[1]PHOENIX (BP)–The three top executives of the troubled Baptist Foundation of Arizona were fired Aug. 26 by the board of directors, investors were told in a letter from the BFA board.
William P. Crotts, president, Tom Grabinski, legal counsel, and Donald Deardoff, controller, had “voluntarily” relinquished their responsibilities in late July and were put on paid leave of absence. A spokesperson told Baptist Press the three were given no severance packages when they were terminated.
Crotts, a former attorney, has been president since 1982, succeeding his father, Glen Crotts, former pastor of First Southern Baptist Church, Tucson, who was the agency’s first president.
The action by the board of directors came at a meeting Aug. 26. Investors were told in the Aug. 28 letter that management responsibility for BFA was given to three people hired by the board but who are not employees of the BFA.
BFA’s new management team includes Joe Panter, Mark Roberts and Mark Dickerson.
Panter, director of the Management Committee, is a local businessman engaged in real estate investment, merchant banking activities and financial advisory services. Panter was founder, chief financial officer and eventually chief executive officer of a publicly held company with operations in 14 states, 3,000 employees and revenues of more than $250 million. Roberts, assistant director, has more than 11 years’ experience in business process re-engineering and financial reorganization. Dickerson, general counsel, is a senior legal executive with diversified corporate, litigation and crisis management experience, including 16 years as general counsel for a publicly held company with $400 million in revenues and operations in 17 states.
The BFA has stopped offering and selling its investment products in an agreement with the Arizona Corporation Commission’s cease-and-desist order Aug. 10. According to the order, the foundation or its affiliates sold securities from Arizona through “misrepresentations, omissions of fact and engaged in business practices in violation of state law.”
More than 13,000 investors have more than $483 million in products with the BFA. Some interest payments and IRA distributions are being made, although continuing reviews of the BFA accounts could alter even that distribution. In earlier reports, the BFA said its offices remain open, “there have been no layoffs but we have put a hiring freeze in place.”
BFA directors told investors it would be sometime in October before they could announce a plan to “deal fairly with investors.”
“We know you’d like us to tell you when you can get some or all of your funds and we’d like to be able to answer that today. [We] hope you understand that we don’t have quite enough information to be that specific yet,” an Aug. 21 letter said.
BFA has been under investigation by the state regulatory commission and the Arizona Attorney General’s office for the past year. Focus of the investigation, including the review of 2 million documents, has been the BFA and its subsidiary/affiliated corporations: Arizona Southern Baptist New Church Ventures and Christian Financial Partners, Inc.
One Arizona Corporation Commission member said he likened the BFA’s practices to a “complex Ponzi” scheme. Authorities have not ruled out criminal prosecution of BFA officials if the investigation warrants such indictments.
BFA, an agency of the Arizona Southern Baptist Convention for 50 years, had been known in Southern Baptist financial circles as very aggressive in its approach to potential investors. The foundation said it will report to investors every 45 days outlining steps the management team is taking to shore up the company. Investors have been told in a letter that the board of directors doesn’t know yet how the BFA got into trouble. The directors said they were “shocked” after learning the extent of the state regulatory agency’s concern in July.
Drastic steps were needed to correct the BFA problems, investors were told, and, if not corrected, the BFA could be forced into receivership or bankruptcy.