217:, officially approved a settlement that would pay former BFA investors $ 217 million (equivalent to $ 368 million in 2023) for Andersen's failure to identify fraudulent activities at the BFA. The court signing off on the settlement meant that the BFA Liquidation Trust had standing should Andersen – which was at the time being charged for issues surrounding Enron – be unable to make that payment.
77:
principal would help if they choose to give some or all of it." 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.
81:
interest." 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.
174:
guilty. The trial of
Grabinski and Crotts was the longest criminal jury trial in the history of the state of Arizona. 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 $ 240 million in 2023), each, in restitution.
136:
1.9M (million) piece of asbestos-contaminated property to the BFA for US$ 1 as a tax write off. The BFA was not interested in making this purchase. Instead, they referred the individual to former BFA Director, Jalma
Hunsinger, who then purchased the property for US$ 1. Hunsinger subsequently used the
103:
The BFA had issued millions of dollars in money-losing loans. In order to remove those loans from its books, the BFA secretly funneled money to a subsidiary. The subsidiary then used that money to purchase the loans from the parent company. In a Good bank-bad bank scheme, the two companies manipulate
223:
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
112:
The BFA sold certificates of deposit that were non-refundable during the life of the CD. MVPNs were marketed with the notion that they received a higher than average yield and that part of the investment's return was used for God's mission. MVPNs were "fraudulently represented ... as one which could
137:
property as collateral to obtain a US$ 6.8M loan from the BFA. 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.
189:
civil trial found in favor of
Grabinski, with the Court ordering National Union to pay Grabinski $ 2.5 million (equivalent to $ 4 million in 2023). National Union appealed that ruling, leading to Grabinski suing them in July 2004 for damages due to abuse of process; the abuse of process claim was
51:
was founded in 1928. In 1948, the
Baptist Foundation of Arizona was founded 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
173:
million (equivalent to $ 1,006 million in 2023). 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
63:
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
201:
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 million (equivalent to $ 220
76:
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
80:
Each of these related companies had Bill Crotts and the BFA's chief attorney, Tom Grabinski, on their board. 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
145:
The BFA sold property to the elderly that was marketed as a retirement community with a nursing home. The person did not actually purchase the property, but purchased the right to occupy said property. Thus, when people tried to sell it they could not because they did not own anything.
113:
be redeemed at any time, although with an interest penalty." 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!"
131:
A land flipping scheme is one where a person or company inflates the value of a piece of property to make more money. For example, the Phoenix New Times reported a case wherein an individual wanted to sell a
52:
held strict moral values, including its officers being forbidden to gamble or drink alcohol. Twenty years later, Glen Crotts' son, William Pierre "Bill" Crotts, became the organization's second president.
821:
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Mechanisms whereby the early investors make a profit by receiving the contributions of later investors. The BFA became dependent upon future investors to pay older investors and loan interest.
348:
31:
on unwitting worshippers in the Southern Baptist community in Arizona, leading to the largest collapse of a religious financial institution in U.S. history. The BFA was associated with the
202:
million in 2023). Jalma Hunsinger, President and Director of Church Ventures (a company whose stated purpose was to build churches), paid $ 150,000 (equivalent to $ 220,000 in 2023).
596:
191:
178:
796:
816:
627:
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in a September 2005 ruling on National Union's motion to dismiss. Independent of the abuse of process ruling, the original Arizona Superior Court ruling was upheld by the
224:
yet settled in a court. 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
516:
383:
781:
801:
471:
338:
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conducted the criminal investigation that resulted in the convictions of eight defendants. At the time of its failure in 1999, it was the largest
724:
548:
281:
745:
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806:
450:
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48:
32:
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181:(National Union), for coverage of his legal fees per the Directors and Officers liability coverage purchased from National Union, plus
585:
617:
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The Baptist Foundation of Arizona declared bankruptcy in 1999, citing $ 530 million in liabilities against $ 70 million in assets.
237:
505:
159:
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786:
648:
24:
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The BFA consistently sold the concept that its main objective was to help its investors serve the work of the
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transactions to favor the public institution while using the "bad bank" to hide the deficiencies.
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actually touches the lives of countless numbers while you earn a very attractive interest rate.
39:
in 1999, it had $ 530 million in liabilities as compared to a reported $ 70 million in assets.
586:"Grabinski v. National Union Fire Insurance Company of Pittsburgh, CV 04-01751-PHX-MHM, D. Az"
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440:
410:
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343:
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59:, while also providing them with favorable returns, as stated in a BFA investor brochure:
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28:
775:
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714:"Arthur Andersen Reaches Deal (Again) with Baptist Foundation of Arizona Investors"
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in March 2005, at which point National Union paid the $ 2.5 million to Grabinski.
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36:
35:, which was affiliated with the national organization. When the BFA filed for
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In 2002, a judge in the civil court case of the BFA Liquidation Trust versus
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that had ever occurred in the United States, with a total loss estimated at
656:
746:"Religious Prey: Baptist Foundation Of Arizona / Medical Scams: Dr. Mikos"
246:, covered the fraudulent behavior of the Baptist Foundation of Arizona.
