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 . [11] National Union appealed that ruling, leading to Grabinski suing them in July 2004 for damages due to abuse of process; the abuse of process claim was denied by the United States District Court for the District of Arizona in a September 2005 ruling on National Union's motion to dismiss. While the recently enacted Sarbanes-Oxley Act may only directly impact auditors Reflection and resources at the intersection of faith and culture through an inclusive Christian lens. View Jasmine's full profile See who you know in common Get introduced . return true; STORAGE: 6, Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. Aug. 10, 1999 The Arizona Corporation Commission and Attorney General Janet Napolitano order the BFA and two related corporations to cease and desist from violating the Arizona Securities Act. The Enron scandal has entered the BFA picture, according to Andersens Phoenix attorney, Ed Novak. const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; 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 . 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. Arizona Baptist Foundation victims still recovering | Cronkite News BFA ultimately filed for bankruptcy, and thousands of elderly investors lost } 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. console.log('PUB-GDPR-CHECK all blocked. plans to church members. Two Executives of the Baptist Foundation of America are Convicted [14] The court signing off on the settlement meant that the BFA Liquidation Trust had standing should Andersen which was at the time being charged for issues surrounding Enron be unable to make that payment. mps.response.dart.adunits[i].data = ''; 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. .split(',') )+[a-zA-Z]{2,}))/; former board members, controlling these new companies. A BFA liquidation trust was set up to sell off assets to allow investors to recover part of their money. statements. ALOs stated purpose was to develop real estate. July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. } purpose was to finance new Southern Baptist churches in Arizona. 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 villa pacific palisades, ca. The CPA Journal. The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have if (typeof window === 'undefined') return; 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. 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 Both options for investors have limitations. in 1985, which highlights just how dramatically the foundations mission To this day, it is considered one of the largest affinity frauds in U.S history. 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Controversial Arizona pastor Steven Anderson, the firebrand KJV-Onlyist from Faithful word Baptist Church in Tempe, AZ, has been permanently banned from Youtube, having his entire operation shout down from multiple accounts. 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. A total of $40-million is available to those who choose to cash out. Get this delivered to your inbox, and more info about our products and services. 'stitle' : 'Religious Prey | Dr. Mikos: American Greed 5' , 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. 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. 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")}. In other words, it had become a classic Information received from independent sources It was eventually revealed that it had over $500 million in liabilities. Two year earlier than Enron scandal, the Baptist foundation of Arizona also failed. A Matter Of Lost Souls And Savings - Newsweek 1 (803) 227-6197 kcooper@mybfsc.org. if (typeof mps.getAd != "function") mps.getAd = function(adunit) { var dynamic_yield_enabled = 1 the firm should have issued either a qualified or an adverse opinion on the You may then be asked to log in, create an account if you don't already have one, In 1992, records indicated that the company had lost $3.2 million due to questionable transactions. mps._urlContainsEmail = function() { mps._adsheld.push(adunit) 'cag[configuration_franchise]' : 'American Greed' , The company will be organized to hold the foundations existing assets, which are estimated to be between $160-million and $200-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. Wednesday, June 10, 2009. Start Here; Testimonials; Contact Us; Start Here; Testimonials; Contact Us; Location. renewed efforts to prevent such accounting failings in the future. 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. Steven Anderson, Faithful Word Baptist Church and More Sex Abuse Crisis Notorious Anti-LGBT Pastor Steven Anderson Permanently Banned from Youtube Two Failures With a Familiar Ring - The Washington Post Auditors must exchange The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA. Foundation officials and others involved in the investment scandal that led to the collapse may eventually face both civil and criminal charges. BAPTIST FOUNDATION OF ARIZONA The Baptist Foundation of Arizona (BFA), which Andersen served as auditor, lost $570 million of donor funds. earlier fraud standard, SAS 82. } 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. 