The former bookkeeper of the defunct Baptist Foundation of Arizona pleaded guilty on Wednesday to one count of attempting to assist a crime syndicate and agreed to testify against remaining defendants in court.
Harold Dewayne Friend, 72, is one of five original defendants to agree to plea deals, according to the state Attorney General’s office. Jury selection began this week for three remaining defendants charged with defrauding 11,000 investors out of $550 million in the late 1990s in a Ponzi scheme.
Opening arguments are scheduled next week in a criminal trial for William Crotts, the foundation’s president and CEO; Thomas Grabinski, general counsel; and Lawrence Hoover, a board member. They are charged with fraud, racketeering and theft in what prosecutors say is the biggest affinity scam in Arizona history.
The Attorney General dropped 30 other charges against Friend. He agreed to pay a $150,000 fine and could face up to two years in prison. Sentencing will take place after he testifies.
Friend was originally indicted on three counts of fraud, 27 counts of theft and one count of illegally conducting an enterprise. He could have faced up to 33 years in prison.
In a statement submitted with the plea agreement, Friend admitted to inflating the foundation’s financial statements beginning in 1989. He also admitted to creating transactions to show a profit or gain that would reflect well on BFA’s financial standing.
The result was to mislead investors into believing money they put into the church-related institution was as safe as if in a bank and profits would be used to further Baptist work in Arizona.
The foundation collapsed in 1999, making it the largest non-profit bankruptcy in U.S. history.
Authorities recovered some of the lost money through sale of assets and legal settlements, including $217 million from Arthur Andersen, the foundation’s accounting firm.
The trial is expected to last from four to six months. It has been delayed several times since indictments were first handed down by a grand jury in October 2002.
Bob Allen is managing editor at EthicsDaily.com.