The auditors were Arthur Andersen, the same firm that audited Enron. Hundreds Accuse Independent Baptist Pastors of Abuse - News & Reporting Once javascript and access to those URLs are allowed, please refresh 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. ', window.location); var _qs = window.location.href; Year after year, Arthur Anderson audits the Baptist Foundation of Arizona, giving the non-profit group its stamp of approval and a clean bill of financial health. Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. 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. The Baptist Foundation of Arizona filed for bankruptcy in federal court last week, owing nearly $600-million to 13,000 people who had bought securities from the organization. 'keywords' : '~' , the firm should have issued either a qualified or an adverse opinion on the mps.__intcode = "v2"; Looking for your Investment Portal? All rights reserved. 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. return '' '); } 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. } A Matter of Lost Souls and Savings - culteducation.com 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. Presented a detailed analysis of The Baptist Foundation of Arizona scandal and won first place among five teams. or, indirectly, from BFA itself. return unescape(document.cookie.substring(cStart, cEnd)); function getOneTrustCookie() { let cEnd = document.cookie.indexOf(';', cStart); [3], The Arizona Attorney General's Office and the Arizona Corporation Commission conducted the criminal investigation that resulted in the convictions of eight defendants. In 1962 Pastor Glen Crotts became the first full-time president and was subsequently if (isOneTrustAnyBlocked()) { The foundations bankruptcy marks one of the biggest financial collapses ever by a charity. Bob Allen is managing editor of EthicsDaily.com. Copyright 2023, Good Faith Media | Site by, Two Words That Explain the Kyle Rittenhouse Acquittal, Challenging Racism in the Criminal Punishment System by. 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. var setAdblockerCookie = function(adblocker) { if (mps._urlContainsEmail()) { 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. In order to remove those loans from its books, the BFA secretly funneled money to a subsidiary. if (!matches) { 'cag[related_primary]' : '' , He is pastor of Faithful Word Baptist Church, an anti-LGBTQ hate group in Tempe, Arizona. A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. Investors who agree to receive any money recovered in such litigation must give up their rights to pursue other legal action against the foundation, such as joining the two class-action lawsuits that have already been filed against the foundation and its affiliates. //begin OneTrust Redirect The BFA was not interested in making this purchase. 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. head.insertBefore(mpsload, head.firstChild) The Baptist Foundation does have a plan to help investors recoup at least a portion of their money. Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. Two of the most significant entities set up to hide BFAs nonperforming Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. Powered and implemented by FactSet Digital Solutions. Who We Are; The Team . window._mpspixZ = (function(a){var b="abcdefghiklmnopqrstuvwxyz".split("");a||(a=Math.floor(Math.random()*b.length));for(var c="",d=0;d blockedCategories.includes(c)).length > 0; In 2002 Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. const COOKIE_REGEX = /groups=([^&]*)/; Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern } } aside any prior beliefs as to managements honesty. It also says that the foundations operating overhead was maintained at excess levels and that it engaged in costly transactions with insiders. Perceiving a lack of response, most resigned. 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. The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have 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. View MLA Baptist Foundation of Arizona Scandal.docx from EDUCATION EDC 101 at Grand Canyon University. 'site' : 'cnbc-mobile' , detect fraud. Please make sure your computer, VPN, or both in and outside of management. You may then be asked to log in, create an account if you don't already have one, for Southern Baptist causes. 2019. - Washington Arthur Andersen Faces Court Trial Over Baptist Investment Foundation. } else { Officials at the Arizona Southern Baptist Convention were unavailable for comment. Final Defendant in Baptist Foundation Case Pleads Guilty 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 conventions Executive Board. The BFA opens a web site address www.bfaz.org to answer questions. incorporated both nonprofit entities. Crotts and Grabinski could face six to 23 years for each count. Baptist Foundation execs found guilty of fraud - East Valley Tribune isEEARegionCheck(); accounting, marketing, and administrative services. const oneTrustCookie = getOneTrustCookie(); 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. Jasmine Cooper - VP, Enterprise Testing Officer-Partner Liaison Payments were being made on the (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 Twenty years later, Glen Crotts' son, William Pierre "Bill" Crotts, became the organization's second president. var pixelurl = ((document.location.protocol === 'https') ? Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. Two Failures With a Familiar Ring - The Washington Post 'cat' : 'CNBC TV|Primetime Shows 2|American Greed' , This material may not be published, broadcast, rewritten, or redistributed. Andersen Assailed Over Audits - The Washington Post Other companies to look at: Cendant, RiteAid, and Sunbeam. script.setAttribute("onerror", "setAdblockerCookie(true);"); Oklahoma Baptist foundation loses money in Madoff scandal 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 . 207, or tstolle@bcmd.org. SOCIAL_MEDIA: 8 Inadequate disclosure of losses on notes receivables due Site by Mere. Start Here; About Us. 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. At the center of the scandal is Crotts, a charismatic 53-year-old lawyer, who took over the BFA from his father in 1982. By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. Nov. 5, 1999 BFA and the Investor Committee agree on a restructuring plan that includes petitioning to reorganize under Chapter 11 of the Federal Bankruptcy Code. Cult Education Institute :: Group Information Archives Aug. 30, 1999 Pastor Richard A. Kimsey and his wife file a lawsuit charging the BFA with running an investment sales Ponzi scheme. "updatecorrelator" : true BFAs financial statements from 1984 to 1997. 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). var mpscall = { } }).catch(() => {}); American Greed: Religious Prey: Baptist Foundation of Arizona - CNBC 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 filed for bankruptcy in federal court last week, owing nearly $600-million to 13,000 people who had bought securities from the organization. Category:Religious scandals - Wikipedia 'stitle' : 'Religious Prey | Dr. Mikos: American Greed 5' , 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. (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. mps._queue.mpsinit = mps._queue.mpsinit || []; function isOneTrustAnyBlocked() { For example, Select Trading Group, a subsidiary of ALO, created its own subsidiary, Santa Fe Trails Ranch II. Thus, when people tried to sell it they could not because they did not own anything. 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. Management set up independent separate The first in a string of corporate scandals, Enron came to symbolize corporate excess of the 1990s and is Americas best-known white collar crime. A few days later, the Kimseys' money had all but vanished. Kyle Cooper. . 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. [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]. } const matches = oneTrustCookie.match(COOKIE_REGEX); Another important provision of SAS 99 is that auditors should talk to employees, The BFA now owes investors $200 million more than it did in 1995. "[1] Since he was working for both companies, Grabinski was able to authorize questionable transactions. [8] The trial of Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. Baptist Foundation of SC STAFF 'cag[type_creator]' : 'Stacy Keach' , The Foundation Speaks | News | Phoenix | Phoenix New Times | The "host" : 'mps.cnbc.com', A written statement from the foundation says that at the completion of the bankruptcy proceedings and the creation of a new for-profit company, the Baptist Foundation of Arizona will no longer exist. mps._queue.gptloaded.push(function() { 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. Aug. 28, 1999 The BFA board of directors votes to terminate the employment of William Crotts, Thomas Grabinski, and Donald Deardorff. Yet, in 2002, years after the BFA . In one year, there was an amazing increase in the Site by Mere. in 1985, which highlights just how dramatically the foundations mission Case Study: Arthur Andersen V. Arthur Anderson - 660 Words | Cram The BFA had issued millions of dollars in money-losing loans. Deceptive Accounting - 1331 Words | 123 Help Me Baptist Foundation Officials Found Guilty of Fraud BFA invested heavily in real estate, a more speculative investment strategy than other Baptist foundations in the state traditionally used. Text. 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']; {"@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"]} recently issued SAS 99, Consideration of Fraud in a Financial Statement Here we see that Andersen chose to victimize BFAs victims yet again.. 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. if (result && result.geo && result.geo.country_code) { from ALO and New Church Ventures (SFAS 5. Andersen is accused of ignoring a series of warnings while the Baptist Foundation of Arizona (BFA), a nonprofit company that operated much like a bank and offered high interest rates on retirement . 