fetch('https://geo.cnbc.com/info/').then(res => res.json()).then(result => { An unambiguous lesson from the BFA case is that the audit team cannot rely
Among Southern Baptists in Arizona and the neighboring states, where many of the investors live, the impact of the case may be more direct. document.addEventListener("DOMContentLoaded", function(event) { SAS 99
'cag[project_management_team]' : 'CNBC US Team' , console.log('PUB-GDPR-CHECK all blocked. Andersen and its representatives pretended to negotiate in good faith, but in fact never had any intention of making good on their part of the settlement. Transactions
[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. 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. 2023 FOX News Network, 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. 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.. Southern Baptist Foundation Scheme in Arizona. }); //begin OneTrust Redirect [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. Crotts and Grabinski could face six to 23 years for each count. Login Here. var foresee_enabled = 1 'cag[attribution_source]' : 'CNBC US Source' , At the center of the scandal is Crotts, a charismatic 53-year-old lawyer, who took over the BFA from his father in 1982. Contact (909) 738-4000 info@bfcal.org. Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. "They had their faith shattered and faced the possible loss of all their retirement investments.". The Phoenix-based. Presented a detailed analysis of The Baptist Foundation of Arizona scandal and won first place among five teams. Sentencing was set for Sept. 29. First, it was critical for BFA to meet the Treasury regulations
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 subsidiary then used that money to purchase the loans from the parent company. Both ALO and New Church Ventures
} It was eventually revealed that it had over $500 million in liabilities. Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. [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]. Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. The company will be organized to hold the foundations existing assets, which are estimated to be between $160-million and $200-million. for Southern Baptist causes. The first time he attested to the value, he indicated that the property was worth $3.3 million. Audit. Auditors must exchange
return false; We are unable to fully display the content of this page. 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. script.setAttribute("async", true); head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); return _regex.test(_qs); Improving and strengthening fraud detection is at the heart
for (var i in mps.response.dart.adunits) { We look forward to serving you! 'is_sponsored' : '0' , the auditors would have discovered that ALO was insolvent. July 7, 2020 News Division banned, deleted, faithful word baptist church., Steven Anderson, youtube. Also, as a condition to the court-approved arrangement, the partner and the
They were acquitted of 23 counts of theft. A few days later, the Kimseys' money had all but vanished. that ALO had a negative net worth of $116 million and had been losing more
The Arizona Southern Baptist Convention was founded in 1928. 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. Quotes displayed in real-time or delayed by at least 15 minutes. }; He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. Over a period of several years, the management of the Baptist Foundation
Profits from investments were supposed to be used to fund the churches' ministries and numerous charitable causes. } In 1962, Pastor Glen Crotts became the organization's first president. 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. 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.. Unfortunately, the issuing of unqualified opinions, even after receiving
The BFA was not interested in making this purchase. 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 . in 1985, which highlights just how dramatically the foundations mission
document.getElementsByTagName("head")[0].appendChild(script); The foundations plan -- which is still subject to approval by investors -- includes one other way people might get back some of their money: litigation. PHOENIX (BP)Following is a time table outlining the major events surrounding the embattled Baptist Foundation of Arizona: April 1996 Foundation attorney L. Kyle Tresch resigns. "updatecorrelator" : true . The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA. a complex mesh of over 90 insider-controlled entities had been used to help
June 7, 2022 . the Arizona Corporation Commission as required by state law. 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-zA-Z]{2,}))/; The Baptist Foundation of Arizona was founded in 1948 to raise money to back up Baptist causes and to pay a return for investors. 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 $895 million in 2021). 'keywords' : '~' , fiduciary requirements governing nonbank passive trustees of IRAs. {"@context": "https://schema.org","@type": "WebPage","url": "https://www.cnbc.com/id/100000099","keywords": ["CNBC TV","Primetime Shows 2","American Greed","source:tagname:CNBC US Source"]} if (!matches) { . const url = `${window.location.pathname}${window.location.search}`; baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. renewed efforts to prevent such accounting failings in the future. Baptist Group Ex-Leaders Guilty of Fraud. (function() { 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. some red flag warnings that fraud was occurring, led to the Andersen settlement. To this day, it is considered one of the largest affinity frauds in U.S history. First case: The Baptist Foundation of Arizona invests and loses millions entrusted by churchgoers, and its mission ends in scandal. Buckner also used Anderson and turned the information over to the firm. CNBC_Comscore = 'CNBC_TV'; was used to pay interest on old money. in that it represents the largest cash settlement for a nonprofit case and