238:
Religious Prey: Baptist Foundation Of Arizona / Medical Scams: Dr. Mikos
339:"In the Name of the Father and the Son and the Wholly Owned Subsidiary"
182:
682:
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The BFA carried out a number of illegal activities in perpetrating
649:"Victims of the Baptist Foundation of Arizona | SENTENCES IMPOSED"
214:
755:
506:"Terry Goddard Applauds Verdicts in Baptist Foundation Trial"
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United States District Court for the District of Arizona
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United States District Court for the District of Arizona
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National Union Fire Insurance Company of Pittsburgh, Pa.
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578:
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304:"Elderly couple pays dearly for Baptist fund's trouble"
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Baptist denominations established in the 20th century
472:"Baptist Foundation of Arizona's Financial Collapse"
213:accounting firm that also failed to properly audit
677:
675:
673:
177:In 2002, Grabinski sued BFA's insurance carrier,
93:against Southern Baptist worshipers in Arizona.
683:"BFA Liquidation Trust v. Arthur Andersen, LLP"
618:"Final 5 Ariz. Foundation Defendants Sentenced"
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568:Superior Ct. Maricopa County, CV 2002-005117
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797:Christian organizations established in 1948
817:Baptist organizations in the United States
687:Bernstein Litowitz Berger & Grossmann
236:In 2007, the first story on the episode "
367:
365:
255:
16:American fraudulent charity (1948–1999)
434:
432:
655:'s Office. 2010-11-16. Archived from
439:Greene Sterling, Terry (1998-09-10).
404:Greene Sterling, Terry (1998-12-10).
372:Greene Sterling, Terry (1998-04-23).
337:Greene Sterling, Terry (1997-05-22).
270:Greene Sterling, Terry (1998-04-16).
7:
538:"BFA Defendants Sentenced to Prison"
185:. In February 2004, the jury in the
754:. Season 1. Episode 5. 2007-07-19.
57:Arizona Southern Baptist Convention
49:Arizona Southern Baptist Convention
33:Arizona Southern Baptist Convention
21:Baptist Foundation of Arizona (BFA)
782:Defunct companies based in Arizona
14:
802:1999 disestablishments in Arizona
812:Baptist Christianity in Arizona
727:from the original on 2006-10-10
693:from the original on 2009-01-02
630:from the original on 2022-05-17
551:from the original on 2013-04-26
519:from the original on 2013-04-25
453:from the original on 2016-12-12
418:from the original on 2018-06-20
386:from the original on 2016-01-21
351:from the original on 2016-01-21
302:Fischer, Alan D. (1999-09-26).
284:from the original on 2016-07-16
827:1948 establishments in Arizona
160:Arizona Corporation Commission
108:Maximum Value Performance Note
1:
547:(Press release). 2006-09-29.
515:(Press release). 2006-07-24.
240:", of the television series
807:Southern Baptist Convention
27:charity, which executed an
853:
226:Savings and Loan collapses
711:Olsen, Ted (2002-05-01).
653:Arizona Attorney General
543:Arizona Attorney General
511:Arizona Attorney General
196:Arizona Court of Appeals
156:Arizona Attorney General
476:www.cephas-library.com
187:Arizona Superior Court
66:
406:"Poring a Foundation"
85:Fraudulent activities
374:"A Shaky Foundation"
272:"The Moneychangers"
837:Religious scandals
787:Corporate scandals
720:Christianity Today
309:Arizona Daily Star
232:In popular culture
220:Christianity Today
158:'s Office and the
98:Good bank-bad bank
446:Phoenix New Times
441:"Savings Bondage"
411:Phoenix New Times
379:Phoenix New Times
344:Phoenix New Times
277:Phoenix New Times
228:of 1986 to 1995.
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832:Charity scandals
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141:Condo properties
25:Southern Baptist
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69:1999 Bankruptcy
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751:American Greed
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689:. 2002-05-06.
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626:. 2007-02-16.
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570:
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326:
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243:American Greed
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190:denied by the
164:affinity fraud
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91:affinity fraud
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29:affinity fraud
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659:on 2013-04-30
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623:Baptist Press
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759:. Retrieved
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661:. Retrieved
657:the original
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599:. 2005-09-23
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480:the original
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593:govinfo.gov
776:Categories
761:2022-05-16
731:2022-05-16
697:2014-12-06
663:2022-05-16
634:2022-05-16
603:2022-05-17
555:2022-05-16
523:2022-05-16
486:2007-07-20
457:2022-05-16
422:2022-05-16
390:2022-05-16
355:2022-05-16
320:2007-07-20
288:2022-05-16
250:References
37:bankruptcy
545:'s Office
513:'s Office
150:Judgments
725:Archived
691:Archived
628:Archived
549:Archived
517:Archived
451:Archived
416:Archived
384:Archived
349:Archived
282:Archived
211:Big Five
183:damages
43:History
209:, the
23:was a
589:(PDF)
215:Enron
756:CNBC
169:US$
154:The
134:US$
47:The
19:The
171:550
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685:.
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