Former Arizona foundation execs sentenced to prison, restitution

http://www.abpnews.com/www/1400.article

Former Arizona foundation execs sentenced to prison, restitution
By Robert Marus
Published: October 3, 2006



PHOENIX (ABP) -- Two former executives of the Baptist Foundation of Arizona were sentenced to jail and told to pay millions in restitution Sept. 29 in what may be the nation's largest case of faith-based financial fraud.
Maricopa County, Ariz., Superior Court Judge Kenneth Fields sentenced former foundation President William Crotts and Thomas Grabinski, the group's former top lawyer, to prison time and fines. Fields gave Crotts, 61, eight years in prison and Grabinski, 46, six years. Each was ordered to pay $159 million in restitution to the victims of a fraudulent scheme that came to light seven years ago.
In July, a jury convicted each man on three counts of defrauding investors and one count of knowingly operating an illegal operation. However, 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.
The sentencing marks the end 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 to support Baptist and other Christian ministries. Foundation representatives claimed the investments would deliver above-average returns while helping support the Lord's work.
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 in a ploy to keep the foundation afloat.
During the sentencing phase, according to news reports, dozens of victims of the scheme, as well as friends and family members of the pair, appeared before Fields to ask, alternately, for heavy sentences or for leniency. Some victims and family members asked Fields to have mercy on the pair because the money belonged to God anyway.
But Fields said the argument was moot, according to the Arizona Republic. "This is not a church, it's a court of law," he said.
Six other foundation officials have already pleaded guilty in the case and are awaiting sentencing.

 

The sad thing too is when some of the pastors in AZ questioned the state leaders they were told everything was okay. I was at the meeting when that was said.

The practice of taking people's giving to invest is simply wrong. Many churches toook the money entrusted to them abd gave it an organization that was biblically wrong. I see no indication in scripture where money was ever loaned by God's people with interest to God's people.

 

When Crotts and his cronies came to Yuma to visit with the pastors at a restaurant I got there early so they did not know who I was. I overheard some of their comments about having Baptist pedigrees, etc. There entire conversation before the pastors came smacked of what I saw as much worse than money hungry folks. I told a pastor friend of mine that I was not putting any money into that organization. I believed it was biblically wrong and at the time those men smacked of something I did want to get involved with. I had been around wealthy businessmen and those men gave me the idea that they were bad news. I went back to the church I was pastoring where there were two people in the congregation involved at the state level. When I told the deacons that we should pull our money out they accused me of being anti-Baptist. It was a short time later that the church I was pastoring lost all of its money in the BFA and had $3,000 left in a local ban account.

During that time I got quite an indoctrination of what the SBC was really like. To many folks in the SBC are involved in back scratching to get to the top. I knew it was not for me anymore. There is entirely too much nepotism and seeking to help each other with favors.

 

Ungodliness will not. I am convinced by a number of conversations and letters I have written that what the people see is far better than what lies underneath. They preach the right stuff but underneath there is not a sound application of scripture. They say they believe the Bible but in practice they do not. They are more about image than substance. I think that is the beef a lot of younger people have about the old guard.

 

An organization is only as good as its people leading it. The leaders were crooks. Those who ignored the warnins should be jailed as well. The SBC leaders who were aware of the situation should be held accountable as well.

It also shows the leaders lack of understanding of scripture. The BFA was supported and promoted by the state SBC leaders.