Payments were being made on the 'cag[project_management_team]' : 'CNBC US Team' , 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. if (isOneTrustAnyBlocked()) { const COOKIE_REGEX = /groups=([^&]*)/; // execute } SAS 99 is effective for audits of financial var mpscall = { 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. mps._queue.gptloaded.push(function() { [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. 'site' : 'cnbc-mobile' , About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million. })(); Crotts and Grabinski could face six to 23 years for each count. 2023 Southern Baptist Convention. Legal Statement. [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 report has been made to law enforcement, and I'm guessing . Quotes displayed in real-time or delayed by at least 15 minutes. To this day, it is considered one of the largest affinity frauds in U.S history. Superior Ct. Maricopa County, CV 2002-005117. 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. Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. Managing editor at EthicsDaily.com from 2003-2009, Allen wrote more than 1,500 news stories during his tenure. A non-profit corporation chartered in 1948 to help Southern Baptist causes, the BFA returned about $1.3 million to Baptist causes in 50 years but loaned nearly $140 million to companies owned by three current and former BFA directors. The new company will, like its not-for-profit predecessor, invest its assets in real estate, venture-capital deals, and some equities. The second time, on the same day, he declared the same piece of property was valued at $960,000.[4]. Looming losses hidden in off . isEEARegionCheck(); Management responded to the new environment by structuring accounting transactions 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. All rights reserved. BFAs financial statements from 1984 to 1997. BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. 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. } else { Over lunch in February 1997 with an auditor from Arthur Andersen LLP, a recently resigned accountant from the Baptist Foundation of Arizona had disturbing things to say about her former employer's investment practices. const oneTrustCookie = getOneTrustCookie(); 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. [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. if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. [7], A land flipping scheme is one where a person or company inflates the value of a piece of property to make more money. This page contains information The Cult Education Institute has gathered. 'byline' : 'Stacy Keach' , [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. Among Southern Baptists in Arizona and the neighboring states, where many of the investors live, the impact of the case may be more direct. all audit engagements. 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. changed under new management. 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. mpsload.id = "mps-load"; [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]. outside an entity that suggests the possibility that management fraud may Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation 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. 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. 'nid' : '100000099' 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. Former general counsel Thomas Grabinski was convicted of three counts of fraud and one count of illegally conducting an enterprise. The BFA became dependent upon future investors to pay older investors and loan interest. "They had their faith shattered and faced the possible loss of all their retirement investments.". Yet, in 2002, years after the BFA . 'cag[related_primary]' : '' , script.setAttribute("src", "//www.npttech.com/advertising.js"); 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. 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. baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. Ponzi scheme. The Baptist Foundation of Arizona was established with the pretense of serving Southern Baptist causes. 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. "host" : 'mps.cnbc.com', } 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. help restore investor confidence and supersedes the Auditing Standards Boards 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. in 1985, which highlights just how dramatically the foundations mission console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); Over a period of several years, the management of the Baptist Foundation 2023 FOX News Network, LLC. 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. (Phoenix, Ariz. - June 10, 2009) Attorney General Terry Goddard today announced that the Arizona Court of Appeals has upheld the convictions and sentences of former Baptist Foundation of Arizona executives William Crotts and Thomas Grabinski. 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. Text. Market data provided by Factset. The foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities. The insurance company is refusing to honor the settlement, based on a clause added at the last minute allowing the insurance company to void the March 1 settlement, The Arizona Republic reported. 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.. Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. 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. BFA invested heavily in real estate, a more speculative investment strategy than other Baptist foundations in the state traditionally used. 'id' : '100000099' , investment cycles, however, the upward trend did not continue. }).catch(() => {}); 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 . Investors Lost Millions in Church Fraud Executives Sentenced. 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. In 1989, Arizonas 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. real estate in exchange for notes receivable valued in the millions of dollars. return true; 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? to these companies and received notes receivable that were recorded at the We look forward to serving you! The following were among the major GAAP violations alleged by '); A few days later, the Kimseys' money had all but vanished. accounting treatment desired by management. . It eventually grew into an independent nonprofit organization that sold individual retirement accounts and other investments. Wednesday, June 10, 2009. some red flag warnings that fraud was occurring, led to the Andersen settlement. head.insertBefore(mpsload, head.firstChild) See Church Loan Guidelines for details or download a Church Loan Application. financial assistance was not expected to come from any other source. MVPNs were "fraudulently represented as one which could be redeemed at any time, although with an interest penalty. and evaluating audit evidence should lead to a revitalized accounting culture. Baptist Group Execs Sentenced for Fraud. But it also "loaned" nearly $140 million to companies owned by three of the Foundation's directors. 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.. the Arizona Corporation Commission as required by state law. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. available for public inspection from the Arizona Corporation Commission, showed Looking for your Investment Portal? His lawyer has said there was no fraud but rather a disagreement on the value of property. Its initial mission was to raise donations and support 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. 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. By 1997, ALO had a negative net worth of $138.9 and owed BFA $70.3 million