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The foundation declared bankruptcy, leaving its investors, many of them elderly, without their life savings.
The foundation was accused of fraud and in some cases with illegal and unwise handling of the investments. Bill Crotts, past president of the foundation, called the attacks as from Satan, 'our spiritual enemy.'
The question is,
who is the Satan? The foundation doesn't have to look any further than itself.
The local Baptist churches that promoted the investments need to look at
themselves. One investor said, 'What's bothering me, really, I am deafened by
the silence from the pulpits of Southern Baptist churches in the state of
Maybe the church members need to speak out forcefully and take action to help their own members. It's difficult to understand their reticence. It's like sweeping dirt under a rug. The dirt remains, and the silence is deafening.
Beware Of Wolves
in Sheep's Clothing - Baptist Foundation of
"Beware of false prophets, who come to you in sheep's clothing, but inwardly they are ravenous wolves. "You will know them by their fruits. Do men gather grapes from thornbushes or figs from thistles? "Even so, every good tree bears good fruit, but a bad tree bears bad fruit. "A good tree cannot bear bad fruit, nor can a bad tree bear good fruit. "Every tree that does not bear good fruit is cut down and thrown into the fire. "Therefore by their fruits you will know them. Matthew 7:15-20
The Foundation allegedly continued to solicit new investors, operating a Ponzi scheme in which funds from new investors were used to pay off old investors. Lawsuits further allege that Arthur Andersen ignored red flags and continued to give the Foundation clean audits, in effect aiding and abetting the fraud.
The Baptist Foundation of Arizona, founded by the Southern Baptist Convention also used Southern Baptist pastors and former pastors as sales representatives to rob 13,000 mostly elderly Christians by promising high returns, the security of church backing, and the chance to help Baptist charities. It was nothing but a fraud and a big Ponzi Scheme.
Until the late
1980s, the BFA had been managing church building funds and retirement funds for
a few thousand Baptist layman. Profits came from land investments in the
Three people related to the Baptist Foundation pleaded guilty to defrauding investors in May and have agreed to cooperate in an investigation of five others indicted on 32 counts each of theft, fraud and racketeering.
Foundation officials Edgar Kuhn, Donald Deardoff and Jalma Hunsinger had earlier pleaded guilty to reduced charges in exchange for cooperating with prosecutors in a case involving five others who claimed innocence reported the Associated Baptist Press.
crash in 1999 of the Baptist Foundation of
Integrity, a grassroots effort seeking to repay Baptist Foundation of
Only 66 Arizona
Southern Baptist churches and missions, out of about 400 congregations, had pledged to support the ROI
plan, said Larry Deskins, pastor of
Gateway Fellowship, SBC, Gilbert, Ariz., who had spearheading the ROI effort.
Another effort the
Steve Bass, Arizona Southern Baptist Convention executive director- treasurer, who made a annual salary of $89,937, said the churches' lack of commitment to ROI should not be construed as a lack of concern for BFA investors, although their real deeds spoke louder than their hypocritical words
The saga of the
Baptist Foundation of
It had been all talk and words but no real concrete action and deeds to correct the injustice to the elderly brought about by the Southern Baptist Convention through its support and management of BFA.
But it was the Southern Baptist convention who supported and propagated the support of the $590 million Ponzi scheme that enriched insiders. Private companies controlled by one insider, former BFA director Harold Friend, were paid about $11 million from BFA and its maze of related companies from November 1998 to November 1999,
However Armstrong, a retired Southern Baptist minister, and his wife, Lois, 76, need money from BFA and can't get a penny. He suffers from diabetes, cancer and a liver malady. The Armstrongs sold their Casa Grande home in June and wired the proceeds, about $160,000, to their BFA account. In all, the Armstrongs had entrusted about $460,000 to BFA. Their "investments" amounted to promissory notes. BFA borrowed their money at a high rate, and promised to pay it back , reported the Phoneix News Times.
BFA didn't keep its promises. It filed for Chapter 11 bankruptcy protection in November, claiming $640 million in debts and $160 million to $200 million in assets. Now the Armstrongs are living in their RV. It is the only home they can afford.
While others are investigating and prosecuting the BFA leaders no one is looking into the system that allowed the Southern Baptist pastors and former pastors to do their thievery - The Southern Baptist Convention. Was this fair and right? It this the way justice was done in America?
QUOTES FROM SOME SO CALLED BFA INVESTORS....
"These people are wolves in sheep's clothing, and our money has been consumed by them. They are nothing more than thieves, and God says, 'Thou shalt not steal'."
"What's bothering me really, I am deafened by the silence from the pulpits of the Southern Baptist churches in the state of Arizona."
"This is the largest charitable religious scam in the history of the United States. It makes Jim and Tammy Faye Bakker look like they were kindergarten kids."
