Former Arizona foundation executives convicted of fraud, await sentencing

Discussion in 'General Baptist Discussions' started by gb93433, Jul 25, 2006.

  1. gb93433

    gb93433
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    http://www.abpnews.com/www/1274.article
    Former Arizona foundation executives convicted of fraud, await sentencing
    By Robert Marus
    Published: July 25, 2006



    PHOENIX (ABP) -- In what has been described as the largest case of fraud targeting a religious group, the former top executive and legal counsel for the Baptist Foundation of Arizona were convicted on multiple fraud-related counts July 24.
    A Maricopa County, Ariz., Superior Court jury convicted former foundation President William Crotts and Thomas Grabinski, the group's former top lawyer, each on three counts of defrauding investors and one count of knowingly operating an illegal operation. The jury also acquitted two of 23 counts of theft. Jurors reportedly determined that Crotts and Grabinski did not personally gain financially from the scheme.
    Because the convictions require mandatory jail time, according to the Arizona Republic, the two were immediately handcuffed and taken into custody. They will be sentenced in September.
    The convictions are the result of a 10-month trial that came nearly seven years after the foundation collapsed and the fraud allegations first came to light, shocking the non-profit world.
    The foundation, controlled by the Arizona Southern Baptist Convention, declared bankruptcy in 1999 after state regulators ordered it to stop selling securities. About 11,000 investors -- many of them elderly members of Baptist churches in Arizona and elsewhere -- lost more than $550 million.
    Prosecutors said Crotts, Grabinski and other foundation employees marketed the charitable fund to individuals interested in investing in a fund that would support Baptist and other Christian ministries. Bible-quoting foundation representatives claimed the investments would deliver above-average returns while helping "to do the Lord's work," the Republic reported.
    However, the prosecutors said, the foundation's investments were actually losing money. The executives created "off-the-books" corporations to hide the losses while touting strong returns to sell the foundation to new investors to cover those losses -- essentially creating a non-profit pyramid scheme.
    Defense attorneys countered that the foundation would eventually have been able to pay off investors if it had been able to wait out a bad real-estate market, but state officials shut the foundation down too soon. The jurors rejected that argument.
    "They got caught up in something they couldn't get out of," the Republic quoted juror Nathan Redmond as saying.
    Five other foundation officials have already cooperated with prosecutors in the case, pleading guilty and testifying against Crotts and Grabinski. A sixth is reportedly too sick to stand trial.
    The accounting firm Arthur Andersen -- which also was connected to the massive Enron fraud scandal -- in 2002 paid a record $217 million to Arizona to settle a lawsuit involving the Baptist case. Andersen served as the foundation's accounting firm.
    Steve Bass, the chief executive officer of the Arizona Southern Baptist Convention, expressed optimism in reaction to the verdicts in a July 24 entry on his weblog.
    "Many in our Arizona Southern Baptist family are ready to close this chapter of our life together and move on," he wrote. "As I visit our churches and hear our people, the BFA issue is no longer the 'hot topic.' It appears that our people have moved on to our greatest passion: sharing the good news of Jesus Christ with our world."
    As a caveat, though, he added: "Arizona is now watching us. Will we remain humble? Will we seek to forgive and to reconcile? Will we invest the kind of evangelism energy in what God has taught us through this experience as Kingdom Children? We must. For whatever we think of Bill and Tom, their trial is now over and ours is just beginning."
     
  2. preachinjesus

    preachinjesus
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    A sad episode in the world of Christendom. It hasn't been talked about much...but should be.

    Thanks for posting this
     
  3. Joseph M. Smith

    Joseph M. Smith
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    This story has been around for a while ... this is just the denouement. One of my Board members said to me yesterday that he expects this publicity will make our work more difficult, even though we are a different state Baptist foundation, quite unconnected with Arizona. (I am Executive Director of the District of Columbia Baptist Convention Foundation). Some folks that might have trusted us will be anxious about it again. As it happens, our small foundation does not actually write gift contracts, but partners with the American Baptist Foundation for those purposes. So now we have to make sure THOSE guys are not off the deep end!

    But Arizona's misdeeds really should not surprise us. Greed has always been a strong motivator, even among Christian people. And runaway pride has always been the hallmark of human sin. Beyond that, in Christian circles there is often -- and perhaps too often -- a gentleman's agreement to look the other way when your colleague is doing something questionable.

