Mormon Church to Pay SEC Millions Following Whistleblower Allegations

mormon whistleblower SEC

On February 21, the U.S. Securities and Exchange Commission (SEC) charged the Church of Latter-day Saints for obscuring its investment portfolio and failing to disclose a multi-billion dollar investment fund. In 2019, a whistleblower filed disclosures with U.S. authorities alleging that the Church’s massive fund was violating federal tax law. The Church and its investment entity agreed to pay $5 million to settle the charges.

According to the SEC, from 1997 through 2019, 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, “failed to file Forms 13F, the forms on which investment managers are required to disclose the value of certain securities they manage.”

“The Church was concerned that disclosure of its portfolio, which by 2018 grew to approximately $32 billion, would lead to negative consequences,” the SEC alleges. “To obscure the amount of the Church’s portfolio, and with the Church’s knowledge and approval, Ensign Peak created thirteen shell LLCs, ostensibly with locations throughout the U.S., and filed Forms 13F in the names of these LLCs rather than in Ensign Peak’s name.”

“We allege that the LDS Church’s investment manager, with the Church’s knowledge, went to great lengths to avoid disclosing the Church’s investments, depriving the Commission and the investing public of accurate market information,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “The requirement to file timely and accurate information on Forms 13F applies to all institutional investment managers, including non-profit and charitable organizations.”

In 2019, David Neilson, a former investment manager for the Church, filed a whistleblower disclosure with the U.S. Internal Revenue Service (IRS) accusing the Church of improperly using charitable donations to fund a $100 billion investment fund.

In his complaint, Neilson alleges that the Church redirects charitable donations by members to the investment portfolio managed by Ensign, which allegedly grew from $12 billion in 1997, when Ensign was formed, to about $100 billion in 2019. According to the complaint, “while accumulating this wealth, Ensign has not directly funded any religious, educational or charitable activities in 22 years,” The Washington Post reports. Neilson claims that Ensign is improperly designated as a tax-exempt religious organization and is violating federal tax law.

The Washington Post further reports that “after lodging the complaint with the IRS, Nielsen also filed a whistleblower complaint with the SEC.” Through the SEC Whistleblower Program, qualified whistleblowers, individuals who voluntarily report original information that leads to a successful enforcement action, are entitled to a monetary award of 10-30% of the funds collected by the government.

Further Reading:

SEC Charges The Church of Jesus Christ of Latter-day Saints and Its Investment Management Company for Disclosure Failures and Misstated Filings

Mormon Church has misled members on $100 billion tax-exempt investment fund, whistleblower alleges – The Washington Post

More SEC Whistleblower News

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