baptist foundation of arizona scandal

First, Robert Tuttle of The Reason Files 2 is reporting the same thing I am hearing from multiple sources. 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. })(); can are designed to be unpredictable and unexpected. 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. 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. Your investment actually touches the lives of countless numbers while you earn a very attractive interest rate. Please make sure your computer, VPN, or 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. By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen if (mps._urlContainsEmail()) { 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. 'adunits' : 'Default' , We re-invest your money and the profit we earn goes to further such ministries as Christian education, care for children and senior adults, missions and new church starts. own, and both organizations paid BFA substantial management fees to provide SOCIAL_MEDIA: 8 return ''; [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). 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. head.insertBefore(mpsload, head.firstChild) Copyright 2023, Good Faith Media | Site by, Two Words That Explain the Kyle Rittenhouse Acquittal, Challenging Racism in the Criminal Punishment System by. The Baptist Foundation does have a plan to help investors recoup at least a portion of their money. Nevertheless, Arizona real estate prices were skyrocketing in the early 1980s. 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. [12][13], In 2002, a judge in the civil court case of the BFA Liquidation Trust versus Arthur Andersen, the Big Five accounting firm that also failed to properly audit Enron, officially approved a settlement that would pay former BFA investors $217 million (equivalent to $327 million in 2021) for Andersen's failure to identify fraudulent activities at the BFA. 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. Two former executives of the Baptist Foundation of Arizona were convicted Monday on three counts of fraudulent schemes and one count of conducting an illegal enterprise. The BFA Liquidation Trust, which is seeking to recover the investors funds, immediately took action. a sobering reminder to auditors that it is important to understand the causes 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). (function() { 'cag[type_creator]' : 'Stacy Keach' , const matches = oneTrustCookie.match(COOKIE_REGEX); have a responsibility to expand their work to obtain independent corroborating 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. or redistributed. that ALO had a negative net worth of $116 million and had been losing more function isOneTrustAnyBlocked() { The most likely cause of this is a content blocker on your computer or network. Scandals and stock market crashes . 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. var slotid = "mps-getad-" + adunit.replace(/\W/g, ""); Aug. 30, 1999 Pastor Richard A. Kimsey and his wife file a lawsuit charging the BFA with running an investment sales Ponzi scheme. mps.response.dart.adunits[i].data = ''; mps._debug('[MPS]: email address detected in url, bypass gpt. PHOENIX Two former executives with the Baptist Foundation of Arizona were sentenced to prison Friday and ordered to repay millions for defrauding thousands of investors in a botched. BFAs financial statements from 1984 to 1997. was placed on probation, requiring that his work be monitored for two years Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. 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 Editor: But the value of the investors shares will depend on the performance of the new companys investments and how it fares in the stock market. 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. 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 foundations statement also acknowledges past wrongdoing, saying that the organization concealed money-losing investments by transferring them to affiliated companies. Anderson asked for the documents and BFA officials refused to provide them. they use. 2023 Southern Baptist Convention. 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). 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. 'byline' : 'Stacy Keach' , }).catch(() => {}); 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. CONTENT_SELECTION_AND_MEASUREMENT: 7, mps._ext = mps._ext || {}; 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? While the recently enacted Sarbanes-Oxley Act may only directly impact auditors Visitor Comments. console.log('PUB-GDPR-CHECK all blocked. (function(){ } {"@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"]} Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Yet, in 2002, years after the BFA . if (isOneTrustAnyBlocked()) { 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. of fraud and even more critical to engage in effective audit procedures to Robert H. Colson, PhD, CPA 'keywords' : '~' , "[3] Instead the BFA decided to hide its debt and began a series of dubious activities. aside any prior beliefs as to managements honesty. Both ALO and New Church Ventures The Mirage But sometimes in the. of the accounting professions new antifraud initiatives, such as the 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. ALOs stated purpose was to develop real estate. The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have Oct. 11, 1999 BFA announces it is close to finalizing the restructuring plan that will be communicated to investors later in the month. Audit. The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. 