Whistle Blower Files IRS Complaint

[Just This Guy]

A Whistle Blower from Ensign Peak Investments has lodges a complaint with the IRS detailing miss use and possible illegal use of the church's $100 Billion tax exempt investment fund.

https://www.washingtonpost.com/investig ... story.html

Lots of info about church finances. More than I think I have ever seen.

[Spicy McHaggis]

This will (hopefully) be a game changer.
$100B in charitable assets is almost inconceivable for a church/corporation.

I recall that Damon Smith book that came out 10-15 years ago. He worked at the COB. He said the church takes in tithing and fast offerings, puts that money in interest bearing accounts for 3 years then it is no longer considered "sacred" funds and they do with it whatever they want.

Maybe this will finally give us some transparency.

[Just This Guy]

In case anyone has trouble with WaPo's paywall.

Mormon Church has misled memberson $100 billion tax-exempt investment fund, whistleblower alleges

By Jon Swaine, Douglas MacMillan, and Michelle Boorstein
Dec. 16, 2019 at 8:49 p.m. EST

A former investment manager alleges in a whistleblower complaint to the Internal Revenue Service that the Church of Jesus Christ of Latter-day Saints has amassed about $100 billion in accounts intended for charitable purposes, according to a copy of the complaint obtained by The Washington Post.

The confidential document, received by the IRS on Nov. 21, 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.

A spokesman for the church did not respond to detailed questions from The Post about the complaint. “The Church does not provide information about specific transactions or financial decisions,” spokesman Eric Hawkins said in a statement.

The complaint provides a window into the closely held finances of one of the nation’s most visible religious organizations, based in Salt Lake City. It details a church fortune far exceeding past estimates and encompassing stocks, bonds and cash.

The complaint was filed by David A. Nielsen, a 41-year-old Mormon who worked until September as a senior portfolio manager at the church’s investment division, a company named Ensign Peak Advisors that is based near the church’s headquarters.

Nonprofit organizations, including religious groups, are exempted in the United States from paying taxes on their income. Ensign is registered with authorities as a supporting organization and integrated auxiliary of the Mormon Church. This permits it to operate as a nonprofit and to make money largely free from U.S. taxes.

The exemption requires that Ensign operate exclusively for religious, educational or other charitable purposes, a condition that Nielsen says the firm has not met.

In a declaration signed under penalty of perjury, Nielsen urges the IRS to strip the nonprofit of its tax-exempt status and alleges that Ensign could owe billions in taxes. He is seeking a reward from the IRS, which offers whistleblowers a cut of unpaid taxes that it recovers.
Nielsen did not respond to repeated phone calls and emails seeking comment.

His twin brother, Lars P. Nielsen, provided a copy of the complaint to The Post, along with dozens of supporting documents. Lars Nielsen, a health-care consultant in Minnesota, said he prepared the complaint with his brother and helped him submit it to the IRS.

Lars Nielsen said in a statement to The Post that his brother asked him to write an exposé on his former employer.

“Having seen tens of billions in contributions and scores more in investment returns come in, and having seen nothing except two unlawful distributions to for-profit concerns go out, he was dejected beyond words, and so was I,” Lars Nielsen wrote.

He said he was coming forward without his brother’s approval because he believed the information was too important to remain confidential. “I know that sometimes newspapers use anonymous sources,” he said. “But that is usually not best for a story.”

In remarks last year, a high-ranking cleric in the church, Bishop Gérald Caussé, said it “pays taxes on any income it derives from revenue-producing activities that are regularly carried on and are not substantially related to its tax-exempt purposes.”

The church typically collects about $7 billion each year in contributions from members, according to the complaint. Mormons, like members of some other faith groups, are asked to contribute 10 percent of their income to the church, a practice known as tithing.

While about $6 billion of that income is used to cover annual operating costs, the remaining $1 billion or so is transferred to Ensign, which plows some into an investment portfolio to generate returns, according to the complaint.

