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Fraud History: The $500 Million Pyramid — How William Crotts Bankrupted the Baptist Foundation of Arizona

By   /   April 18, 2014  /   No Comments

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William Crotts. Mugshot.

William Crotts, Jr. Mugshot.

One of the most expensive cases of religious affinity fraud in the history of the United States did not start out as one.

This fraud, which stole more than $500 million from thousands of trusting, mostly elderly investors, was uncorrupted for many years.

But that did not last.

Beginning in the late 1980s, and continuing for more than a decade, the Baptist Foundation of Arizona (BFA) systematically siphoned millions of dollars from Baptists and others, money that added up to more than half a billion dollars.

A small cadre of BFA leaders, led by one in particular, managed the scheme with a fancy financial sleight-of-hand that would have impressed any professional illusionist.

The story of the fall of the Baptist Foundation of Arizona is not just a story of greed. It is also one of pride, and what happens when those two impulses are joined together.

It is a terrible story.

Backdrop: Arizona

The 48th and last of the contiguous united states to join the nation, Arizona is barely 100 years old, having been admitted in 1912.

Arizona is a large, expansive state, the country’s sixth largest, and one that shares a testy 389-mile border with Mexico.

Prior to statehood, the Arizona territory was first settled by several Native American tribes, including the Navaho, Hopi, Maricopa and Tohono nations.

In the middle-to-late 19th century, Brigham Young dispatched Mormons to Arizona, where many ended up settling in Phoenix Valley, or the “Valley of the Sun.”

After statehood, growth was slow. The Arizona climate was not hospitable to mass settlement in the years before the development of the home air conditioning unit.

The population ‘boom’ exploded after the second world war with the invention of air conditioning. In a climate controlled environment, Arizona was a wonderful place to live, especially in the winter months.

The state grew in populaton by almost 80% between 1940 and 1950, and it kept growing and growing.

Maricopa County, in the south central part of the state, is the locus of power in Arizona. Sixty percent of the Arizona population lives in Maricopa County. The county includes the state’s capital and largest city, Phoenix, as well as the populous cities of Tempe, Mesa, Scottsdale, among others.

Most of the state’s elected officials live in Maricopa County.

Maricopa County is a Republican political stronghold The county has voted Republican in every Presidential election since 1948. The state has voted Republican for President every year since 1948, with the sole exception of 1996, when Bill Clinton won Arizona by two percentage points. (He still lost Maricopa County, however.)

Arizona has produced some of the country’s most well-known conservative icons, including “Mr. Conservative,” former United States Senator, Barry Goldwater. The square-jawed Senator earned his moniker with positions like his opposition to the 1964 Civil Rights Act and virtually every one of Lyndon Johnson’s ‘Great Society’ programs.

Goldwater lived in small, affluent town north of Phoenix called Paradise Valley, where other notable conservatives also resided. Former U.S. Chief Supreme Court Justice, William Rhenquist, and former Justice Sandra Day O’Conner also lived in Paradise Valley.

Other notable conservative residents from the town where median home prices are upwards of one million dollars (and many $10 million-plus), include former Vice-President Dan Quayle and United States Senator and former Presidential candidate, John McCain.

Charles Keating, the banker responsible for Lincoln Savings & Loan collapse (requiring a $3 billion federal bailout), is also a Paradise Valley resident.

The Arizona climate made an ideal retirement destination for aging Americans. For most of the last half of the 20th century, thousands of frugal, middle and working-class retirees from the colder states spent the winters of their lives in a place that was warm and sunny 300 days a year.

Large planned retirement communities like Sun City (pop. 40,000) drew the old folk to the Arizona desert in droves, where they could swim, golf, dance, and wear high-waisted shorts year round at these senior ‘mini-cities.’ The people who migrated permanently, and the seasonal “snowbirds,” were almost all Caucasian, usually conservative, and often religious.

The state’s ethos has remained decidedly right-leaning as the 20th century progressed. In 1983, for example, Sen. John McCain did not vote to recognize Martin Luther King, Jr.’s birthday as a national holiday, which nonetheless passed and was reluctantly signed by Ronald Reagan. (McCain, a member of the “Keating Five,” also defended former Arizona Governor Evan Mecham’s rescission of the King holiday in 1987.)

Arizona’s legislature has passed the most restrictive immigration laws in the nation, including mandatory voter identification requirements. The electorate voted against same-sex marriage rights.

So, while Phoenix may have some Democrat representation, Arizona as a whole is very far from liberal, and is, in fact, a politically and socially conservative bastion.

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