The Moneychangers

Director A
Current BFA board director L. Dwain Hoover is a 62-year-old former butane-company owner turned real-estate investor. He has served several three-year terms on the board.

In what appears to be a case of blatant inflation of real-estate values, BFA in 1996 recorded a $3.1 million gift of "Colorado Real Estate" from "Director A" in its audited statement.

BFA refused to provide the appraisal to New Times, and would say only that the land was near a "major ski resort." So New Times checked property records in all Colorado counties, and found that BFA got title to land only in Mesa County, Colorado, near the Powder Horn ski resort.

From Dwain Hoover.
Today, the "market value" of the land is $151,990, according to Mesa County Assessor documents. Paul Jensen, an appraisor with the Mesa County Assessor's Office, says the assessor tries to accurately appraise land at its actual market value based on comparable land sales in the area. In the Hoover land appraisals, comparable sales for all of 1995 and the first six months of 1996 were considered.

Hoover himself valued "Mesa County Land" at only $295,576.41 in a 1995 financial statement filed with the Arizona Corporation Commission. Public records do not say whether Hoover took a $3.1 million income tax deduction for the land in 1996.

Hoover engaged in at least four other real-estate transactions with BFA. BFA's audited statements say that by December 1996, BFA held "notes receivable totalling $11,892,744 from Director A."

Translation: Hoover wrote IOU's to BFA for more than $11.8 million.
Asked to explain why the board allowed a sitting director to borrow the money, BFA wrote New Times: "Director A did not borrow from BFA, but rather purchased assets for approximately $11.8 million in 1996. He paid $2,974,937 as a cash down payment and gave a carryback note of $8,825,063. That note has been paid down to $3,259,310 as scheduled under the terms of the note. This produced to BFA a profit of $4.4 million."

BFA provided no documentation to support the claim, did not say what the "purchased assets" were and did not say whether Hoover paid down his note with cash, stock or land.

In 1996, Hoover also borrowed $6.5 million from New Church Ventures Credit Corporation, a company controlled by Hunsinger and managed by BFA. The loan is secured by land in Maricopa County. Hoover is not personally liable for the loan.

The records do not disclose other terms of the loan, and do not say whether the debt is part of the $11.8 million Hoover owes to BFA.

Hoover lives in a $1.4 million house in Paradise Valley. A member of the North Phoenix Baptist Church, he is regarded by church members as an exemplary Christian who is an excellent "steward" of the millions God has blessed him with.

"I have known Dwain all my life," says LaVerne Pippett, a member of North Phoenix Baptist Church. "He is a super neat man and has a lovely wife.

"I don't know how he makes his money. All I know is that he and his wife have always been very active in the church."

Benefactor A
Harold Friend is a 64-year-old Paradise Valley resident who has dealt extensively with Hunsinger and BFA, public records show. Friend is an officer in several of Hunsinger's privately held corporations, and has signed documents for the companies in real-estate deals with BFA.

Friend's own business dealings with BFA and Hunsinger have been intricate, according to BFA's financial statements.

For example, in 1995, a Hunsinger non-profit paid a debt to BFA with land valued at $1.6 million. Then Friend bought the land from BFA for $3.2 million. He paid only $800,000 down, then wrote an IOU for $2.4 million.

In what may or may not be a related transaction, during the same month in 1995, BFA paid $793,000 in cash to Friend for stock in one of his corporations.

BFA then sold the Friend stock to Hunsinger for $1.2 million in cash and an IOU for $3.7 million.

That same year, Friend pledged $2 million to BFA--a pledge he paid off with stock from MCF, his private real-estate corporation. At the time of the pledge, state Corporation Commission records show, MCF, then a nine-year-old company, was worth only about $5,000. Shortly before the pledge was paid to BFA, Friend filed a 1996 financial statement with the Corporation Commission, listing the assets of his company at more than $2 million.

These financial gyrations would have had the effect of bolstering the bottom line in BFA's financial statements with paper profits.

Friend and his wife Stevie are members of North Phoenix Baptist Church, where Stevie sings in the choir. At a choir party given by the Friends at their $1.68 million home in Paradise Valley, choir members were impressed by the elegant antiques and knickknacks and Stevie's flair for interior design.

Friend declined to be interviewed for this story.

The BFA executives
Vice President and General Counsel Thomas D. Grabinski, 38, joined BFA in 1988. Even though he is BFA's staff attorney, Grabinski also is agent for numerous Hunsinger corporations which list the BFA mailing address. Grabinski has signed documents for both BFA and Hunsinger corporations in multimillion-dollar transactions between those same companies. Asked if a conflict of interest existed, BFA claimed both Hunsinger and BFA had waived any conflicts of interest.