Based on internal accounting documents from February 2018, the complaint estimates the portfolio has grown in value from $12 billion in 1997, when Ensign was formed, to about $100 billion today.

The church also owns real estate worth billions of dollars, according to the complaint, which focuses on surplus tithing money and says that the church may have additional holdings not managed by Ensign.

While accumulating this wealth, Ensign has not directly funded any religious, educational or charitable activities in 22 years, the complaint said. No documents are provided to support this claim, which is attributed to information David Nielsen gleaned from working at the company.

Philip Hackney, a former IRS official who teaches tax law at the University of Pittsburgh, said the complaint raised a “legitimate concern” about whether the church’s investment arm deserved its tax-exempt status.

“If you have a charity that simply amasses a war chest year after year, and does not spend any money for charity purposes, that does not meet the requirements of tax law,” Hackney said in an interview. Hackney, who served in the IRS chief counsel’s office, has been retained by The Post to analyze the whistleblower documents.

IRS rules dictate that a nonprofit organization must carry out charitable activity that is “commensurate in scope with its financial resources” to maintain its tax-exempt status. No threshold for this test is specified and the agency instead considers examples case by case.

Details of the church’s expenditures on charitable work are not publicly available, but in a lecture at the University of Oxford in 2016, a senior elder said the church had spent about $40 million a year over the past 30 years on welfare, humanitarian aid and other international projects. He did not mention Ensign.

While declining to discuss the extent of their holdings, church leaders have sought to explain the practice of continuing to collect tithes while accumulating financial reserves.

In a speech in March 2018, Caussé linked the church’s financial strategy to the “prophecies about the last days.” Just as the church maintains grain silos and emergency warehouses, Caussé said, so it “also methodically follows the practice of setting aside a portion of its revenues each year to prepare for any possible future needs.”

According to the complaint, Ensign’s president, Roger Clarke, has told others that the amassed funds would be used in the event of the second coming of Christ. Clarke did not respond to an email seeking comment.

Nielsen’s complaint is sharply critical of church leaders for continuing to ask for tithes, even from members who are struggling financially, while the church sits on a fortune. “Would you pay tithing instead of water, electricity, or feeding your family if you knew that it would sit around by the billions until the Second Coming of Christ?” he wrote in a 74-page narrative that accompanied his complaint. He suggests church leaders favor continuing to collect tithes to avoid “losing control over their members’ behavior” by releasing them from their financial obligations. In June, the church raised the monthly charge paid by most families to cover the cost of their children serving as missionaries from $400 to $500 per month.

Leaders have consistently tried to downplay speculation about the extent of the church’s wealth. Quoting a former church president during the speech last year, Caussé, said: “When all is said and done, the only real wealth of the church is in the faith of its people.”

When interviewed by a German reporter in 2002 about suggestions that the church had amassed billions, then-President Gordon B. Hinckley said: “Yes, if you count all of our assets, yes, we are well-off. But those assets, you have to know this, are not money-producing. Those assets are money-consuming.”

Unlike other nonprofits, religious organizations are not required to publicly report their income or assets.

Nielsen’s estimate of Ensign’s assets places the Mormon investment organization among some of the country’s wealthiest companies and charities. Microsoft, Alphabet and Apple each hold between $100 billion and $136 billion in cash, according to the most recent company filings, while Harvard University has the country’s largest academic endowment at $40.9 billion. The Bill and Melinda Gates Foundation is the largest private philanthropic foundation in the world at $47.8 billion.

In addition to criticizing the scale of wealth accumulated by the church, Nielsen’s complaint accuses church leaders of acting improperly on the rare occasions that funds have been paid out from the investment division.

According to Nielsen, $2 billion from Ensign has been used over the past decade to bail out a church-run insurance company and a shopping mall in Salt Lake City that was a joint venture between the church and a major real estate company.

Citing an internal presentation that he includes as an exhibit, Nielsen alleges that in 2009 Ensign spent funds on rescuing the insurance firm, Beneficial Life, which was suffering from its exposure to mortgage-backed securities amid the financial crisis.