PHOENIX (ABP) The Arizona Court of Appeals has upheld convictions of two former Baptist Foundation of Arizona officials sentenced to prison in 2006 for defrauding more than 11,000 investors in a Ponzi scheme. View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. return '' from the Baptist Foundation Fraud. It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. [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. helped to further accelerate the demise of a once prestigious and great firm. 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. } 'template' : 'special_reports' , 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. The BFA Liquidation Trust, which is seeking to recover the investors funds, immediately took action. The previously announced cash out plan is shelved after talking to more than 4,000 investors. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. 'site' : 'cnbc-mobile' , By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen The majority of New Church Ventures
help restore investor confidence and supersedes the Auditing Standards Boards
Baptist Foundation of Arizona (Southern Baptist charity) BFA: Books for Africa (St. Paul, MN) BFA: Body Fat Analysis (biology) BFA: British Fantasy Award (British Fantasy Society; UK) BFA: Baseball for All (various locations) BFA: Botswana Football Association (Botswana) BFA: Blank Firing Attachment: BFA: Benefit Fraud Assessment: BFA BFA management was highly motivated not to show any losses and to report only
Yet, in 2002, years after the BFA . Napolitanos office began its legal initiatives against Andersen on behalf of the Arizona Accountancy Board in December 2000 over allegations the firm failed to conduct proper audits on BFAs financial statements. As a nonprofit company, ALO filed its financial statements each year with
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. 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. of Accountancy alleged that because of the very material departures from GAAP
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. His lawyer has said there was no fraud but rather a disagreement on the value of property. former board members, controlling these new companies. 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. }; The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. [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. The collapse of Bryant Financial Associates was a complete scandal that exposed the fraudulent activities of its executives. In order to remove those loans from its books, the BFA secretly funneled money to a subsidiary. "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. 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. It eventually grew into an independent nonprofit organization that sold individual retirement accounts and other investments. Synopsis The Baptist Foundation of Arizona (BFA) was organized as an Arizona nonprofit organization primarily to help provide financial support for various Southern Baptist causes. //end OneTrust Redirect Auditors must broaden the range of information that
if (typeof(window._mpspixZ) != 'string') { How did such a massive fraud develop? 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. In BFA's early days, it focused its attention mps.__timer = Date.now ? } 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. implementation is being urged. June 2, 2010, 9:03 AM. 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. Editor:
'cag[configuration_franchise]' : 'American Greed' , Two of the most significant entities set up to hide BFAs nonperforming
both in and outside of management. } const blockedCategories = decodeURIComponent(matches[1]) BFA, an agency of the Arizona Southern Baptist Convention, was founded in 1948 to raise and manage endowments for church work in Arizona. 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. "host" : 'mps.cnbc.com', 'subtype' : 'primetime_show' , BFA ultimately filed for bankruptcy, and thousands of elderly investors lost
The BFA filed for Chapter 11 bankruptcy that November, listing assets of $220 million and liabilities of $640 million. 'type' : 'mobile: episode' , 'nid' : '100000099' Baptist Foundation indictments thrown out. mps.response.dart.adunits[i].data = ''; let cEnd = document.cookie.indexOf(';', cStart); return false; Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos 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 . The Baptist foundation began selling investment products to church members in 1983. var w=window;if(w.performance||w.mozPerformance||w.msPerformance||w.webkitPerformance){var d=document;AKSB=w.AKSB||{},AKSB.q=AKSB.q||[],AKSB.mark=AKSB.mark||function(e,_){AKSB.q.push(["mark",e,_||(new Date).getTime()])},AKSB.measure=AKSB.measure||function(e,_,t){AKSB.q.push(["measure",e,_,t||(new Date).getTime()])},AKSB.done=AKSB.done||function(e){AKSB.q.push(["done",e])},AKSB.mark("firstbyte",(new Date).getTime()),AKSB.prof={custid:"1320688",ustr:"",originlat:"0",clientrtt:"138",ghostip:"61.19.12.55",ipv6:false,pct:"10",clientip:"202.6.19.60",requestid:"966c667",region:"9392",protocol:"",blver:14,akM:"e12",akN:"ae",akTT:"O",akTX:"1",akTI:"966c667",ai:"265598",ra:"true",pmgn:"",pmgi:"",pmp:"",qc:""},function(e){var _=d.createElement("script");_.async="async",_.src=e;var t=d.getElementsByTagName("script"),t=t[t.length-1];t.parentNode.insertBefore(_,t)}(("https:"===d.location.protocol?"https:":"http:")+"//ds-aksb-a.akamaihd.net/aksb.min.js")}. const COOKIE_REGEX = /groups=([^&]*)/; Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. One BFA subsidiary, Arizona Southern Baptist New Church Ventures, had a stated purpose of financing new Southern Baptist churches in Arizona. The Baptist Foundation of Arizona was established with the pretense of serving Southern Baptist causes. Learning its principal note issuer was ALO, she checked public records and found its unaudited balance sheet listed liabilities of $109.7 million and assets at minus $6.9 million. bounce back, but by the mid-1990s the only phenomenon that kept BFAs
