc-mobile' , 10 Major Accounting Scandals That Caught the Public's Eye: What Do They 'cag[brand]' : 'none' , A Church Divided: Sex Worker Scandal Exposes Fault Lines in Anti-LGBTQ The subsidiary then used that money to purchase the loans from the parent company. Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation 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 . The BFA carried out a number of illegal activities in perpetrating affinity fraud against Southern Baptist worshipers in Arizona. Thus, when people tried to sell it they could not because they did not own anything. 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. is the cornerstone of a multifaceted effort by the accounting profession to "Fraudulent Practices" | News | Phoenix | Phoenix New Times | The by the Arizona State Board of Accountancy. 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 . This material may not be published, broadcast, rewritten, mps.cloneAd = function() { return false; } The Baptist foundation began selling investment products to church members in 1983. Wednesday, June 10, 2009. "host" : 'mps.cnbc.com', After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. [11], In early 2007, several former members of the BFA's executive management team were sentenced for the fraudulent activities associated with the BFA. Robert H. Colson, PhD, CPA By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. Baptist Convention. BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. script.setAttribute("onerror", "setAdblockerCookie(true);"); 'byline' : 'Stacy Keach' , Start Here; Testimonials; Contact Us; Start Here; Testimonials; Contact Us; Location. const url = `${window.location.pathname}${window.location.search}`;

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