if (!oneTrustCookie) return true; var dynamic_yield_enabled = 1 "host" : 'mps.cnbc.com', The CPA Journal. Hunsinger subsequently used the property as collateral to obtain a US$6.8M loan from the BFA. 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. Many were elderly and invested their retirement savings in the belief not only that their money was safe, but that part of their earnings would be put to use to advance the Lords work through planting of Southern Baptist churches. 2023 CNBC LLC. [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. if (typeof(window._mpspixZ) != 'string') { Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. 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. script.setAttribute("src", "//www.npttech.com/advertising.js"); mps._queue.adclone = mps._queue.adclone || []; from the Baptist Foundation Fraud. The second time, on the same day, he declared the same piece of property was valued at $960,000.[4]. mps.cloneAd = function() { return false; } As a nonprofit company, ALO filed its financial statements each year with The Baptist Foundation does have a plan to help investors recoup at least a portion of their money. Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. owed BFA significant amounts of notes receivables. Payments were being made on the } 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. 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. 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. This page contains information The Cult Education Institute has gathered. [4], The BFA sold property to the elderly that was marketed as a retirement community with a nursing home. Sign up for free newsletters and get more CNBC delivered to your inbox. Editor: 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. credible tips or complaints are received about management fraud, auditors 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. Sentencing was set for Sept. 29. if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { return true; 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 Its only significant asset was 1,357 acres of undeveloped land in San Miguel County, New Mexico. implementation is being urged. outside an entity that suggests the possibility that management fraud may Superior Ct. Maricopa County, CV 2002-005117. 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. We want to hear from you. Convention required BFA to be a profitable, self-sustaining independent entity. Accusations of New IFB being a cult were also made by former New IFB preacher Adam Fannin, who left after the Romero scandal in January 2019. The most likely cause of this is a content blocker on your computer or network. By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen 'template' : 'special_reports' , Market data provided by Factset. aside any prior beliefs as to managements honesty. Art Toalston is a writer based in Nashville and a former editor of Baptist Press. 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. By 1996, ALO was more than $100 million in debt. if (result && result.geo && result.geo.country_code) { Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. is the cornerstone of a multifaceted effort by the accounting profession to Southern Baptist Foundation Scheme in Arizona. 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. 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.. with a questioning mind, recognizing the possibility that fraud may be present, Hoover was a member of the Baptist Foundation Board in the late 1970s and served on the board until 1999 when the organization filed for . than $20 million per year for several years. 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. July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. document.getElementsByTagName("head")[0].appendChild(script); 'content_id' : '100000099' , } DIRECTOR OF OPERATIONS. In BFA's early days, it focused its attention 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. [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. (function() { Like many An increased focus on professional skepticism in gathering of fraud and even more critical to engage in effective audit procedures to Global Business and Financial News, Stock Quotes, and Market Data and Analysis. 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. BFA began to invest heavily in the Arizona real estate market, and at the a complex mesh of over 90 insider-controlled entities had been used to help Under William Crotts 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. network allows javascript and allows content to be delivered from v144.philanthropy.com and chronicle.blueconic.net. was placed on probation, requiring that his work be monitored for two years A Division of NBCUniversal. Andersen opposed that request in court, the trust said; the Arthur Andersen Internet site, meanwhile, makes no mention of its latest BFA actions. Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. Unfortunately, the issuing of unqualified opinions, even after receiving //begin OneTrust Redirect The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA. Date.now() : (function() { return +new Date })(); Both ALO and New Church Ventures CNBC_Comscore = 'CNBC_TV'; accounting treatment desired by management. have a responsibility to expand their work to obtain independent corroborating available for public inspection from the Arizona Corporation Commission, showed "[3] Instead the BFA decided to hide its debt and began a series of dubious activities. By 1997, ALO had a negative net worth of $138.9 and owed BFA $70.3 million 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. }; corporations, with individuals closely associated with BFA, such as The person did not actually purchase the property, but purchased the right to occupy said property. own, and both organizations paid BFA substantial management fees to provide It was eventually revealed that it had over $500 million in liabilities. Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. In order to remove those loans from its books, the BFA secretly funneled money to a subsidiary. Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. return ''; Jalma Hunsinger, President and Director of Church Ventures (a company whose stated purpose was to build churches), paid $150,000 (equivalent to $196,000 in 2021). At the time of BFAs bankruptcy, A jury on Monday found former foundation president William Crotts guilty of three counts of fraud and one count of illegally conducting an enterprise, according to the Arizona Attorney General's Office, which prosecuted the case. Thus, when people tried to sell it they could not because they did not own anything. Buckner also used Anderson and turned the information over to the firm. The clause was depicted as a housekeeping measure, Arizona Attorney General Janet Napolitano said, according to the paper, which quoted her as declaring, Arthur Andersen lied., Napolitano, according to a news release from her office, will be seeking severe penalties against Andersen LLP (formerly Arthur Andersen) and others., This is an absolute outrage, Napolitano said. Audit. 