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Feds fine Mormon Church $5 million over scheme to hide $32 billion in assets
The Mormon Church got caught trying to hide its wealth from members through illegal means
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The Mormon Church and its investment division, a company named Ensign Peak Advisors, will have to pay a paltry $5,000,000 fine after an investigation conducted by the Securities and Exchange Commission (SEC) found that Ensign Peak purposely obscured the Church’s equity investments. That cover-up allowed The Church of Jesus Christ of Latter-day Saints to withhold from members the fact that it has been stockpiling over $100,000,000,000 in donations meant to go to charity.
The Securities and Exchange Commission today announced charges against Ensign Peak Advisers Inc., a non-profit entity operated by The Church of Jesus Christ of Latter-day Saints to manage the Church’s investments, for failing to file forms that would have disclosed the Church’s equity investments, and for instead filing forms for shell companies that obscured the Church’s portfolio and misstated Ensign Peak’s control over the Church’s investment decisions. The SEC also announced charges against the Church for causing these violations. To settle the charges, Ensign Peak agreed to pay a $4 million penalty and the Church agreed to pay a $1 million penalty.
It’s pocket change for the Mormon Church but a symbolic reminder that the institution is as corrupt as any other large religious group.
We first learned about this issue in 2019, when David A. Nielsen, a Mormon who worked for Ensign Peak as a senior portfolio manager, blew the whistle on what was happening.
The confidential document, received by the IRS on Nov. 21 [of 2019], accuses church leaders of misleading members — and possibly breaching federal tax rules — by stockpiling their surplus donations instead of using them for charitable works. It also accuses church leaders of using the tax-exempt donations to prop up a pair of businesses.
Nielsen and his brother Lars P. Nielsen allow the Washington Post to use their real names in the article and they provided supporting documentation to back up their claims. Their concern was that the money taken in by the Church was designated for charity—and therefore exempt from taxes—but it was being used for radically different reasons.
That was based on the fact, the brothers said, that the tens of millions of dollars came in but it was never earmarked to go back out for “religious, educational or charitable activities.” Only twice was that money spent anywhere: once, to bail out a “church-run insurance company,” and another time, for a church-owned shopping mall. The brothers said Ensign Peak shouldn’t be considered a tax-exempt charity.
The allegation was so damning that the richest man in Utah, Jeff T. Green (a tech mogul worth about $5 billion), later submitted his resignation to the Mormon Church and specifically cited what was going on with Ensign Peak in his letter.
The Wall Street Journal now reports that the SEC’s investigation looked at 20 years’ worth of filings made by Ensign Peak. While investment managers who hold over $100 million in assets are supposed to report their stockholdings every quarter (via a formed called 13F), the firm did it via “13 shell corporations with addresses located throughout the U.S.” That allowed the true wealth of the Mormon Church to remain hidden from its most devout members.
[Former Ensign Peak president Roger] Clarke said he believed church leaders were concerned that public knowledge of the fund’s wealth might discourage tithing, which is the requirement that church members give 10% of their income to the church. Other former Ensign Peak employees have said the church was concerned that members might view the firm’s holdings as endorsements and try to buy stocks the church owned.
The church was aware of Ensign Peak’s misleading disclosures, the SEC said. Church officials wanted to avoid disclosure of the amount and nature of their financial assets, the SEC found.
How do we know the Mormon Church knew about this? They approved the creation of one of the shell companies while others were managed, on paper, by “church members with common names and little social-media presence,” so that the wealth remained obscured.
All of this was first brought to light by the website MormonLeaks in 2018.
But the punishment here will do no financial damage to the institution. If Ensign Peak managed $32 billion in assets, $5 million represents 0.015625% of the account, a tiny fraction of a single percentage. It’s nothing. It’s a large penalty for a filing failure, but it’s not even a slap on the wrist for the Mormon Church.
There’s no reason to think anything will change. The Church is already attempting to pass the buck, blaming all of this on its attorneys. In a statement released this afternoon, they wrote:
The Church’s senior leadership received and relied upon legal counsel when it approved of the use of the external companies to make the filings. Ensign Peak handled the mechanics of the filing process. The Church’s senior leadership never prepared or filed the specific reports at issue.
We have worked with the SEC for years to come to this settlement. We reached resolution and chose not to prolong the matter… With the announcement of the order, the matter is closed.
Just because the senior leadership didn’t prepare the tax filings doesn’t mean they were oblivious to what was happening. That said, Church did not have to admit any wrongdoing as part of the settlement.
The Church added that the $5 million penalty would be covered by “investment returns” and not tithe money, as if there’s a serious difference at this point.
According to the Salt Lake Tribune, the Mormon Church seems to be doing just fine:
The latest SEC filing valued Ensign Peak’s public fund at $44.4 billion at the end of 2022. (These reports show investments that must be disclosed to the SEC and thus do not reflect the portfolio’s total holdings.)
Topping Ensign Peak’s list of public holdings were stakes worth more than $1 billion each in Apple and Microsoft. The fund also carried more than $1 billion in two types of shares in Alphabet Inc., parent company of search engine giant Google.
If there’s any silver lining here, it’s that the news of the punishment itself might reveal to some gullible Mormons who foolishly give money to the Church that they’re just throwing it all away. The Church doesn’t need their money. That didn’t stop them, however, from lying about how they were using it, and the people at the very top were in on the scam.
It would be nice if more Mormons were outraged by their own religious leaders lying to them, but if they haven’t been upset to this point, there’s no reason to believe they’ll come to their senses now.
(Image via Shutterstock)