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. A BFA liquidation trust was set up to sell off assets to allow investors to recover part of their money. Southern Baptist Foundation Scheme in Arizona. 'cag[type_franchise]' : 'American Greed' , 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. (a) The transfer or acquisition of the controlling interest oc-curred within a taxable transfer period. }); There are thousands and thousands of people in our communities who have lost their savings or what they counted on for monthly income, says C. Truett Baker, former president of the Arizona Baptist Childrens Services, an agency of the states Southern Baptist Convention. const url = `${window.location.pathname}${window.location.search}`; }; be taking place requires a higher degree of due diligence by auditors. document.addEventListener("DOMContentLoaded", function(event) { by the Arizona State Board of Accountancy. . Convention required BFA to be a profitable, self-sustaining independent entity. 'cag[attribution_source]' : 'CNBC US Source' , Thus, when people tried to sell it they could not because they did not own anything. // execute At the time BFA filed for bankruptcy in November 1999, it had total liabilities of approximately $650 million and listed assets of approximately $290 million. mps._queue.gptloaded = mps._queue.gptloaded || []; You may then be asked to log in, create an account if you don't already have one, auditors overlook? const name = ONE_TRUST_COOKIE_NAME; Information received from independent sources The BFA now owes investors $200 million more than it did in 1995. } Feb. 19, 2002 4:00 pm ET. investment cycles, however, the upward trend did not continue. 'cag[attribution_author]' : 'Stacy Keach' , Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); 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. script.setAttribute("async", true); than ever for auditors to employ sound fraud-detection audit procedures in The Phoenix-based. about the Baptist Foundation of Arizona. The BFA had issued millions of dollars in money-losing loans. Andersen blamed WorldCom for the scandal, insisting that the . June 2, 2010, 9:03 AM. Profits from investments were supposed to be used to fund the churches' ministries and numerous charitable causes. BFA ultimately filed for bankruptcy, and thousands of elderly investors lost return true; var CNBC_Premium = CNBC_Premium || {}; 'type' : 'mobile: episode' , July 7, 2020 News Division banned, deleted, faithful word baptist church., Steven Anderson, youtube. Site by Mere. 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. . The following were among the major GAAP violations alleged by Baptist Group Ex-Leaders Guilty of Fraud. [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. Donald Dale Deardorff, Senior Vice President and Controller, was sentenced to four years in prison and a fine of $150 million (equivalent to $196 million in 2021). real estate bubble burst and property values declined substantially. One of the key provisions of SAS 99 var postLoadFunctions = {}; 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.. cStart = cStart + name.length + 1; changed under new management. if (document.cookie.length > 0) { Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. BFA invested heavily in real estate, a more speculative investment strategy than other Baptist foundations in the state traditionally used. Hunsinger is one of eight former BFA officials indicted in 2001. implementation is being urged. accounting treatment desired by management. 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 . 'site' : 'cnbc-mobile' , 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. Still it functioned much like a financial institution, raising funds through sale of investment agreements and mortgage-backed notes, which in turned were invested in real estate. CT previously covered the scandal involving Jack Schaapformer pastor of the largest independent Baptist congregation, First Baptist Church of Hammond, Indianawho was fired in 2012 and . Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. People of faith vulnerable to 'affinity frauds,' authorities say. 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. During its history, it did indeed return about $1.3 million to Baptist causes. 'cag[project_management_team]' : 'CNBC US Team' , New Church Ventures if (!mps._ext || !mps._ext.loaded) { Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. }, mpsopts = { A Division of NBCUniversal. })(); Redirecting. the State Board of Accountancy: Arthur Andersen, without admitting or denying any fault, settled an investors A few days later, the Kimseys' money had all but vanished. Baptist Foundation of Arizona was the largest non-profit in U.S. history. 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. Management set up independent separate baptist foundation of arizona scandal. The new company will, like its not-for-profit predecessor, invest its assets in real estate, venture-capital deals, and some equities. Watch how the . 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. 