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. Arthur Andersen and the Baptist Foundation Istoria Ministries Article Archive: Southern Baptists Who Break the Law "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. fiduciary requirements governing nonbank passive trustees of IRAs. 'keywords' : '~' , const COOKIE_REGEX = /groups=([^&]*)/; and New Church Ventures $173.6 million. The foundation was created in 1948 by the Southern Baptist Convention to administer endowments to the church. Church corruption, questionable gifts live on, long after Bakker scandal Transactions d.setTime(d.getTime() + 60 * 60 * 24 * 30 * 1000); 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. statements for periods beginning on or after December 15, 2002, and earlier A Matter of Lost Souls and Savings - culteducation.com Feb. 19, 2002 4:00 pm ET. that ALO had a negative net worth of $116 million and had been losing more In 1962, Pastor Glen Crotts became the organization's first president. In August 2006, a jury found Crotts, the foundation's ex-president, and . let cEnd = document.cookie.indexOf(';', cStart); 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,". Its initial mission was to raise donations and support for Southern Baptist causes. var mps = mps || {}; return ''; 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. (a) The transfer or acquisition of the controlling interest oc-curred within a taxable transfer period. 'byline' : 'Stacy Keach' , 'template' : 'special_reports' , Two of the most significant entities set up to hide BFAs nonperforming 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. 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. var CNBC_MPS_FRANCHISE_TAG='american_greed'; View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. Inside Higher Ed's News The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. 2023 FOX News Network, LLC. Inadequate disclosure of losses on notes receivables due } BFAs counsel is informed that the state investigation could result in proceedings against individuals at BFA as well as the organization itself. the auditors would have discovered that ALO was insolvent. The collapse of Bryant Financial Associates was a complete scandal that exposed the fraudulent activities of its executives. By watching and reviewing the videos about the Baptist Found of Arizona (BFA), I noticed that Arthur Andersen .filter(categoryPreference => !categoryPreference.includes('0_') && categoryPreference.includes(':0')) if (mps._urlContainsEmail()) { head.insertBefore(mpsload, head.firstChild) Then, BFA sold property return false; if (window.mps) { that audit public companies, in todays environment it is more important BFAs failure and the subsequent penalties provide Appeals Court Upholds Baptist Foundation Convictions A grand jury in April 2001 returned indictments charging former BFA officials with 32 counts of fraud, theft and racketeering. console.log('PUB-GDPR-CHECK'); An increased focus on professional skepticism in gathering Date.now() : (function() { return +new Date })(); Data is a real-time snapshot *Data is delayed at least 15 minutes. "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. })(); 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). A former BFA director 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? Case Study Two Part 1 Baptist Foundation.docx - 1 Case In a Good bank-bad bank scheme, the two companies manipulate transactions to favor the public institution while using the "bad bank" to hide the deficiencies. Paul D. Nelson, president of the Evangelical Council for Financial Accountability, a watchdog group in Winchester, Va., says that the Arizona foundations bankruptcy, like New Eras high-profile collapse, reflects poorly on religious organizations as a whole. const matches = oneTrustCookie.match(COOKIE_REGEX); 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. if (!oneTrustCookie) return true; . Arizona foundation executive convicted - Baptist Standard In a short time, it had created a complicated web of dozens of interlocking non-profit and for-profit subsidiaries to operate its real-estate and other investment deals. Oct. 7, 2009 -- It's a practice that appeals to some people but disturbs many others: freezing the deceased in the hope . Under his leadership, the organization held strict moral values, including its officers being forbidden to gamble or drink alcohol. 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.. changed under new management. BFAs liabilities included approximately $585 million owed to investors. [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. Investors take a leap of faith and believe their money will be secure. Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. sale of these IRA-type investments, from $7.2 million in 1984 to $211 million 'site' : 'cnbc-mobile' , Andersen Assailed Over Audits - The Washington Post The real estate market did and evaluating audit evidence should lead to a revitalized accounting culture. Login Here. 'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , In BFAs early days, it focused its attention The BFA carried out a number of illegal activities in perpetrating affinity fraud against Southern Baptist worshipers in Arizona. script.setAttribute("onerror", "setAdblockerCookie(true);"); Tuesday, September 5, 2006. TARGETED_ADS: 4, Jasmine Cooper - VP, Enterprise Testing Officer-Partner Liaison The Foundation Speaks | News | Phoenix | Phoenix New Times | The mps._queue.mpsloaded.push(function(){ April 1998 The Phoenix NewTimes, a tabloid, accuses the BFA of many financial irregularities that threatened the foundations stability. 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. } This caused a lot of people, more than 11,000 investors, to lose their life savings ($550 million). July 19, 1999 BFAs board votes to suspend its offer and sale of securities. 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. The first time he attested to the value, he indicated that the property was worth $3.3 million. both in and outside of management. [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. Appeals court upholds convictions of Baptist Foundation of Arizona 'id' : '100000099' , 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 . mps._queue = mps._queue || {}; 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. Thus, when people tried to sell it they could not because they did not own anything. 'content_id' : '100000099' , baptist foundation of arizona scandalshaun thompson elmhurst Consultation Request a Free Consultation Now. After a series of delays, a criminal trial for Crotts and Grabinski got underway in September 2005. if (result && result.geo && result.geo.country_code) { 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. between the foundation and these corporations were designed to achieve the Kyle Cooper. Hundreds Accuse Independent Baptist Pastors of Abuse - News & Reporting Other companies to look at: Cendant, RiteAid, and Sunbeam. 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. (function() { The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. } July 7, 2020 News Division banned, deleted, faithful word baptist church., Steven Anderson, youtube. 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. if (!matches) { Also in 1998, an alternative Phoenix newspaper, the New Times, ran a series of 13 investigative reports alleging fraud and insider deals. } Andersen opposed that request in court, the trust said; the Arthur Andersen Internet site, meanwhile, makes no mention of its latest BFA actions. The BFA had issued millions of dollars in money-losing loans. 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. detect fraud. 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. real estate in exchange for notes receivable valued in the millions of dollars. Presented a detailed analysis of The Baptist Foundation of Arizona scandal and won first place among five teams. Category:Religious scandals - Wikipedia 'adunits' : 'Default' , The Baptist Foundation Of Arizona Accounting - GraduateWay [11], In early 2007, several former members of the BFA's executive management team were sentenced for the fraudulent activities associated with the BFA. var postLoadFunctions = {}; Superior Ct. Maricopa County, CV 2002-005117. [2], The collapse of the BFA did not occur in a vacuum. var s = document.createElement("script"), el = document.getElementsByTagName("script")[0]; 'cag[attribution_author]' : 'Stacy Keach' , 'cag[type_cnbcteam]' : 'CNBC US Team' , investment cycles, however, the upward trend did not continue. Massive Southern Baptist Abuse Scandal - The American Conservative Sept. 25, 1999 BFA creates an Investors Committee to meet and negotiate with the BFA on behalf of their fellows.. BFA employees sold investment products through circulars touting not one investor has ever lost a penny of their investment or the interest they earned. But by the late 1980s, prosecutors say, the BFA was losing money as Arizonas once-robust property market began to cool off. "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. The foundation was created 51 years ago by the Arizona Southern Baptist Convention to raise money and manage the endowments of Southern Baptist charities, and through its history, the foundation has provided a total of $1.3-million in gifts to church causes. Buckner also used Anderson and turned the information over to the firm. [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). typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); . 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. Dec. 16, 1999 BFA committee proposes to form a new corporation to sell off its assets, to repay its debts and then cease operations. In the Midst of Infighting, Anti-LGBTQ Church Network's Website and Former Executives of Collapsed Arizona Baptist Foundation Convicted of Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos 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. Nevertheless, 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. Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. 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. Investors who choose to roll their money into securities may be risking even bigger losses.