"I just can't understand [where the missing $590 Million went]. You'd have to be in a casino 24 hours a day for years to get rid of that kind of money."
"How is the fox who raided the henhouse going to bring back the chickens? They ate them all, and now they're fat."
BFA's Biblically-based stewardship perspective...
"Stewardship Investing" through the Foundation is a TREMENDOUS OPPORTUNITY TO BE FOUND FAITHFUL ABOVE and BEYOND the TITHE TO YOUR LOCAL CHURCH...
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Don't let your retirement dollars fly away! In the complex and changing world of today, planning for retirement is CRITICAL. WE CAN HELP you ACHIEVE YOUR RETIREMENT DREAMS (NIGHTMARES).
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We know that for most of you, our common ties to the churches are one of the most important reasons you invest with BFA, CFP, and NCV, AND THOSE SAME TIES CAN HELP CARRY US THROUGH THESE DIFFICULT TIMES.
The Baptist Foundation of Arizona, a subsidiary of the Southern Baptist Convention used Southern Baptist pastors and former pastors as sales representatives to rob 13,000 mostly elderly Christians by promising high returns, the security of church backing, and the chance to help Baptist charities. It was nothing but a fraud and a big Ponzi Scheme.
Until the late 1980s, the BFA had been managing church building funds and retirement funds for a few thousand Baptist layman. Profits came from land investments in the red-hot Arizona market. But when property values tanked, the BFA investments did, too. Instead of admitting losses and writing down loans, BFA officials in several cases allegedly cooked up transactions between BFA and shell companies that made it look as if the BFA was still profitable. "It was a big paper charade," charged Assistant State Attorney General Robert Zumoff, reported the Phoenix New Times
To counter the unreported losses, fund president William Crotts and the BFA stepped up marketing, allegedly trying to bring in enough new money to cover old losses. Through the '90s, brochures extolled BFA's "Biblically based" investment plans, and urged faithful Baptists to "do good by doing good," becoming "bolder stewards of their God-given resources." Helpful salesmen made house calls. "[Our pastor] said if you've got any money, take it up to the Baptist Foundation," recalls investor Opal Bostwick, 72. The marketing worked. The BFA now owed investors $200 million more than it did in 1995.
Lucrative 'seed faith' mail ministry has
Once a traveling tent-revival preacher, the
Rev. James Eugene Ewing built a direct-mail empire from his mansion in
computerized mailing operation, Saint Matthew's Churches, mails more than 1
million letters per month, many to poor, uneducated people, while
The letters contain an alluring promise of "seed faith": send Saint Matthew's your money and God will reward you with cash, a cure to your illness, a new home and other blessings. They often contain items such as prayer cloths, a "Jesus eyes handkerchief," golden coins, communion wafers and "sackcloth billfolds." Recipients are often warned to open the letters in private and not discuss them with others.
reaped Ewing and his organization a gross income of more than $100 million
since 1993, including $26 million in 1999, the last year Saint Matthew's made
its tax records public. And while much of the money is spent on postage and
The organization is not related to other Tulsa-area churches named St. Matthew's, though many of them have received calls asking to be removed from its mailing list.
founder of the Trinity Foundation, a nonprofit religious watchdog group, has
At the time,
Anthony has also
obtained documents that describe how
"He capitalizes on the isolation of the loneliest and poorest members of our society, promising them magical answers to their fears and needs if only they will demonstrate their faith by sending him money," Anthony said.
"He is, quite literally, the father of the modern-day 'seed-faith' con cept that fuels the multibillion-dollar Christian industry known as the 'health-and-wealth gospel.'
Joyce, who has
represented Ewing for decades, said Ewing, 70, would not agree to an interview
for this story. He said Anthony's characterization of
Joyce said seed faith "is a biblical principle that is preached by thousands."
"The Bible is full of admonitions to give."
Joyce said the
church has services in a Presbyterian church that it leases in
The pastor of the
church, the Rev. Leslie Merlin, said she had never heard of
Ewing, who did not attend divinity school, was ordained by the Communion of Evangelical Episcopal Churches.
Ewing was born in
Texas in 1933, the son of south Texas sharecroppers, according to his mailings.
After serving in the Air Force, he chartered Camp Meetings Revivals in
Roberts' ministry had plummeted after Roberts built
The Rev. Wayne A.
Robinson, then the vice president of public affairs for the Oral Roberts
Evangelistic Association, called
interest in the plane, which was dispatched to
"I brought them in to see Oral," Robinson recalled. "I was expecting the appropriate deference of these guys to Oral, the big man. About the first thing Gene said was, 'Oral, you are in trouble, and I can help you.' "
Ewing, who had little formal education, was about 5 feet, 7 inches tall, wore expensive clothing and jewelry and a blow-dried hairstyle, Robinson said.