People of faith vulnerable to 'affinity frauds,' authorities say. mps.__intcode = "v2"; Another important provision of SAS 99 is that auditors should talk to employees,
'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; assets were receivables from the insolvent ALO. if (window.mps) { })(); Management responded to the new environment by structuring accounting transactions
"true" : "false") + "; expires=" + d.toUTCString() + "; path=/"; Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. plans to church members. New Church Ventures
Looking for your Investment Portal? Some 13,000 investors lost $570 million, mainly elderly Baptists, some of whom lost their entire life's savings. 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. Sign up for free newsletters and get more CNBC delivered to your inbox. The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. [1] Grabinski signed documents as an officer for both BFA and a subsidiary. Tuesday, September 5, 2006. if (document.cookie.length > 0) { A Division of NBCUniversal. positive results. The entities had no employees of their
Art Toalston is a writer based in Nashville and a former editor of Baptist Press. Investors take a leap of faith and believe their money will be secure. 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,". mps._queue.gptloaded = mps._queue.gptloaded || []; s.src = "https://fm.cnbc.com/applications/cnbc.com/resources/files/2020/03/28/VisitorAPI.js"; Visitor Comments. 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. Napolitano and the Arizona Corporation Commission then filed a civil lawsuit against Andersen in January 2001, seeking civil remedies for violations of the Arizona Securities and Consumer Fraud Act. 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). As recounted by The Wall Street Journal March 4, many of the foundations investors were elderly churchgoers attracted by the foundations offer of above-market returns on promissory notes and other investment products, and by its mission of using earnings for good works, such as building churches and nursing homes for the poor. BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. Dec. 16, 1999 BFA committee proposes to form a new corporation to sell off its assets, to repay its debts and then cease operations. During its history, it did indeed return about $1.3 million to Baptist causes. earlier fraud standard, SAS 82. [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. Andersen blamed WorldCom for the scandal, insisting that the . 'cag[type_franchise]' : 'American Greed' , (function(){var g=function(e,h,f,g){this.get=function(a){for(var a=a+"=",c=document.cookie.split(";"),b=0,e=c.length;b=e/100?0:100),a=[h,e,0],this.set(f,a.join(":"));else return!0;var c=a[1];if(100==c)return!0;switch(a[0]){case "v":return!1;case "r":return c=a[2]%Math.floor(100/c),a[2]++,this.set(f,a.join(":")),!c}return!0};this.go=function(){if(this.check()){var a=document.createElement("script");a.type="text/javascript";a.src=g+ "&t=" + (new Date()).getTime();document.body&&document.body.appendChild(a)}};this.start=function(){var a=this;window.addEventListener?window.addEventListener("load",function(){a.go()},!1):window.attachEvent&&window.attachEvent("onload",function(){a.go()})}};try{(new g(100,"r","QSI_S_ZN_3NNZu19yzvgN7tr","//zn3nnzu19yzvgn7tr-nysscpa.siteintercept.qualtrics.com/WRSiteInterceptEngine/?Q_ZID=ZN_3NNZu19yzvgN7tr&Q_LOC="+encodeURIComponent(window.location.href))).start()}catch(i){}})(); Inadequate disclosure regarding ALO and New Church Ventures
(function(){ let cStart = document.cookie.indexOf(`${name}=`); 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. 3210 E. Guasti Road Ontario, 91761 View on map. You may then be asked to log in, create an account if you don't already have one, function isEEARegionCheck() { manager on the BFA audit lost their CPA licenses to practice and a third CPA
const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; We want to hear from you. The Arizona Baptist Foundation. The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. statements for periods beginning on or after December 15, 2002, and earlier
of fraud and even more critical to engage in effective audit procedures to
recently issued SAS 99, Consideration of Fraud in a Financial Statement
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. Several accountants and one attorney became concerned enough to approach senior management about ALOs deficit. Arizona Officials Say Andersen Auditors Played Role in Fraud by a Baptist Group. if (typeof adunit != "string") return false; Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. that audit public companies, in todays environment it is more important
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? detect fraud. 'cag[device]' : 'mobile-touch' , Prosecutors estimated 11,000 investors, most of them elderly, were defrauded in the 1980s and 1990s. All rights reserved. than $20 million per year for several years. console.log('PUB-GDPR-CHECK'); One pastor who had recently entrusted $1 million in church funds to. })(); Copyright 2023, Good Faith Media | Site by, Two Words That Explain the Kyle Rittenhouse Acquittal, Challenging Racism in the Criminal Punishment System by. } all audit engagements. }; was placed on probation, requiring that his work be monitored for two years
propertys book value, not its diminished current value. 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. Other companies to look at: Cendant, RiteAid, and Sunbeam. Under William Crotts
})(); 'path' : '/id/100000099' , console.log('PUB-GDPR-CHECK oneTrustCookie: ', oneTrustCookie); }).catch(() => {}); [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. 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. [2], The collapse of the BFA did not occur in a vacuum. function isOneTrustAnyBlocked() { Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention.
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