By 1997, ALO had a negative net worth of $138.9 and owed BFA $70.3 million
help restore investor confidence and supersedes the Auditing Standards Boards
2023 Southern Baptist Convention. earlier fraud standard, SAS 82. 'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , Profits from investments were supposed to be used to fund the churches' ministries and numerous charitable causes. 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. Audit. 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. View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. To this day, it is considered one of the largest affinity frauds in U.S history. The Baptist Foundation does have a plan to help investors recoup at least a portion of their money. accounting, marketing, and administrative services. Management responded to the new environment by structuring accounting transactions
Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. 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. 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). BFA, an agency of the Arizona Southern Baptist Convention, was founded in 1948 to raise and manage endowments for church work in Arizona. mps._queue.adload = mps._queue.adload || []; } 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. }, mpsopts = { MVPNs were "fraudulently represented as one which could be redeemed at any time, although with an interest penalty. Hunsinger subsequently used the property as collateral to obtain a US$6.8M loan from the BFA. 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. if (typeof(window._mpspixZ) != 'string') { If the audit team had obtained copies of ALOs detailed financial statements,
The audit team requested the financial statements
Prosecutors said investors were promised high returns and a safe investment for using their money to build churches and retirement homes, but their combined losses totaled more than a half-billion dollars. To this day, it is considered one of the largest affinity frauds in U.S history. too heavily upon management assurances. 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. "[6] Elder law attorney Leas wondered why BFA would sell the elderly, "an investment that would tie up more than two-thirds of their non-residential assets in an investment that would be unavailable for five years! View Jasmine's full profile See who you know in common Get introduced . Powered and implemented by FactSet Digital Solutions. 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. and New Church Ventures $173.6 million. Defense lawyers said they plan to ask Judge Kenneth Fields to dismiss the charges, and plan to appeal if he doesn't. assets were receivables from the insolvent ALO. 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. Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. 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. var foresee_enabled = 1 })(); 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 Scandals and stock market crashes . if (document.cookie.length > 0) { Surname 1 Student's Name Professor's Name Course Date Financial Fraud Question I The litigation Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. 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. Buckner also used Anderson and turned the information over to the firm. Quotes displayed in real-time or delayed by at least 15 minutes. owed BFA significant amounts of notes receivables. return _regex.test(_qs); 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. recently issued SAS 99, Consideration of Fraud in a Financial Statement
It expects that its preferred stock will start paying annual dividends of 6 per cent by 2002. purpose was to finance new Southern Baptist churches in Arizona. Three former BFA officials have pleaded guilty to felonies in the case while Crotts and four others face fraud and racketeering charges. Second,
By MICHAEL SCHROEDER Staff Reporter of THE WALL STREET JOURNAL. accounting treatment desired by management. mpsload.id = "mps-load"; console.log('PUB-GDPR-CHECK Blocked Categories: ', blockedCategories); Bob Allen is managing editor of EthicsDaily.com. June 2, 2010, 9:03 AM. By 1996, ALO was more than $100 million in debt. if (mps._urlContainsEmail()) { (a) The transfer or acquisition of the controlling interest oc-curred within a taxable transfer period. }); mps._adsheld.push(adunit) const ONE_TRUST_COOKIE_NAME = 'OptanonConsent'; The BFA carried out a number of illegal activities in perpetrating affinity fraud against Southern Baptist worshipers in Arizona. from ALO and New Church Ventures (SFAS 5. typeof mps._gptfirst == "function" && mps._gptfirst(adunit, slotid); }).catch(() => {}); 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. The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. STRICTLY_NECESSARY: 1, return false; For example, Select Trading Group, a subsidiary of ALO, created its own subsidiary, Santa Fe Trails Ranch II. sale of these IRA-type investments, from $7.2 million in 1984 to $211 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. in 1985, which highlights just how dramatically the foundations mission
(function() { [5], The BFA sold certificates of deposit that were non-refundable during the life of the CD. We look forward to serving you! BFA began to invest heavily in the Arizona real estate market, and at the
'cag[attribution_source]' : 'CNBC US Source' , BFAs financial statements from 1984 to 1997. Perceiving a lack of response, most resigned. both in and outside of management. Along with companies like Enron and Worldcom, it was audited by accounting firm Arthur Andersen, giving investors a false sense of security. Please make sure your computer, VPN, or [4], The BFA sold property to the elderly that was marketed as a retirement community with a nursing home. const COOKIE_REGEX = /groups=([^&]*)/; Powered and implemented by FactSet Digital Solutions. Visitor Comments. 'subtype' : 'primetime_show' , Investors who choose to roll their money into securities may be risking even bigger losses. mps._queue = mps._queue || {}; Legal Statement. 'cag[related_primary]' : '' , real estate properties were ALO and New Church Ventures. DIRECTOR OF OPERATIONS. The foundation's bankruptcy marks one of the biggest financial collapses ever by a charity. Information received from independent sources