"He had all the things you can think of of people who had made it and come out of poverty: the most expensive silk suits, alligator shoes, coifed hair."
Ewing spoke in broken grammar and one of his model letters contained 17 misspellings, Robinson said. But Roberts "recognized that this person had something to say, and he was willing to listen."
During a second
meeting with Roberts,
"Gene laid out one of the most sophisticated fund-raising campaigns I had ever seen. He said, 'Oral, I want you to write your supporters and tell them you are going in the prayer tower, and you are going to read their prayer requests and pray over them.' He stayed there three days. I forget how many hundred thousands of letters we had, but it was huge."
Robinson said that on Ewing's advice, Roberts responded to the letters with a letter outlining seed faith.
"You give and you get from God. It was a kind of prosperity gospel," Robinson said.
Roberts was so happy with Ewing's advice that he gave Ewing the plane, Robinson said.
The next year, income to Roberts' ministry doubled, to $12 million from about $6 million, Robinson said.
prosperous times, Robinson said, he was unhappy in the job and soon quit.
Today, he is a pastor of the
"Once he did it with the biggest man of all, then all the others were just tickled to get on board."
that after he left Roberts' ministry, he had a chance meeting on an airplane
with Tulsa-based evangelist T.L. Osborn, who had also sought
"He said, 'We were down to counting pencils and paper clips until Gene came along.' "
A certain flair
Ewing's flair for effective, dramatic direct-mail appeals won him jobs writing for evangelists including Tilton, Rex Humbard and "Rev. Ike." In many cases, the letters are identical but contain different signatures.
Foundation, which obtained copies of the identical letters, has dubbed
"We had nine
different televangelists essentially sending out the same letter," Anthony
said. "He (
Anthony said one
Ewing letter, written for Humbard, brought in $64 for each copy mailed. Another
mailing by Humbard contains a "sackcloth billfold" and asks
recipients to mail a "seed offering" of $19 to a
A similar letter from Tilton also contained a "sackcloth billfold" but encouraged recipients to return a "seed of faith" of at least $709.00.
"Pastors preach other people's sermons all the time," he said.
Tulsa evangelist Billy James Hargis became friends with Ewing in the 1970s, said his wife, Betty Hargis.
having some difficult times here in
Betty Hargis said
she and her husband receive
"When he does something, he does it right, first class and showy."
pitch letters for other evangelists,
Joyce said the home wasn't a mansion and that
Ewing later changed the organization's name to Rev. Ewing's Evangelistic Ministries Inc., or REEM, a religious, direct-mail operation that received tax-exempt status.
later, the two incorporated Church by Mail Inc., with a downtown
In its application for tax-exempt status, Church by Mail stated that "it conducts regular worship services, usually without the congregation physically present."
The company sent mailings to more than 3 million homes in 46 states.
The mailings included the "Gold Book Partnership with God" still used by Saint Mat thew's today. The book contained a year's worth of monthly coupons. Recipients were instructed to "tear out a coupon and mail it with a 'faith money payment' to Rev. Ewing each month."
Church by Mail's net
mail revenue in 1980 totaled just more than $3 million and it reported
contributing $100 to charity. Despite the hefty revenue, Church by Mail
reported a deficit, mainly because of the complex financial arrangements
between the organization and
In court filings, the IRS argued that funds generated by Church by Mail "inure to the benefit of private individuals."
"Ewing and McElrath sit at the top of a very lucrative set of organizations which they totally control without interference," the IRS brief states.
Five years later,
with the IRS court battle still under way, Ewing incorporated Church and Bible
Study in the Home by Mail, also listing Joyce's
Joyce said the name change had nothing to do with the court case.
also claims to be an ordained minister, listed his occupation as advertising
and gave an address in Marina del Ray,
Ewing, McElrath and their nonprofit and for-profit companies leased numerous luxury cars from a Tulsa auto leasing company during the 1980s in deals arranged by Joyce, records show. The cars included four Rolls-Royces, two Jaguars, three Mercedes sedans and a Ferrari.
Joyce said the
auto leases were paid for through profits from
"Because he's a minister he's supposed to drive a Jeep?"
Records show both
Joyce declined to divulge recent financial information about the church and said it did not issue annual financial reports.
'Good growth addresses'
A federal tax
lien was filed stating
Joyce said the liens were released after the debts were paid.
In 1992, the IRS commissioner issued a final ruling denying tax-exempt status for Church by Mail Inc.
The ruling had no
"J.C., this growth program is working like a dream. . . . We are going to be able to get a much better selection of good growth addresses than we have ever been able to in the past thanks to a new program that we now have," states the memo, dated Oct. 19, 1993.
"Using this new method of selection we are actually picking those geographic areas that we know respond the best to our growth letters. The size of each special area is about two to four city blocks. And thank God there are 10's of thousands of them across the nation."
