August 25, 1999
Arizona foundation probe continues
___PHOENIX, Ariz. (RNS)--The Baptist Foundation of Arizona may have been running a Ponzi scheme, according to an official of the Arizona Corporation Commission.
___The foundation, an agency of the Arizona Southern Baptist Convention, was ordered by the state Aug. 10 to stop selling investment products. The Arizona foundation, in an approach different from any other state Baptist foundation, aggressively recruited individual investors.
___"They haven't been disclosing their actual lack of profitability and have been covering that up through ... transactions that were being created by the people in charge of the foundation," said Mark Sendrow, director of the Arizona Corporation Commission's securities division.
___Sendrow said these "transactions," which he believes were created by foundation officers, "didn't seem to have any kind of substance."
___Asked if he believed the transactions were a Ponzi scheme, in which new investors are brought in to pay off old ones, Sendrow said, "It appears that way to us."
___The investigation by the securities division and the state attorney general's office is continuing and could lead to civil court action or criminal prosecutions, he said.
___"We don't know what the extent of the deficit is," Sendrow said, "whether it's something that can be remedied through their restructuring their investments and selling off some things ... or whether there's going to be a hole ... there that won't be filled."
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