At the time, a church-owned newspaper reported that a different commercial church company, Deseret Management, had injected $594 million into Beneficial Life to make up its deficit. Mark Willes, Deseret Management’s president and chief executive, was reported to have said that no tithing money was used in the transaction.

Yet the internal presentation supplied to the IRS by Nielsen refers to a $600 million “withdrawal” from Ensign to Beneficial Life in 2009, citing a page from an Ensign slide presentation entitled “Framework and Exposures” and dated March 2013. Nielsen said the funds were taken specifically from the Ensign account that receives surplus tithing. Nielsen said the transfer was not treated as a loan and was not recorded as an investment on Ensign’s balance sheet.

Despite the bailout, Beneficial Life announced it would terminate 150 of its 214 Utah workers and stop writing new insurance policies.
Neither Willes nor an official from Beneficial Life responded to messages seeking comment.

Nielsen’s complaint further alleges that between 2009 and 2014, Ensign pumped $1.4 billion in several installments into the City Creek Center, a shopping mall in downtown Salt Lake City featuring a retractable roof. The mall, partly owned by the church, had also been hit by the financial crisis.
Amid complaints from members about the church venturing into retail, church leaders have repeatedly made assurances over several years that no money from tithes would be spent on developing the mall, a joint venture with the Taubman real estate group.

“I wish to give the entire church the assurance that tithing funds have not and will not be used to acquire this property. Nor will they be used in developing it for commercial purposes,” Hinckley said when plans for the mall were unveiled in 2003.

The church told The Post that through its involvement in the City Creek mall, it had “increased local economic activity during a financial downturn and attracted visitors and residents to Salt Lake City’s historic downtown.”

A Taubman spokeswoman declined to comment.

Hackney, the University of Pittsburgh tax law expert, said the payments would raise red flags if they were indeed made to for-profit entities that were separate from Ensign and not recorded as investments.

While the church may argue Ensign contributes to a broader religious and charitable mission, as a separate corporate entity it must show that “it furthers a charitable purpose exclusively on its own,” Hackney said.

“Once that money comes in, it’s gotta go back out,” he said. “They have to come up with a justification based on the entity alone. Looking at the other organizations shouldn’t be a means of justifying hoarding.”

In its statement to The Post, the church said all revenue it receives ultimately supports its mission. “Investments can be accessed in times of hardship,” the statement said.

IRS rules state that nonprofits “must not provide a substantial benefit to private interests” and that the earnings of registered religious organizations must not benefit “any private individual or shareholder” to avoid jeopardizing tax-exempt status.

The Mormon Church’s wealth and investment acumen has been widely reported. A Time magazine cover story, “Mormons, Inc.,” published in 1997 estimated the church’s total assets at $30 billion or more. A 2012 Reuters article reported that the church owned “about $35 billion worth of temples and meeting houses around the world, and controls farms, ranches, shopping malls and other commercial ventures worth many billions more.”

Nielsen’s complaint comes as many Mormons across the United States are engaged in discussions with their bishops, traditionally held in December, to “settle” their dues to the church. His estimate of $7 billion in annual revenue points to a relatively high rate of contributions from the 15 million members. By comparison, the Catholic church in the United States was reported in 2005 to receive $8 billion in annual tithes from 170 million members.

The complaint filed by Nielsen comprised a signed Form 211, the formal piece of IRS paperwork for reporting tax avoidance, a notarized cover letter to officials, plus the 74-page narrative document co-written with his brother in which he detailed his allegations at length.
These documents were sent to the IRS whistleblower office in Ogden, Utah, together with a thumb drive containing digital versions of documents and emails that Nielsen collected during his time at Ensign, the complaint says. He also provided information on Ensign’s bank accounts and a list of employees that officials should contact.

Nielsen told Ensign in a resignation letter dated Aug. 29 that his employment had become unworkable after his wife and children left the Mormon Church and asked him to follow them, according to a copy of the letter provided by Lars Nielsen. David Nielsen offered to continue working until Oct. 4.

