Baptist Foundation of Arizona

From Wikipedia, the free encyclopedia - View original article

 
Jump to: navigation, search

The Baptist Foundation of Arizona (BFA) was a Southern Baptist charity whose fraudulent behavior led to the largest collapse of a religious financial institution in U.S. history.[1] The BFA was associated with the Arizona Southern Baptist Convention, which was affiliated with the national organization. When the BFA filed for bankruptcy in 1999, it had $530 million in liabilities as compared to a reported $70 million in assets.[2]

History[edit]

The BFA was founded in 1948 and initially sought to provide a financial revenue for participants while supporting Baptist-motivated causes. In 1962, Pastor Glen Crotts became the organization's first president. Under his leadership, the organization held strict moral values. Its officers were forbidden from gambling and drinking alcohol. Twenty years later, Glen Crotts' son, William Pierre Crotts, became the organization's second president.

The collapse of the BFA did not occur in a vacuum. In 1992, records indicated that the company had lost $3.2 million due to questionable transactions. The Reverend Ed Shaw suggested that the BFA "Explain the situation completely to investors; ask their forgiveness; let them know their gift of principal would help if they choose to give some or all of it."[3] Instead the BFA decided to hide its debt and began a series of dubious activities. Under Bill Crotts, the organization diverted over $140 million to two former and one active (as of 1998) director. The organization did this through the use of over 63 different public and private organizations all directly affiliated with the BFA.[4]

Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board.[4] Grabinski signed documents as an officer for both BFA and a subsidiary. When asked if a conflict of interest existed, the BFA indicated that both parties "had waived any conflicts of interest."[4] Since he was working for both companies, Grabinski was able to authorize questionable transactions. For example, on one day Grabinski attested to the value of a piece of property twice. The first time he attested to the value, he indicated that the property was worth $3.3 million. The second time, on the same day, he declared the same piece of property was valued at $960,000.[5]

Baptist Foundation of Arizona mission statement
Our purpose is to provide resource and expertise for Arizona Southern Baptist ministries. [2]

The Baptist Foundation of Arizona's mission statement[edit]

In response to the love God expressed in Jesus Christ, the Baptist Foundation of Arizona is a ministry which is committed to providing asset management services to Christians who desire to benefit worthy ministries while earning a market return on their investments.

We are further committed to protecting our investors through a growing fund balance which will enable us to provide resource and expertise for Arizona Southern Baptist ministries.

BFA's staff members offer professional services through an `up close and personal' client strategy.

The ministry of the Baptist Foundation of Arizona is born out of calling, commitment and sacrifice. Through excellence and commitment in their professional and spiritual lives, our board of directors and staff strive to be effective witnesses for Jesus Christ.[2]

Fraudulent activities[edit]

Baptist Foundation of Arizona brochure
We are a ministry dedicated to serving the Lord and furthering Southern Baptist and other Christian causes. 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. Your investment actually touches the lives of countless numbers while you earn a very attractive interest rate.[4]

Judgments[edit]

In early 2007, several former members of the BFA's executive management team were sentenced for the fraudulent activities associated with the BFA. Donald Dale Deardorff, Senior Vice President and Controller, was sentenced to four years in prison and a fine of $150,000,000. Jalma Hunsinger, President and Director of Church Ventures (a company whose stated purpose was to build churches), paid $150,000. BFA president, Crotts, was sentenced to eight years in prison. BFA chief attorney, Grabinski, was sentenced to six years and ordered to pay $159,000,000.[8]

Arthur Andersen, the Big Five accounting firm that audited Enron, paid former BFA investors $217 million for Andersen's failure to identify fraudulent activities at the BFA. When the settlement was originally released, in 2002, there were questions as to whether or not Arthur Andersen, which was at the time being charged for issues surrounding Enron, would be able to make that payment.[9] Christianity Today reported that "the worst case scenario for Baptist Foundation investors would be if Andersen were convicted this month in the criminal case [over its audits of Enron], then quickly filed for bankruptcy-court protection."[10] 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.

References[edit]

  1. ^ a b Baptist Foundation of Arizona's Financial Collapse
  2. ^ a b c Fischer, Alan. Elderly couple pays dearly for Baptist fund's trouble Arizona Star. 26 Sept 1999
  3. ^ a b Sterling, Terry. In the Name of the Father and the Son and the Wholly Owned Subsidiary Phoenix New Times. May 22, 1997.
  4. ^ a b c d Sterling, Terry. The Moneychangers Phoenix New Times, April 16, 1998
  5. ^ a b Sterling, Terry. A Shaky Foundation Phoenix New Times. April 23, 1998.
  6. ^ Sterling, Terry. Poring a Foundation Phoenix New Times, December 10, 1998
  7. ^ a b Sterling, Terry. Savings Bondage Phoenix New Times, September 10, 1998
  8. ^ Final 5 Ariz. foundation defendants sentenced Posted 2/16/07. Accessed 7/18/07
  9. ^ BFA Liquidiation Trust v. Arthur Andersen LLP Accessed 7/18/07
  10. ^ Olsen, Ted. Weblog:Arthur Andersen Reaches deal (again) with Baptist Foundation of Arizona Investors May 1, 2002. Christianity Today. Accessed 7/18/07