Baptist Foundation of Arizona

History

The Arizona Southern Baptist Convention 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 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.

The BFA consistently sold the concept that its main objective was to help its investors serve the work of the Arizona Southern Baptist Convention, while also providing them with favorable returns, as stated in a BFA investor 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.

1999 Bankruptcy

The Baptist Foundation of Arizona declared bankruptcy in 1999, citing $530 million in liabilities against $70 million in assets.

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." 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.

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 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.

Fraudulent activities

The BFA carried out a number of illegal activities in perpetrating affinity fraud against Southern Baptist worshipers in Arizona.

Good bank-bad bank

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 transactions to favor the public institution while using the "bad bank" to hide the deficiencies.

Maximum Value Performance Note

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 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!"

Ponzi schemes