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. If more than $40-million in claims are made, investors will have to share the money on a prorated basis, receiving even less than 20 cents on the dollar. const url = `${window.location.pathname}${window.location.search}`; window._mpspixZ = (function(a){var b="abcdefghiklmnopqrstuvwxyz".split("");a||(a=Math.floor(Math.random()*b.length));for(var c="",d=0;d' } One pastor who had recently entrusted $1 million in church funds to. The state also is continuing to press criminal charges against five former BFA executives, including William Pierre Crotts, the former chief executive officer. Two year earlier than Enron scandal, the Baptist foundation of Arizona also failed. The Mirage But sometimes in the. 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. In 1989, Arizonas
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. console.log('PUB-GDPR-CHECK oneTrustCookie: ', oneTrustCookie); Sept. 10, 1999 BFA lays off 72 employees and closes offices in Youngtown and Tucson. For example, on one day Grabinski attested to the value of a piece of property twice. In one year, there was an amazing increase in the
The following were some of the key warnings: Cases like the Baptist Foundation, along with other corporate frauds, have
Investors Lost Millions in Church Fraud Executives Sentenced. 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. 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. About 11,000 investorsmany of them elderly members of Baptist churches in Arizona and elsewherelost more than $550 million. 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. The Baptist foundation began selling investment products to church members in 1983. 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. In a March 29 statement, the day after receiving notice from Andersen, the trust said one of the first steps will be to ask the mediator who presided over the settlement negotiations, retired federal judge Layn Phillips, to rule that Andersen has breached the agreement and to order Andersen to pay the $217 million as promised.. head = document.head || document.getElementsByTagName("head")[0], mpsload = document.createElement("script"); mps.__timer = Date.now ? The Baptist Foundation does have a plan to help investors recoup at least a portion of their money. and evaluating audit evidence should lead to a revitalized accounting culture. help restore investor confidence and supersedes the Auditing Standards Boards
// check for region and redirect if country is in EEARegion [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. The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA. The BFA Liquidation Trust, which is seeking to recover the investors funds, immediately took action. Arthur Andersen provided unqualified clean audit opinions on
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. BFAs failure and the subsequent penalties provide
accounting, marketing, and administrative services. Payments were being made on the
mps._queue.adview = mps._queue.adview || []; auditors overlook? 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. Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. mps._adsheld.push(adunit) Founded in 1948, BFA was created as a nonprofit agency of the Arizona Southern Baptist Convention. A former BFA director
The new company will, like its not-for-profit predecessor, invest its assets in real estate, venture-capital deals, and some equities. } 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. "I just hope they realize they defied (God's) word by mishandling money that people entrusted to them," said Virginia Branch, 77, of Prescott, who lost $400,000 she said would have helped her grandchildren pay for college. "updatecorrelator" : true 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. }, mpsopts = { 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. Profits from investments were supposed to be used to fund the churches' ministries and numerous charitable causes. on funding church start-ups and providing aid for children and the elderly. The largest bankruptcy of a non-profit in history, the BFA, like Enron, allegedly hid losses. During its history, it did indeed return about $1.3 million to Baptist causes. var _regex = /([^=&/<>()[].,;:s@"]+(.[^=&/<>()[].,;:s@"]+)*)@(([[0-9]{1,3}.[0-9]{1,3}.[0-9]{1,3}.[0-9]{1,3}])|(([a-zA-Z-0-9]+. manager on the BFA audit lost their CPA licenses to practice and a third CPA
In BFAs early days, it focused its attention
First, it was critical for BFA to meet the Treasury regulations
In applying SAS 99, auditors should plan and execute every audit
[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. var pixelurl = ((document.location.protocol === 'https') ? 'cat' : 'CNBC TV|Primetime Shows 2|American Greed' , Legal Statement. 'title' : 'American Greed: Religious Prey: Baptist Foundation of Arizona | Medical Scams' , National Union Fire Insurance Company of Pittsburgh, Pa. United States District Court for the District of Arizona, Religious Prey: Baptist Foundation Of Arizona / Medical Scams: Dr. Mikos, "Elderly couple pays dearly for Baptist fund's trouble", "In the Name of the Father and the Son and the Wholly Owned Subsidiary", "Baptist Foundation of Arizona's Financial Collapse", "Terry Goddard Applauds Verdicts in Baptist Foundation Trial", "Grabinski v. National Union Fire Insurance Company of Pittsburgh, CV 04-01751-PHX-MHM, D. Az", "Final 5 Ariz. Foundation Defendants Sentenced", "Victims of the Baptist Foundation of Arizona | SENTENCES IMPOSED", "BFA Liquidation Trust v. Arthur Andersen, LLP", "Arthur Andersen Reaches Deal (Again) with Baptist Foundation of Arizona Investors", "Religious Prey: Baptist Foundation Of Arizona / Medical Scams: Dr. Mikos", https://en.wikipedia.org/w/index.php?title=Baptist_Foundation_of_Arizona&oldid=1137812926, Christian organizations established in 1948, Baptist organizations in the United States, Baptist denominations established in the 20th century, Articles lacking reliable references from May 2022, Creative Commons Attribution-ShareAlike License 3.0, This page was last edited on 6 February 2023, at 16:04. 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. 2023 Southern Baptist Convention. Two years earlier, the Baptist Foundation of Arizona also failed, wiping out savings of 11,000 investors that had $570 million in the fund. statements for periods beginning on or after December 15, 2002, and earlier
let cEnd = document.cookie.indexOf(';', cStart); script.setAttribute("src", "//www.npttech.com/advertising.js"); But it also "loaned" nearly $140 million to companies owned by three of the Foundation's directors.