c. 2006 Religion News Service

(UNDATED) With the fraud convictions of two executives of the bankrupt Baptist Foundation of Arizona, investors are expressing relief that a sad chapter in their lives has ended.

Verdicts announced Monday (July 24) after a 10-month trial found William Crotts, the foundation’s former president, and Thomas Grabinski, its former general counsel, each guilty of three counts of fraud in what was the largest nonprofit bankruptcy in U.S. history when it occurred in 1999. The two men were also each charged with one count of illegally conducting an enterprise.

While investors believed their money would aid Baptist causes _ such as building churches _ state investigators found the two men had created a Ponzi scheme, in which new investors’ money was used to pay off old ones.

The Rev. Bonner Magnus of Lufkin, Texas, a 78-year-old retired Southern Baptist pastor, said he and his wife invested about $750,000 with the foundation before investigators began looking into violations of state securities laws.

“The things they said to me, oh, it pleased me so much,” he recalled. “They said, `This is not only a nonprofit thing, we’re doing this to honor God. We’re doing this to build churches here in the West.’ And I believed in it so much that, if I could have done so, I would have given them an arm and a leg.”

Magnus _ who eventually recouped about half of his investment _ was among approximately 11,000 investors who were owed about $590 million when the foundation filed for bankruptcy.

A March 2006 letter to investors said more than $453 million has been returned to creditors and investors, with most investors receiving 55 percent or 69 percent of their money.

Steve Bass, state missionary for the Arizona Southern Baptist Convention, welcomed the verdict. The foundation was a separate corporate subsidiary of the state convention.

“From the start, we believed that God could use the jury to weigh the evidence and reach the right verdict,” said Bass in a statement. “It is now time for the healing to begin.”

The sentencing of Crotts and Grabinski, who each face a maximum term of more than 46 years in prison, is scheduled for Sept. 29. Five other people linked to the foundation pleaded guilty to charges related to the fraud investigation. The case involving a board member is still pending.

For years, ministers and lay people thought they had lost all their investments. For many, even losing half was a significant blow. Former investors recalled the day they received the letter informing them the foundation was in bankruptcy proceedings.

“I was … totally shocked because of the fact that all of our retirement was invested in that organization because of the interest we had in Christian missions and starting churches,” said the Rev. Jack Bailey, a retired Southern Baptist minister in Huntsville, Texas, who invested in the foundation with his wife.

“You feel like you’ve been fraudulently misinformed and disadvantaged emotionally and financially raped … but we know that `vengeance is mine, says the Lord, I will repay,”’ he added, quoting Scripture.

Forrest Bomar, a Baptist layman from Palestine, Texas, said he and his wife invested in the foundation for about five years, removing money from another investment firm from which they received a “good return” because of the higher rates promised by the foundation. He said “justice has been rendered” after years of waiting for the investigation and resulting trial to conclude.

“We were assured they were doing work for the Lord with the investors’ money and so we had the best of the two worlds,” he said.

Bomar said he came close to having a nervous breakdown when he and his wife, retired AT&T Corp. employees, learned of the foundation’s bankruptcy.

“I grew up poor and I was taught to save for a rainy day and when this happened, I just lost it,” he said. “But I never lost my faith. I knew that real faith is real different from faith in humans who do bad things.”

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