Indictments appear likely in an investment fraud case involving the Phoenix- based Baptist Foundation of Arizona (BFA), according to local news reports. The Arizona attorney general's office would not confirm to CT that prosecutions are in the offing, but a staff member acknowledged that an investigation is active.

Arizona authorities estimate that some 13,000 investors have purchased more than $500 million worth of securities from BFA, which is associated with the Arizona Southern Baptist Convention. The foundation was ordered to stop selling securities on August 10 by the state's Corporation Commission. Three days earlier, BFA had written to its investors that it faced possible bankruptcy and was placing "a temporary freeze" on the redemption of investments. The foundation did say it would continue to make some payments to certain IRA investors.

"This was a soul-wrenching letter for us to write," says Berry Norwood, the new BFA board chairman. "Our investors are also our friends, our family, BFA employees, board members—we are all affected. We pray for a successful resolution to this situation."

On August 26, the foundation terminated its longtime president, William "Bill" Crotts, along with Thomas Grabinski, its general counsel, and controller Donald Deardoff.

The foundation's investments have been marketed primarily to conservative Christians of many different denominations, a large number of them elderly or retired. BFA financial services representatives were mostly Southern Baptist church members who offered attractive, above-market rates of return. With the freeze on redemptions, many investors face financial hardship.

PHONY DEALS: The foundation was organized in 1948 to raise funds for Southern Baptist–related charities. ...