August 5, 2002
Arizona convention objects to BFA settlement
___PHOENIX--Settlement of court cases related to Arthur Andersen's auditing of the Baptist Foundation of Arizona could leave the Arizona Southern Baptist Convention exposed to unjust liability, a convention attorney claims.
___At a July 12 hearing on Andersen's $217 million settlement with investors in the bankrupt foundation, the convention filed an objection.
___"Simply stated, the settlement agreement would prevent the convention from bringing a claim against Arthur Andersen if someone sues the convention," said Jeff Schneck, legal counsel for the convention.
___The "someone" who might sue the convention is the BFA Liquidating Trust, the body charged with divesting the failed foundation's assets and recouping as much of the $570 million in lost investor money as possible.
___"The liquidation trust continues to threaten to sue the convention, contending the convention was responsible for the losses suffered by the investors," Schneck said.
___Yet terms of the investors' settlement with Andersen could prevent the convention from pressing its own claim against Andersen in the future, he added. "The settlement seeks to prevent the convention from asking the court ... to require Arthur Andersen to pay its share of any judgment against the convention."
___The convention contends it had no control over the Baptist Foundation of Arizona, even though the foundation's board of directors was elected by the convention.
___The convention does not oppose the settlement between investors and Andersen but does oppose the one section that would remove any potential of the convention making claims against Andersen in the future, Schneck explained.
___The next hearing in the matter is scheduled for September.
___The demise of the Baptist Foundation of Arizona is believed to be the largest bankruptcy of a non-profit entity in United States history. Foundation officers have been charged with running a Ponzi scheme, in which new investors continually had to be recruited in order for the foundation to keep paying high-yield returns to previous investors.
The Baptist Standard
News of religion, faith, missions, Bible study and Christian ministry among Texas Baptist churches, in the BGCT, the Southern Baptist Convention ( SBC ) and around the world.
Contents/ Masthead / Why We're Here / Links / Archive / E-mail us/ SUBSCRIBE!/ Signup for FirstLook