Mormon Church has misled members on $100 billion tax-exempt investment fund, whistleblower alleges
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.