BFA sold real-estate investments to 13,000 mostly elderly Christians, promising high returns, the security of church backing, and the chance to help Baptist charities. Many of its sales representatives were pastors or former pastors.
In fact, much of the money went to insiders and shell corporations, and only token amounts to charities. A Phoenix newspaper exposed BFA, which filed for bankruptcy in November 1999.
Nearly all of the numerous financial recovery efforts are aimed at a much bigger, wealthier, and, some say, equally culpable target: Andersen, the multinational accounting firm formerly known as Arthur Andersen. Andersen's accountants repeatedly gave BFA's operations clean audits, even as the fraud was unraveling. Andersen staff also allegedly ignored reports from BFA whistleblowers.
With $10 billion in revenue in 2000, Andersen has deep pockets. The foundation's successor body, the BFA Liquidation Trust, also has filed suit against Andersen, charging negligence and breach of fiduciary duty. But BFA's liquidators will have to get in line. Among other groups taking aim at Andersen are:
The Arizona Board of Accountancy, which seeks $600 million in damages and wants to revoke the licenses of Andersen accountants who worked for BFA.
The state Corporation Commission, which has sued Andersen for securities fraud, audit violations, and consumer fraud.
Groups of investors, who have filed class-action lawsuits in both state and federal courts, alleging fraud, racketeering, and a cover-up.
The Arizona ...1
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