By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
By New Times
The $1 Building
Anyone sifting through the public records of tangled real-estate transactions conducted by the Baptist Foundation of Arizona will soon begin asking questions:
What would possess a religious foundation to pass up the opportunity to acquire a $1.9 million office building for $1?
Why would that foundation turn around and option the same $1 building to a former board member?
Why would it then allow that same former director to use the building to collateralize millions of dollars in loans he already had received from the foundation?
There are no common-sense answers.
But that's business as usual at the Baptist Foundation of Arizona (BFA), a $368 million religious organization that claims devotion to charitable causes while handing out nearly $140 million in loans to insiders. BFA officials hide their deals behind a thicket of more than 60 subsidiary companies, some non-profit, some for-profit.
In the case of two New Mexico real-estate deals, BFA appears to have padded its assets with multimillion-dollar notes from an insider.
Both deals went down within two weeks in 1992. Both involved a company called Barclay New Mexico Associates and former BFA director Jalma Hunsinger, who controls a slew of companies of his own (most of which use BFA's address). Hunsinger declined to comment for this story. No BFA officials would consent to interviews, although the foundation did respond in writing to written questions posed by New Times.
Barclay owned Simms Tower, a 13-story office building in downtown Albuquerque, New Mexico. Simms Tower was appraised at $1.9 million, BFA says in its March 24 letter to New Times. Barclay also owned a parking garage adjacent to Simms Tower.
To understand how BFA passed up a chance to make a killing on the Simms Tower, one must back up and examine what Hunsinger and BFA did with some Maricopa County land, and what Hunsinger and Barclay did with the parking garage.
The complicated transactions began in Phoenix on September 22, 1992, when a BFA subsidiary deeded four parcels of Maricopa County land to a Hunsinger company for $3.3 million, according to sworn affidavits signed by Hunsinger and BFA attorney Tom Grabinski.
The same day Hunsinger bought the land from BFA, he "flipped" the parcels through several of his Arizona companies. (A land flip occurs when a piece of land is sold quickly--sometimes several times a day--between related parties or shell corporations. The land value can be artificially lowered or raised. Land flips are illegal if artificial values are used to create fake appraisals or bogus income tax advantages, or increase net worth to deceive lenders or investors.)
In one day, the BFA land that was flipped repeatedly by Hunsinger plummeted in value from $3.3 million to $960,000--a difference of more than $2.3 million, according to the sworn affidavits.
Grabinski signed affidavits attesting to the $3.3 million value of the four parcels; Hunsinger signed affidavits attesting to both the higher and the lower values of $3.3 million and $960,000--all on the same day.
What did Hunsinger get for his contortionist real-estate transactions? He swapped the Arizona parcels to Barclay New Mexico for the parking garage next door to Simms Tower. On that very busy day, Barclay deeded the $960,000 garage to a Hunsinger company.
As compensation for the four Maricopa County parcels, Hunsinger had signed an IOU to BFA for $2.3 million--$1 million less than BFA's own attorney swore the parcels were worth earlier that same day. Worse, BFA then allowed Hunsinger to collateralize the multimillion-dollar note with the New Mexico garage he'd acquired for land allegedly now worth only $960,000.
All this happened without any indication that Hunsinger paid a penny to anybody.
The public record and BFA's letter of explanation about the New Mexico transactions raise serious questions: Why did the Maricopa County land parcels lose millions of dollars in value after BFA insider Jalma Hunsinger flipped the acreage through his companies? Did BFA book millions in questionable assets on the Maricopa land to offset losses elsewhere? Did Hunsinger claim paper losses for tax advantages?
The paper trail is littered with suspicious documents.
In the first place, BFA's Grabinski's affidavits swore that the four Arizona parcels were worth $3.3 million, yet BFA allowed Hunsinger to purchase them for a $2.3 million IOU on the same day. Then BFA turned around and allowed Hunsinger to collateralize his $2.3 million IOU with a parking garage that was apparently worth only $960,000.
Two weeks later, Barclay offered BFA an option to buy the $1.9 million Simms Tower--next to the garage--for $1.
"Barclay desires to donate the building to BFA in such manner that the transaction will constitute a charitable gift by Barclay to BFA under the Internal Revenue Code, and BFA desires to accept the same in the form of a freely assignable option to acquire the building for no or nominal consideration," the October 8 option agreement says.
A Barclay official said in a recent interview that the building was free of debt at the time. But Barclay claims it never took a tax write-off for the building.
That's because BFA did not hold on to the option.
If BFA had accepted the donation, could it have sold the building at a fire-sale price and then funneled the entire sum to needy Southern Baptist causes?