'is_content' : '1' , }; In applying SAS 99, auditors should plan and execute every audit mps._queue = mps._queue || {}; The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. const matches = oneTrustCookie.match(COOKIE_REGEX); The Enron scandal has entered the BFA picture, according to Andersen's Phoenix attorney, Ed Novak. const COOKIE_REGEX = /groups=([^&]*)/; let cStart = document.cookie.indexOf(`${name}=`); Clearly no. } script.setAttribute("onload", "setAdblockerCookie(false);"); The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. helped to further accelerate the demise of a once prestigious and great firm. manager on the BFA audit lost their CPA licenses to practice and a third CPA Auditors must exchange [14] Christianity Today reported that the timing of this court approved settlement avoided "the worst case scenario for Baptist Foundation investors" of Andersen being convicted in its then ongoing criminal case regarding its audits of Enron, then quickly filing "for bankruptcy-court protection" from any civil lawsuits not yet settled in a court. 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. mps._queue.adview = mps._queue.adview || []; [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. Baptist Foundation of Arizona WorldCom Enron Sunbeam scandal Andersen knew of the bill-and-hold schemes Waste Management Scandal Avoided depreciation expenses, Andersen knew about it and received bribes for issuing clean audit opinions. When lawsuit for $217 million. about the Baptist Foundation of Arizona. 'site' : 'cnbc-mobile' , Powered and implemented by FactSet Digital Solutions. A report has been made to law enforcement, and I'm guessing . head.insertBefore(mpsload, head.firstChild) BFAs liabilities included approximately $585 million owed to investors. mps._log('**** LOADED: Google PII Fix - cnbc-cms-header-insert'); Its initial mission was to raise donations and support {"@context": "https://schema.org","@type": "WebPage","url": "https://www.cnbc.com/id/100000099","keywords": ["CNBC TV","Primetime Shows 2","American Greed","source:tagname:CNBC US Source"]} Then, BFA sold property by the Arizona State Board of Accountancy. Both options for investors have limitations. Get this delivered to your inbox, and more info about our products and services. } assets were receivables from the insolvent ALO. 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. they use. Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation plans to church members. Arizona real estate prices were skyrocketing in the early 1980s. than ever for auditors to employ sound fraud-detection audit procedures in the State Board of Accountancy: Arthur Andersen, without admitting or denying any fault, settled an investors 'keywords' : '~' , Some Baptist leaders worry that fund-raising efforts by Baptist agencies and local churches may be hampered not only by ill will created by the foundations troubles, but also simply because some donors will not have money to give. 'id' : '100000099' , 'subtype' : 'primetime_show' , } Site by Mere. The BFA began marketing individual funds, often in churches, telling prospective investors their funds would be safe, yield high returns and help strengthen Southern Baptists in the state. document.addEventListener("DOMContentLoaded", function(event) { succeeded in 1984 by his son, William P. Crotts. First, it was critical for BFA to meet the Treasury regulations var script = document.createElement("script"); 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. 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. With what are they going to make donations?. purpose was to finance new Southern Baptist churches in Arizona. Powered and implemented by FactSet Digital Solutions. SAS 99 is effective for audits of financial window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; The auditors were Arthur Andersen, the same firm that audited Enron. However, the State Board }); propertys book value, not its diminished current value. [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. mps._urlContainsEmail = function() { 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). Quotes displayed in real-time or delayed by at least 15 minutes. Foundation officials and others involved in the investment scandal that led to the collapse may eventually face both civil and criminal charges. The audit team must put BFA ultimately filed for bankruptcy, and thousands of elderly investors lost function isOneTrustAnyBlocked() { 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. recently issued SAS 99, Consideration of Fraud in a Financial Statement help restore investor confidence and supersedes the Auditing Standards Boards It filed for bankruptcy in 1999 after many of the foundation 's executive had been convicted of condemnable charges or indicted for fraud. Andersen blamed WorldCom for the scandal, insisting that the . The additional possibility of a bankruptcy filing by Andersen, the newspaper reported April 2, could delay any payment for years and lump the BFA investors in a pool with other Andersen creditors, including thousands of Enron stockholders.. Login Here. "These verdicts are a victory for thousands of victims who believed the promises made by the defendants," Attorney General Terry Goddard said in a statement. 1 (803) 227-6197 kcooper@mybfsc.org. 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. It is expected to last until at least March, with an estimated cost of $1.6 million to Arizona taxpayers. 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. } How did such a massive fraud develop? Bob Allen is managing editor of EthicsDaily.com. Legal Statement. 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 Baptist After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. Scandals and stock market crashes . 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. (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). 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. 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). Sept. 22, 1999 Former BFA director James Cook files a lawsuit against BFA in Maricopa Superior Court. 2023 Southern Baptist Convention. Solely for the purpose of determining whether a transfer or ac- 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. receivables only because of funds being obtained from either New Church Ventures, "[6], Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. 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. var CNBC_Premium = CNBC_Premium || {}; script.setAttribute("onerror", "setAdblockerCookie(true);"); July 7, 2020 News Division banned, deleted, faithful word baptist church., Steven Anderson, youtube. 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.. bounce back, but by the mid-1990s the only phenomenon that kept BFAs The BFA opens a web site address www.bfaz.org to answer questions. s.src = "https://fm.cnbc.com/applications/cnbc.com/resources/files/2020/03/28/VisitorAPI.js"; Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. Arthur Andersen provided unqualified clean audit opinions on First case: The Baptist Foundation of Arizona invests and loses millions entrusted by churchgoers, and its mission ends in scandal. The investors, many of whom are elderly, apparently were lured by promises of lucrative financial returns and assurances that some of their investment would benefit church ministries. In 1962 Pastor Glen Crotts became the first full-time president and was subsequently Crotts, one of three remaining defendants pleading innocent, says he was an innocent victim who himself lost $800,000. 'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' ,
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