    Where was the BFA Board in all this, by the way? The DCBCF Board receives regular reports on our finances and examines those reports carefully.
     
  4. gb93433

    gb93433
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    Before the news happened several pastors spoke against the practice. It was made public at the annual meeting. But the leaders were believed simply because they were Southern Baptist and people trusted them. I spoke against it to the deacons at the church I was pastoring. They thought I was anti-Baptist. I told a few pastor friends of mine and they pulled their money our before the crash. Other pastors I spoke with saw nothing wrong with the practice.

    I have never believed that giving should be used for investements to gain interest to make money. It should be used for ministry. Why should the money for God's work be used to charge Christians interest. Churches were being started and they were charged interest on the money they borrowed. I see nowhere is the Bible where there was any practice of charging Christians interest. I have challenged pastors and others to show me any practice in scripture where interest was charged God's people.

    Ex. 22:25, "If you lend money to My people, to the poor among you, you are not to act as a creditor to him; you shall not charge him interest."

    Deut. 23:19, 20, "You shall not charge interest to your countrymen: interest on money, food, or anything that may be loaned at interest. "You may charge interest to a foreigner, but to your countrymen you shall not charge interest, so that the Lord your God may bless you in all that you undertake in the land which you are about to enter to possess. "

    Psa. 15, "O Lord, who may abide in Your tent? Who may dwell on Your holy hill? He who walks with integrity, and works righteousness, And speaks truth in his heart. He does not slander with his tongue, Nor does evil to his neighbor, Nor takes up a reproach against his friend; In whose eyes a reprobate is despised, But who honors those who fear the Lord; He swears to his own hurt and does not change; He does not put out his money at interest, Nor does he take a bribe against the innocent. He who does these things will never be shaken."
     
  5. Bro Tony

    Bro Tony
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    As a pastor in Arizona for over 25 years. Formerly on the Executive Board of the ASBC and Chairman of the Growth Board, I can lend some light to this question. Most of the people on the Baptist Foundation Board were just pastors and people from the churches in the state. They were serving because they were asked to, and some had little if no expertise in the area of finance. The board meetings I attended as part of the Executive Board which also heard reports from the Bapt. Found. all we received were a group of reports along with a cover sheet that was supposed to tell us everything was alright. We we never given detailed information and I am not sure if the board for the Bapt Found could have understood the information if they received it. Bill Crotts told them everything was good and they received that as truth.

    I remember being on the executive board of the ASBC and getting a folder filled with pre-done recommendations that they wanted us to approve. I asked where they came from and who did the study to see if this was needful. I was told the convention staff had put it together and that it was my job to approve it. I told them I would not approve anything I did not understand or felt was led of God. The financial practices at that time were even worse. I asked for information concerning salaries for covention personnel and they told me I did not need to know. They placed it all in the budget under "salaries".

    Boards can only know as much as those who daily deal with things will allow. Unfortunately, when you have a board member who asks too many questions they are not invited to serve on the boards again.

    Bro Tony
     
  6. Joseph M. Smith

    Joseph M. Smith
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    I think this practice is truly horrible. I have seen it even in local churches, where the salaries for all the personnel are lumped into one sum, so that you cannot see what the pastor, the secretary, the janitor, whatever, earn. What is there to hide? If we are paying too little, then people should see that and be motivated to be more fair. If we are paying too much, then we are paying too much, and that too needs to be corrected. I have heard the practice defended as avoiding "invasion of privacy". No, it's not. An employer -- and that is what a church is -- clearly has to know what is being paid its employees.
     
  7. Bro Tony

    Bro Tony
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    I agree completely.

    Bro Tony
     
  8. gb93433

    gb93433
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    That is what happens when worldliness steps in. Too often people in christian circles do not believe God, nor wait for him, but rather believe it is dependent upon their manipulation to do what they think is what should be done or what they want. That kind of attitude is pure foolishness and ought to be a red flag to anyone who wants what is right.
     
  9. Bro Tony

    Bro Tony
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    True gb---unfortunately it has become the mode of operation in many of our convention boards and in some of our churches.

    Bro Tony
     

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