[1]PHOENIX (BP)–In the latest move by directors of the troubled Baptist Foundation of Arizona, 72 employees were laid off Sept. 10, helping the agency reduce its “overhead by more than 50 percent in a very short period of time.”
In a Sept. 13 letter to 13,000 investors, W. Berry Norwood, trustee chairman, said “One sad, but necessary part of our duty to investors was laying off 72 out of 133 employees, most of them on Friday, Sept. 10.
“We deeply regret the need to let good people go, but know it is important to retain no more than the staff necessary to operate the organization during this time of transition.”
Another component of the cost-cutting plan will be closure of BFA’s Youngtown and Tucson, Ariz., offices in the near future. Investors were assured, the letter said, none of the cutbacks would affect BFA’s ability to provide them with critical services in support of their investments.
More than 13,000 investors with more than $483 million in investment products are affected by an Aug. 10 Arizona Corporation Commission “cease-and-desist” order against the BFA. It ordered BFA to discontinue immediately the offering and selling of its investment products. 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.
The BFA’s three top executives voluntarily stepped down, on paid leave of absence, at that time and then on Aug. 26 were fired by the BFA board of directors. The directors instituted a new management team and, in cooperation with the state, told worried investors a plan of action would be forthcoming in October.
The Arizona Southern Baptist Convention agency was sued in Maricopa County Superior Court in a class action lawsuit filed Aug. 27, and on Aug. 30 another suit was brought by a Phoenix-area Southern Baptist pastor.
The class action suit was filed by investor Franklin Kestner Sr., who charged the BFA and former and current officers and directors bilked investors by funneling their money into projects “to finance BFA’s officers and/or directors’ real estate deals which were transacted … for personal gain and profit.”
A second suit by Richard A. Kimsey and his wife, Ann, also alleges BFA current and former officers took investment sales “pyramided into a Ponzi scheme in which the mountain of debt could be sustained only by selling new notes and persuading investors to roll old notes into new investment.” Kimsey became pastor of Desert Valley Baptist Church, a Southern Baptist congregation in suburban New River, in March of this year. Kimsey reportedly sold his home in Georgia and took the proceeds, $100,000, and invested them in BFA July 15, shortly before state corporation officials met with BFA officials.
In the Sept. 11 letter, Norwood said the directors have designed a “wide-ranging plan that is expected to reduce BFA’s annual overhead by more than 50 percent in a very short period of time.”
However, “none of the cutbacks will affect our ability to provide you with critical services in support of your investments.”
BFA also reported it was still on schedule for October completion of a plan to deal fairly with all investors, and it was also in the process of creating an advisory group of investors who will provide input directly to the board and management team.
In addition, investors were told the Arizona Southern Baptist Convention had established “The Jerusalem Fund” as a relief effort.
“The fund is completely independent of the BFA, created by caring individuals to help those of you facing real hardships as a result of not being able to access your investments,” the letter told investors. Investors were told information about the fund was being sent to them.