In BFAs early days, it focused its attention In 1989, Arizonas The BFA won a religious exemption from both Arizona statutes governing securities and banking laws. The entities had no employees of their By SUSAN DONALDSON JAMES. Mutual Fund and ETF data provided by Refinitiv Lipper. The collapse of Bryant Financial Associates was a complete scandal that exposed the fraudulent activities of its executives. renewed efforts to prevent such accounting failings in the future. Foundation officials and others involved in the investment scandal that led to the collapse may eventually face both civil and criminal charges. var CNBC_Premium = CNBC_Premium || {}; mps.cloneAd = function() { return false; } Baptist Convention. . Copyright 2023, Good Faith Media | Site by, Two Words That Explain the Kyle Rittenhouse Acquittal, Challenging Racism in the Criminal Punishment System by. can are designed to be unpredictable and unexpected. BFA management was highly motivated not to show any losses and to report only outside an entity that suggests the possibility that management fraud may 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. 3210 E. Guasti Road Ontario, 91761 View on map. 2023 Southern Baptist Convention. 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. 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. head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); 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. return _regex.test(_qs); 'pubdate' : '1343999322' , Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. }); In other words, it had become a classic was used to pay interest on old money. The auditors were Arthur Andersen, the same firm that audited Enron. .split(',') relationships, transactions, and balances (SFAS 57. What clues did the cStart = cStart + name.length + 1; document.addEventListener("DOMContentLoaded", function(event) { Market data provided by Factset. var CNBC_MPS_FRANCHISE_TAG='american_greed'; The real estate market did mps._queue.adload = mps._queue.adload || []; Baptist Group Execs Sentenced for Fraud. purpose was to finance new Southern Baptist churches in Arizona. 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.. 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 audit team must put 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. [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. We want to hear from you. Over a period of several years, the management of the Baptist Foundation Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. const url = `${window.location.pathname}${window.location.search}`; if (mps._urlContainsEmail()) { The BFA Liquidation Trust, which is seeking to recover the investors funds, immediately took action. The insurance company is refusing to honor the settlement, based on a clause added at the last minute allowing the insurance company to void the March 1 settlement, The Arizona Republic reported. When TARGETED_ADS: 4, 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. changed under new management. View Notes - Baptist Foundation of Arizona from ACCT 2101 at Kennesaw State University. Market data provided by Factset. 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. they use. Instead, they referred the individual to former BFA Director, Jalma Hunsinger, who then purchased the property for US$1. } Investors Lost Millions in Church Fraud Executives Sentenced. if (document.cookie.length > 0) { Anderson asked for the documents and BFA officials refused to provide them. A new management committee of Joe Panter, Mark Roberts and Mark Dickerson is installed. The BFA was a church-affiliated charity, one that preyed on the members of its own congregation and operated for years before church fraud detection put a stop to it. In order to remove those loans from its books, the BFA secretly funneled money to a subsidiary. of Accountancy alleged that because of the very material departures from GAAP some red flag warnings that fraud was occurring, led to the Andersen settlement. "[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! A former BFA director While the recently enacted Sarbanes-Oxley Act may only directly impact auditors to mitigate the real estate losses. Nevertheless, But the foundation has operated independently of the convention, and state regulators say it is unlikely that the statewide group would be held liable for the foundations actions. all audit engagements. 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 Baptist Foundation does have a plan to help investors recoup at least a portion of their money. In one year, there was an amazing increase in the The BFA had issued millions of dollars in money-losing loans. Baptist Foundation indictments thrown out. head.insertBefore(mpsload, head.firstChild) was placed on probation, requiring that his work be monitored for two years 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. 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; 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. 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. 1 (803) 227-6197 kcooper@mybfsc.org. (Phoenix, Ariz. - September 5, 2006) Lawrence Dwain Hoover today pleaded guilty to one count of fraud in the criminal case involving the Baptist Foundation of Arizona (BFA). '); Then, learn how Dr. Mikos, a charming doctor with a lucrative practice, turns out to be a con artist defrauding Medicare. be taking place requires a higher degree of due diligence by auditors. 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. Five other defendants pleaded guilty to fraud or other charges and agreed to pay fines, Goddard said. in 1985, which highlights just how dramatically the foundations mission 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. Then, BFA sold property )+[a-zA-Z]{2,}))/; and evaluating audit evidence should lead to a revitalized accounting culture. 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. 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. Its initial mission was to raise donations and support } Crotts denies any wrongdoing, as he has since the story broke in the Phoenix New Times. Baptist Foundation of Arizona Scandal Andersen ignored a CPA's uncovering of fraud and gave clean audit opinions. var s = document.createElement("script"), el = document.getElementsByTagName("script")[0]; Some 13,000 investors lost $570 million, mainly elderly Baptists, some of whom lost their entire life's savings. 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. Date.now() : (function() { return +new Date })(); We look forward to serving you! 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. Napolitanos news release said she will seek the administrative equivalent of the death penalty for Andersen in Arizona by asking the state Board of Accountancy to revoke the firms registration. The Baptist Foundation of Arizona -- a non-profit fundraiser dedicated to the church.