The Arizona Southern Baptist Convention was founded in 1928. Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. 'cag[attribution_author]' : 'Stacy Keach' , changed under new management. Under William Crotts's leadership, the foundation engaged in a major strategic shift in its operations. mps._adsheld = []; Baptist Foundation of Arizona WorldCom Enron Sunbeam scandal Andersen knew of the bill-and-hold schemes Waste Management Scandal Avoided depreciation expenses, Andersen knew about it and received bribes for issuing clean audit opinions. 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. 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.. 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. Reglious Prey: Baptist Foundation of Arizona. the villa pacific palisades, ca. bounce back, but by the mid-1990s the only phenomenon that kept BFAs
var script = document.createElement("script"); In BFAs early days, it focused its attention
Two former executives committed fraud to hide their financial mismanagement of the Baptist Foundation of Arizona, but they didn't line their own pockets, jurors said in convicting them Monday. Anderson asked for the documents and BFA officials refused to provide them. lawsuit for $217 million. [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. . 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. for ALO and New Church Ventures, but management refused to release the statements. } or redistributed. Quotes displayed in real-time or delayed by at least 15 minutes. 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. 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. Data is a real-time snapshot *Data is delayed at least 15 minutes. PC Phone Home mps.cloneAd = function() { return false; } SAS 99
return Object.values(OneTrustCategories).filter((c) => blockedCategories.includes(c)).length > 0; for (var i in mps.response.dart.adunits) { The BFA now owes investors $200 million more than it did in 1995. function getOneTrustCookie() { Some Baptist leaders worry that fund-raising efforts by Baptist agencies and local churches may be hampered not only by ill will created by the foundations troubles, but also simply because some donors will not have money to give. How did such a massive fraud develop? Nov. 5, 1999 BFA and the Investor Committee agree on a restructuring plan that includes petitioning to reorganize under Chapter 11 of the Federal Bankruptcy Code. Transactions
window.location.href = `/opt-in-check?pub_referrer=${encodeURIComponent(url)}`; be taking place requires a higher degree of due diligence by auditors. (function() { Baptist Foundation of Arizona Beecher-Tilton scandal case Branch Davidians C Claudy bombing F Foreign Office papal visit memo G Greater Grace World Outreach Greater Ministries International H Hyles-Anderson College I 2015 Iglesia ni Cristo leadership controversy K Keldholme Priory election dispute David Koresh L Lonnie Latham Larry Lea Two of the most significant entities set up to hide BFAs nonperforming
Wednesday, June 10, 2009. 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. Crotts and Grabinski could face six to 23 years for each count. Arizona real estate prices were skyrocketing in the early 1980s. if (!mps._ext || !mps._ext.loaded) { Investors take a leap of faith and believe their money will be secure. An increased focus on professional skepticism in gathering
Sept. 22, 1999 Former BFA director James Cook files a lawsuit against BFA in Maricopa Superior Court. regarding the disclosure of related parties and the recognition of losses,
Former general counsel Thomas Grabinski was convicted of three counts of fraud and one count of illegally conducting an enterprise. head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); of fraud and even more critical to engage in effective audit procedures to
d.setTime(d.getTime() + 60 * 60 * 24 * 30 * 1000); 'cag[template]' : 'special_reports' , than ever for auditors to employ sound fraud-detection audit procedures in
'id' : '100000099' , the firm should have issued either a qualified or an adverse opinion on the
Investors Lost Millions in Church Fraud Executives Sentenced. Mutual Fund and ETF data provided by Refinitiv Lipper. return true; 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. [8] Crotts was sentenced to eight years in prison, while Grabinski was sentenced to six years; the two convicted criminals were required to pay $159 million (equivalent to $214 million in 2021), each, in restitution. If more than $40-million in claims are made, investors will have to share the money on a prorated basis, receiving even less than 20 cents on the dollar. The BFA case involves the largest Chapter 11 bankruptcy filing by a nonprofit organization in U.S. history and the March 1 settlement was approximately twice the largest malpractice court settlement previously agreed to by Chicago-based Arthur Andersen. ', window.location); Its initial mission was to raise donations and support for Southern Baptist causes. Clearly no. A report has been made to law enforcement, and I'm guessing . The Arizona Baptist Foundation. Andersen settled a class-action lawsuit with BFA investors for $217 million, without admitting any wrongdoing. Star Stacy Keach (voice) See production, box office & company info Add to Watchlist Photos incorporated both nonprofit entities. 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 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,". }); 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. They can either cash out of the foundation, receiving 20 per cent of the value of their investments and the interest due to them, or elect to receive shares of stock in a new for-profit company that will be publicly traded. var mps = mps || {}; 'cag[configuration_franchise]' : 'American Greed' , real estate in exchange for notes receivable valued in the millions of dollars. Baptist Foundation indictments thrown out. mps._debug('[MPS]: email address detected in url, bypass gpt. CONTENT_SELECTION_AND_MEASUREMENT: 7, 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. See Church Loan Guidelines for details or download a Church Loan Application. 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.