Ensign’s human resources director told him in a reply that managers had decided it would be best to terminate his employment Sept. 3.
“We appreciate your years of service and the contributions you have made for the church,” the letter concluded.

The complaint describes an aggressive guarding of information by leaders at Ensign. Ensign employees “are trained to be especially sensitive” about data flowing outside the corporation, the complaint states. “Of course, all corporations need to guard their information, but the lengths that [Ensign] goes to borders on paranoia.”

Only four senior Ensign executives are permitted to see the company’s full financial statements, according to the complaint, and investment staff members may access information only on the Ensign assets relating to their own area of work.

Little has been publicly disclosed by Ensign, whose website address redirects readers to the church’s homepage.

The company files abbreviated annual tax returns that report the taxes it paid on the small fraction of its investment activity that is taxable. The returns, which are publicly available, show that in some recent years the company has reported losses of millions of dollars — a period in which, according to the complaint, a fuller accounting of its operations would have shown billions of dollars in profits.

This limited type of tax return requires Ensign to disclose the total value of its holdings, which the complaint asserts, has for years run to tens of billions of dollars. On those returns, Ensign has sometimes stated that it held $1 million, other times “more than $1,000,000,” and it once left this section of the paperwork unfilled.

During his 2002 interview with a German reporter, Hinckley was told that several major denominations in Germany published records of their finances. Why not the Mormons?

“We simply think that information belongs to those who made the contribution, and not to the world,” said Hinckley, who died in 2008.
Steven Rich and Alice Crites contributed to this article.

[wtfluff]

Very Interesting...

[Palerider]

I just posted on this over on doctrinal discussions.

I guess we can move the discussion here for all intents and purposes.

I think the crap may have just hit the fan for the church. Watch 'em lawyer up now boys and girls!

[Brent]

Oddly I am sad. Maybe because i know what the disillusion feels like.

[Mormorrisey]

This IRS whistleblower also has a video that I'm currently listening to. I'm not a data person at all, but it's pretty fascinating.

https://youtu.be/KDlFZF3RyhE

Getting my popcorn ready!

[2bizE]

I’ve been reading the comments on the Washington Post...very entertaining.

For some reason, non Mormons think there is something really going on between the church and Trump.

Others think us church members have been swindled...

I have the scenes this is going to be entertaining for a long time...I bet the big boys a Kirton McKonkie will be up late tonight....
BTW, if you haven’t used the application called Startpage, it can be rather handy for reading articles on the Washington Post.

[jfro18]

I picked a good night to visit this forum for the first time in a while.

This is amazing... will be interesting to see how members discredit the whistleblower and defend the church's need to stockpile the $$.

I remember hearing when the $32B in stock news broke that the church needed to stockpile the money because as membership growth drops, costs will keep going up so they're just being responsible and preparing.

$100,000,000,000 -- that is an UNREAL amount of cash to stockpile off the backs of the paying members of the church and I can not believe I contributed to that amount in my lifetime.

[Thoughtful]

What has me confused is why the church needs billions at the second coming?

Why not feed the hungry now? Clean water? Vaccinate the entire world?

[Brent]

Church Spokesman talking point:
"This is a Mormon church problem...we are the Church of Jesus Christ of Latter-day Saints...not us..."

[Palerider]

What has me confused is why the church needs billions at the second coming?

Why not feed the hungry now? Clean water? Vaccinate the entire world?

Ha! Mrs. Palerider just asked me this exact same question! Here's what I said:

"Well, the Biblical scriptures (and Mormon pseudo-scripture) indicate a number of distressful years for the entire world, before the actual Coming of Christ and I think current justification in the church is that while the rest of the world is starving in war, chaos and anarchy the true "saints" will be protected, well fed and orderly. Probably similar to Noah's ark. You want to be on the inside.

But if you read the approach Joseph was headed for during his life, he had planned to set himself up as king to reign on earth, while Christ reigned as king from Heaven through him. How lucky can you be?

