By Amy Silverman
By Olivia LaVecchia
By Monica Alonzo and Stephen Lemons
By Chris Parker
By Michael Lacey
By Weston Phippen
Now, in the Juniper Ridge case, BFA and its chief counsel, Thomas Grabinski, stand accused of fraud.
Companies controlled by McRae, Stuckey and Holmes contend they lost their right to buy Juniper Ridge through an illegal scheme "masterminded" by BFA, Grabinski and Friend. The reason, according to the lawsuit: to enrich Friend, whose companies eventually reaped $4 million worth of contracts to manage and market the RV resort. There is no indication Friend was able to collect any of that money before litigation paralyzed Juniper Ridge.
"The catacomb of entities controlled by BFA and Grabinski is a never ending maze, an artifice which enables inside benefactors, such as Defendant Friend, to reap enormous personal gain while victimizing innocent parties . . . all under the self-serving banner of charity and religion," the lawsuit says.
"Plaintiffs' continued investigation into Defendant's culpability is essential to expose the myth behind the BFA, whose professed charitable objectives mask the true purpose of its existence, which is to provide a gold mine of wealth for key insiders who use their position as a vehicle to scam innocent third parties, such as Plaintiffs," the lawsuit says.
The document, filed June 19, seeks to add BFA and Grabinski as defendants in a lawsuit filed in 1997 by companies owned by McRae, Stuckey and Holmes against Friend, Kuhn, their companies and attorneys.
Friend has countersued, and three of his companies have filed separate lawsuits against the three developers, contending they've "intentionally interfered" with his lucrative contracts to run Juniper Ridge.
All the defendants in all the lawsuits have denied wrongdoing. All the litigants and their attorneys declined to be interviewed for this story.
BFA and Grabinski have yet to file court papers responding to the fraud allegations.
The $1.7 million that funded EVIG's purchase of Juniper Ridge came from BFA's investors. BFA has solicited funds in Southern Baptist churches and over the Internet. Investors are told their money will be reinvested prudently.
But a bankruptcy dispute over a scheduled July 13 sale of Juniper Ridge places at risk the $1.7 million BFA lent EVIG so it could buy Juniper Ridge late last year.
In a deposition last month, Kuhn, the sole director of EVIG, knew little about EVIG or its business dealings. Kuhn did not even know where EVIG did its banking, and knew little about the Juniper Ridge deal.
Kuhn said in a deposition he relied heavily on the advice of BFA's chief counsel Tom Grabinski, EVIG's "portfolio manager."
But a document dated May 9, 1996, and obtained by New Times raises questions about why BFA lent EVIG the money in the first place. The memo detailed how BFA had used EVIG to conceal some of BFA's nonperforming loans.
The "For the File" memo was written by Rich Polley, a certified public accountant who was then BFA's trust accounting manager. According to his memo, Polley believed a company called "East Valley Investment Group," or "EVIG," was being used in 1996 by BFA as an "off-balance sheet company" to hide millions of dollars in bad debts from BFA's auditors and BFA board members.
This would have the effect of secreting the bad loans in EVIG.
"Not only do our board members have potential liability for such decisions (i.e. savings and loan examples), but our constituents believe, and have every reason to, that our Board is providing just this kind of oversight," the memo says.
"I believe that Christ demands and expects more from those that carry His name," the memo says. "II Corinthians 4:1-2 says 'Therefore, since through God's mercy we have this ministry, we do not lose heart. Rather, we have renounced secret and shameful ways, we do not use deception, nor do we distort the word of God. On the contrary, by setting forth the truth plainly we commend ourselves to every man's conscience in the sight of God.' It is my opinion that the continuance of transactions such as the one outlined above fail to show the kind of turning away from sin required of true repentance. Proverbs 28:13 is quite clear, 'He who covers his sins will not prosper, but whoever confesses and forsakes them will have mercy.' I firmly believe that so long as the Foundation continues to do transactions such as the one listed above, that God will not be able to bless us as He wishes to. It is my sincere hope and prayer that God might use this conversation to persuade you of the need to make deep and lasting changes in the way we do Christ's business."
When asked about the memo, BFA's Grabinski wrote to New Times saying he had no knowledge of it. After New Times provided a copy of it to BFA, Grabinski wrote on June 30, "The East Valley Investment Group transaction described in the memo you provided has worked out as expected by all parties. The concerns in the May 9, 1996, Memorandum were unfounded."
Grabinski did not explain how the transaction "worked out as expected."
Polley resigned from BFA in August 1996.
Reached at his Phoenix residence, Polley declined to elaborate.
"I don't see anything good that could come out of bringing the foundation down," Polley said last month.