Joyce said the memo "is very much directed to the goals of the church in saving souls."
Letters sent to the organization went to a Tulsa post office box, were opened in Tulsa and the funds deposited in a Tulsa bank, court records show.
A 1995 memo from McElrath to Ewing, Joyce and others states that the daily bank balance for Church by Mail and Church and Bible Study in the Home by Mail must be faxed to him by 11 a.m. It states that the report should include "estimates for all unopened mail including today's."
Joyce said after
the letters are opened and the funds deposited, the
prayer requests are sent to Saint Matthew's
"The church prays over them five times a day, every day. They've got 100 people at times reading them."
One letter from
Sister Lupe Martinez thanks
"I try my best to help your mission, whatever I could give," the letter states.
A postcard filled
out and returned by a boy from
"I am 10 years old. I only can give a quarter. Please don't underrate me because of my age, I believe strongly in Jesus," it states.
A pastor from
Joyce said Saint Matthew's removes people from its mailing list upon request. He said there may be a lag time between the request and the removal because Saint Matthew's uses a commercial printing company for its mailing services.
Shirley Waldemar of West Hampstead, N.Y., gave about $80 a month to Saint Matthew's Churches for about five months until she began to wonder who was behind the company.
"They would send you a little piece of cloth and it was supposed to be doing things for you, and I thought that was silly."
Waldemar said she
stopped sending money after she was unable to reach a person connected with the
company on the telephone or find a street address for it in
"They purport to pray for people who are having problems. . . . They were basically just asking for money. . . . It did make you feel if you did not give, something bad would happen."
The Top 10 scams as listed by the North American Securities Administrators Association, ranked by the organization in order of prevalence or concern:
1. Unlicensed individuals, such as life insurance agents, selling
To verify that a person is licensed or registered to sell securities, call your state securities regulator. If the person is not registered, don't invest.
Many scammers use their victim's religious or ethnic identity to gain their trust --knowing that it's human nature to trust people who are like you --and then steal their life savings. From "gifting" programs at some churches to foreign exchange scams targeted at Asian Americans, no group seems to be without con artists who seek to exploit others for financial gain.
Payphone and ATM
In early March, 25 states and the District of Columbia announced actions against companies and individuals -- many of them independent life insurance agents --that took roughly 4,500 people for $76 million selling coin-operated customer-owned telephones. Investors leased payphones for between $5,000 and $7,000 and were promised annual returns of up to 15 percent. Regulators say the largest of these investments appeared to be nothing but Ponzi schemes.
Short-term debt instruments issued by little-known or sometimes non-existent companies that promise high returns --upwards of 15 percent monthly --with little or no risk. These notes are often sold to investors by independent life insurance agents. In Indiana, 18 elderly investors lost some $1.4 million in a promissory note scam. An 80-year-old woman lost her life savings of $324,000. Interestingly, this is the scam that has been most used in Ponzi-scheme banking in Eastern Europe, notably Albania and Romania.
Scammers use the wide reach and supposed anonymity of the Internet to "pump and dump" thinly traded stocks, peddle bogus offshore "prime bank" investments and publicize pyramid schemes. Roughly half the states have Internet surveillance programs that watch for fraud or investigate investor complaints.
Always in style, these swindles promise high returns to investors, but the only people who consistently make money are the promoters who set them in motion, using money from previous investors to pay new Investors. Inevitably, the schemes collapse.
These higher-yielding certificates of deposit won't mature for 10 to 20 years, unless the bank, not the investor, "calls,'. or redeems, them. Redeeming the CD early may result in large losses --upwards of 25 percent of the original investment. In Iowa. for example, a retiree in her 70's invested over $100.000 of her 97-year-old mother's money in three "callable" CD's with 20 year maturities. Her intention, she told her broker, was to use the money to pay her mother's nursing home bills. Regulators say sellers of callable CDs often don't adequately disclose the risks and restrictions.
Originated as a way to help the gravely ill pay their bills, these financial interests in the death benefits of terminally ill patients are always risky and sometimes fraudulent. The insured person gets a percentage of the death benefit in cash; investors get a share of the death benefit when the insured dies. Because of uncertainties predicting when someone will die, these investments are extremely speculative.
Prime bank schemes.
Scammers promise investors triple-digit returns through access to the investment portfolios of the world's elite banks. Purveyors of these schemes often target conspiracy theorists, promising access to the "secret" investments used by the Rothschilds or Saudi royalty. In North Dakota, state securities regulators are alleging a small group of salesmen, including a local pastor, used religion and family ties to bilk investors out of $2 million in a prime bank scam.
Often the people getting rich are those running the seminar, making money from admission fees and the sale of books and audiotapes. These seminars are marketed through newspaper, radio and TV ads and "infomercials" on cable television. Regulators urge investors to be extremely skeptical about any get-rich-quick scheme.