June 11, 2001
Investors in Arizona foundation
picket Arthur Andersen in Phoenix
___By Bob Allen
___Associated Baptist Press
___PHOENIX (ABP)--About 50 people braved 100-degree heat May 30 to picket accounting firm Arthur Andersen's Phoenix office.
___Most lifelong Southern Baptists and older than 65, they represented a fraction of 13,000 investors with funds locked up in the failed Baptist Foundation of Arizona. It was one in a series of organized protests to draw attention to alleged negligence by Andersen that court documents say allowed foundation officers to defraud trusting investors out of millions of dollars.
Retired Southern Baptist home missionaries Victor and Eileen Kaneubine said they lost $15,000 they were saving for volunteer mission trips when the Baptist Foundation of Arizona collapsed two years ago.
___Andersen has been named in both civil suits and administrative actions for issuing clean audits while Baptist Foundation officials allegedly conducted a Ponzi scheme, recruiting new investors to pay off old ones. Several foundation officers, meanwhile, face fraud and racketeering charges over allegations that they hid losses from potential investors.
___Owing investors about $590 million, the foundation declared bankruptcy in November 1999 and now is liquidating its assets. To date, investors have received about five cents on the dollar of their investment.
___Anne Cacacy of Sun City, Ariz., said the fact that the foundation was being audited by a trusted national accounting firm played a big role in her decision to move savings for retirement into the foundation in 1998. "If Arthur Andersen said, 'It's OK,' I guess it's got to be OK," she said she thought at the time. "They know numbers, right? Based on that, we put our money in the Baptist Foundation."
___Soon, however, the foundation filed for bankruptcy, and Cacacy's funds were frozen. She said she believes both foundation and Andersen representatives knew, or should have known, that the institution was in trouble. Instead, she was assured the foundation never had lost an investor's money and that her investment would be used to finance churches and other ministries.
___Tom Kennedy, an organizer of the rally, agreed. "We wouldn't have been in this situation if Arthur Andersen had just disclosed any irregularities," he said.
___According to published reports, whistle-blowers reported alleged unlawful activity by foundation officials to auditors but were ignored. Critics also say Andersen ignored other red flags like the formation of numerous subsidiary corporations to hide losses. Andersen denies any wrongdoing, saying it's hard to catch a client bent on deceiving an auditor.
___Kennedy, a member of Mountain View Baptist Church in Phoenix, labeled Andersen's defense that auditors were relying on information provided by Baptist Foundation officials "ludicrous."
___Investor Virginia Fletcher said the foundation's bankruptcy hit her at a vulnerable time. Her husband died just a week before she learned of the foundation's impending bankruptcy.
___Everything she had saved was invested with the foundation.
___"It was the most vulnerable time in my life," she said. "I lost my husband and my money in a week. To say it was devastating is to put it mildly."
___"If it weren't for my church and my friends, I would have had to sell my house," she said. She's gone to work for minimum wage, because she never acquired a job skill.
___Laura Jamison, 74, leaned on a walker while holding a picket sign. A widow since 1984, she said she lost her life's savings when the foundation collapsed. Now living on Social Security, she said she sometimes doesn't have enough money for her many prescribed medications.
___Lena Thompson of Sun City said she and her husband rolled over nearly $300,000 saved over 45 years just before the collapse. "It's hard to take," she said. "At first I was so angry and bitter."
___Eventually, she said, "I had to let it go. If we get something, that's OK. If we don't, we've just got to leave it up to the Lord."
___Thompson said her 66-year-old husband has been forced to come out of retirement and take a part-time job.
___"We can't even buy our kids or grandkids birthday presents anymore," she said.
___Editor's note: As the Standard has noted before, the Baptist Foundation of Arizona offered individual investment services no other state Baptist foundation offers. The practices of the failed Arizona Baptist Foundation should in no way be associated with the Baptist Foundation of Texas.
___
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