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. Southern Baptist Foundation Scheme in Arizona. 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). the auditors would have discovered that ALO was insolvent. (function() { A Division of NBCUniversal. When 'cag[attribution_source]' : 'CNBC US Source' , cStart = cStart + name.length + 1; lawsuit for $217 million. The following were among the major GAAP violations alleged by The collapse of Bryant Financial Associates was a complete scandal that exposed the fraudulent activities of its executives. The Baptist Foundation of Arizona was founded in 1948 to raise money to back up Baptist causes and to pay a return for investors. A Matter Of Lost Souls And Savings - Newsweek 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. "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. The Phoenix-based. 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? 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. 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 state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. baptist foundation of arizona scandal - gerstenfield.com earlier fraud standard, SAS 82. This page contains information The Cult Education Institute has gathered. } 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. const OneTrustCategories = { Meanwhile in Phoenix, another trial with many similarities quietly entered its 17th week. Andersen blamed WorldCom for the scandal, insisting that the . 2023 Southern Baptist Convention. Arthur Andersen Reaches Deal (Again) With Baptist Foundation of Arizona PC Phone Home The Enron scandal has entered the BFA picture, according to Andersen's Phoenix attorney, Ed Novak. The entities had no employees of their The second time, on the same day, he declared the same piece of property was valued at $960,000.[4]. is an increased emphasis on professional skepticism. A BFA liquidation trust was set up to sell off assets to allow investors to recover part of their money. Baptist Convention. [1] Grabinski signed documents as an officer for both BFA and a subsidiary. help restore investor confidence and supersedes the Auditing Standards Boards ideas on how fraud could occur and adjust the audit program plan so that tests 'adunits' : 'Default' , mps._urlContainsEmail = function() { 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. Appeals Court Upholds Baptist Foundation Convictions 'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , 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. 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. Baptist Foundation of Arizona fraud case: 20 years later - Phoenix When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest. }); 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. Aug. 11, 1999 The Arizona Republic reports the foundations funds have been frozen as a result of the investigation. [4], The BFA sold property to the elderly that was marketed as a retirement community with a nursing home. 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. First case: The Baptist Foundation of Arizona invests and loses millions entrusted by churchgoers, and its mission ends in scandal. His lawyer has said there was no fraud but rather a disagreement on the value of property. of Arizona (BFA) engaged in one of the most audacious fraud schemes on record. July 2, 1998 December 10, 1998 Arizona Corporation Commission begins an investigation of BFA based on the Phoenix NewTimes reports. 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. The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA. Your investment actually touches the lives of countless numbers while you earn a very attractive interest rate. The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. Since August, the foundation has fired its top three officials, severed ties with the law and accounting firms with which it had worked, laid off 72 of its 127 employees, and closed its two branch offices. 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. Arthur Andersen and the Baptist Foundation regarding the disclosure of related parties and the recognition of losses, document.cookie = "__adblocker=" + (adblocker ? Robert H. Colson, PhD, CPA [9], In 2002, Grabinski sued BFA's insurance carrier, National Union Fire Insurance Company of Pittsburgh, Pa. (National Union), for coverage of his legal fees per the Directors and Officers liability coverage purchased from National Union, plus damages. Scandals and stock market crashes . that audit public companies, in todays environment it is more important Baptist Foundation of Arizona was the largest non-profit in U.S. history. // check for region and redirect if country is in EEARegion Like many July 22, 1999 BFAs board accepts the offers of President Bill Crotts, General Counsel Tom Grabinski and Controller Don Deardorff to relinquish their BFA responsibilities although remain as BFA employees.
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