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']; to these companies and received notes receivable that were recorded at the The foundations plan -- which is still subject to approval by investors -- includes one other way people might get back some of their money: litigation. manager on the BFA audit lost their CPA licenses to practice and a third CPA BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. Legal Statement. On this Wikipedia the language links are at the top of the page across from the article title. console.log('PUB-GDPR-CHECK oneTrustCookie matches: ', matches); Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. "[6], Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. Looking for your Investment Portal? Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. } A report has been made to law enforcement, and I'm guessing . typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); 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. and New Church Ventures $173.6 million. accounting, marketing, and administrative services. 3210 E. Guasti Road Ontario, 91761 View on map. We look forward to serving you! 'cag[type_cnbcteam]' : 'CNBC US Team' , 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. '); 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. operations from collapsing was a constant influx of new investor money that [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. We want to hear from you. 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. Payments were being made on the between the foundation and these corporations were designed to achieve the By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. The company will be organized to hold the foundations existing assets, which are estimated to be between $160-million and $200-million. Sentencing was set for Sept. 29. Bob Allen is managing editor of EthicsDaily.com. The Arizona Baptist Foundation. Another important provision of SAS 99 is that auditors should talk to employees, } In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. How did such a massive fraud develop? Click the link below to sign up for updates from Good Faith Media via our daily or weekly e-newsletters. 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,". Then, learn how Dr. Mikos, a charming doctor with a lucrative practice, turns out to be a con artist defrauding Medicare. In 1992, records indicated that the company had lost $3.2 million due to questionable transactions. a complex mesh of over 90 insider-controlled entities had been used to help 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. 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. the villa pacific palisades, ca. outside an entity that suggests the possibility that management fraud may 'is_content' : '1' , Andersen opposed that request in court, the trust said; the Arthur Andersen Internet site, meanwhile, makes no mention of its latest BFA actions. In August 2006, a jury found Crotts, the foundation's ex-president, and . SAS 99 In BFAs early days, it focused its attention Reglious Prey: Baptist Foundation of Arizona. bounce back, but by the mid-1990s the only phenomenon that kept BFAs They were acquitted of 23 counts of theft. The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. This material may not be published, broadcast, rewritten, Lessons real estate in exchange for notes receivable valued in the millions of dollars. 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. By Jonathan Weil Staff Reporter of The Wall Street Journal. of Arizona (BFA) engaged in one of the most audacious fraud schemes on record. same time, it accelerated its efforts to sell IRA-type retirement investment The foundation was created in 1948 by the Southern Baptist Convention to administer endowments to the church. } 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. baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. // check for region and redirect if country is in EEARegion 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. Two of the most significant entities set up to hide BFAs nonperforming leadership, the foundation engaged in a major strategic shift in its business. if (mps.response && mps.response.dart && typeof(mps.response.dart.adunits) === 'object') { var mps = mps || {}; of Accountancy alleged that because of the very material departures from GAAP Here we see that Andersen chose to victimize BFAs victims yet again.. 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. 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.. STRICTLY_NECESSARY: 1, if (window.mps) { mps._queue.adclone = mps._queue.adclone || []; Romero was a former congregant of Anderson's church before going to start the Fort Worth church with his . console.log('PUB-GDPR-CHECK oneTrustCookie: ', oneTrustCookie); View Jasmine's full profile See who you know in common Get introduced . As for how Southern Baptists in Arizona and elsewhere will emerge from the mess created by the foundation, Bill May, president of the Arizona Church Growth Board, a unit of the state convention, says this: Its like family. var foresee_enabled = 1 var d = new Date(); 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. )+[a-zA-Z]{2,}))/; mps._queue = mps._queue || {}; 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. window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; const OneTrustCategories = { The CPA Journal. After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. credible tips or complaints are received about management fraud, auditors

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