Either way you need a ton of assets, influence and money to get that done. And that potent culture has thrived in the upper echelons of leadership.

Frankly, I don't think Joseph actually believed Christ would ever return (in his lifetime at least) even though he used the 2nd Coming as a ploy to manipulate his followers. I think he just thought he was setting himself up with a little kingdom. Like being on a wave and seeing how far it would take him.

Anyway, from the current government's point of view the purpose of valid, reputable religions and charities is to help the poor and society in general. It will be difficult for the government now to see the church as really helping anyone but the corporation itself.

But then this has always been the hallmark of the church's doctrine. "We sell you the privilege of being saved by our super duper special ordinances and you get the privilege of dedicating everything you have (even your life if need be) to us. Meanwhile we just get bigger and bigger until like a cancer, someone notices and stops us or we take over."

I think the church just got noticed in a big way.

[Raylan Givens]

I bet it is all “technically” legal and just skirts on the right side of the line. The Church is pretty damn smart with money. They hired the best accounting firms to diversify (hide) funds. So even if you knock down one wall, there are a dozen others you have to take out. This is another example where Scientology and the Church have the same playbook.

What this does is continue to be that pesky PR debacle that needs to be smoothed.

[Spicy McHaggis]

What has me confused is why the church needs billions at the second coming?

Why not feed the hungry now? Clean water? Vaccinate the entire world?

That’s a great point. Everything I was taught about the 2nd coming means money would be useless. If everything and everyone (except TBMs) is going to be torched and and those still around are immortal, living in the millennial Utopia, then why would a corporation need any money?

[Raylan Givens]

What has me confused is why the church needs billions at the second coming?

Why not feed the hungry now? Clean water? Vaccinate the entire world?

But that’s not the way corporations work. Jesus will send a massive text message letting everyone know he is cashing out his options. Get that luxury jet ready, destination Jackson County.

[Red Ryder]

Here’s the Letter to an IRS Director

https://www.scribd.com/document/4393858 ... S-Director

I’ll try and read this and summarize when I have time. I’ll probably print it off and send it to my bishop with my tithing settlement declaration.

Looks like Packer was turned away from details of the funds size before he died. Uchtdorf may have known.

Scribed isn’t letting me copy and paste. But you can read it here

page 13 footnote w.

John Dehlin and the OSF is mentioned as OSF board member was a bond trader who did signifsnct trades with EPA.

Page 21 footnote OO

Page 51 flowchart.

[moksha]

This is a major story. Hope it gets mentioned on LDS related Facebook pages.

[crazyhamster]

This does not surprise me at all. Only the amount, which is even more than I would have figured, raises my eyebrows.

Grifters gotta grift.

[blazerb]

Looks like Packer was turned away from details of the funds size before he died. Uchtdorf may have known.

I'll spend some time reading the piece. Can it be true that those at the highest levels did not know? The president of the church had to be aware. He is the big boss. Did the other 14 just trust that president knew what he was doing?

I have little doubt that nothing will come of the complaint. The church will send its lawyers and employ the best of the philosophies of men to get out of trouble. I hope I'm wrong.

When Hinckley made his comment that financial information is reserved for those who made the donations, I was a little bothered because I had made donations and was given no information. I did not pursue that line of reasoning very far. I was naive to trust.

[Not Buying It]

Don’t get your hopes up people. First off, the membership doesn’t care, most of them probably buy the idea that the Church needs to horde money for the Second Coming, however stupid the idea sounds to the rest of the world. Second, the Church has an army of lawyers to keep crap from hitting the fan. Third, the current leadership in the White House loves to pander to religious groups and would have no hesitation in calling off the IRS, unless the President thinks it will embarrass Mitt Romney, he’s unpredictable that way. Fourth, Scientology has demonstrated that fraudulent religions have ways of beating the IRS, and the Church is at least as savvy legally as they are. Fifth, to the members this is just more persecution by Satan and his minions.

By the keys of prophecy with which I have been endowed, and in the name of the Flying Spaghetti Monster, I prophesy this will be a Nothingburger.