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

The church did now not respond to distinctive questions from The Post about the complaint and said in a statement Monday that it does no longer talk about precise financial transactions. On Tuesday, after the first version of this story turned into published, the church said it takes seriously its responsiblity to care for participants’ donations.“Claims being currently circulated are based mostly on a narrow attitude and limited tips,” pointed out a commentary attributed to the church’s First Presidency, its easiest governing body. “The Church complies with all acceptable law governing our donations, investments, taxes, and reserves.”The complaint provides a window into the heavily held price range of one of the nation’s maximum visible religious corporations, based in Salt Lake City. It details a church fortune far exceeding beyond estimates and encompassing stocks, bonds and cash.The complaint was filed by way of David A.

Nielsen, a 41-year-old Mormon who worked until September as a senior portfolio manager at the church’s investment division, a employer named Ensign Peak Advisors that is based mostly close to the church’s headquarters.Nonprofit companies, adding devout groups, are exempted in the United States from paying taxes on their income.

Ensign is registered with gurus as a helping organization and included auxiliary of the Mormon Church. This allows it to operate as a nonprofit and to make money in large part free from U.S. taxes.The exemption requires that Ensign function exclusively for religious, tutorial or other charitable purposes, a condition that Nielsen says the firm has now 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 may also owe billions in taxes. He is seeking a advantages from the IRS, which offers whistleblowers a cut of unpaid taxes that it recovers.Nielsen did no longer respond to repeated phone calls and emails trying comment.His twin brother, Lars P.

Nielsen, provided a copy of the complaint to The Post, along with dozens of assisting information.

Lars Nielsen, a health-care representative in Minnesota, brought up he prepared the complaint with his brother and helped him post it to the IRS.Lars Nielsen observed in a remark to The Post that his brother asked him to write an exposé on his former employer.“Having seen tens of billions in contributions and rankings more in investment returns come in, and having seen nothing apart from two unlawful distributions to for-profit concerns pass out, he was dejected beyond words, and so turned into I,” Lars Nielsen wrote.He talked about he was coming forward without his brother’s approval because he believed the tips changed into too crucial to remain confidential. “I know that occasionally newspapers use anonymous sources,” he stated.

“But that is customarily no longer easiest for a tale.”In comments last year, a top-ranking cleric in the church, Bishop Gérald Caussé, pointed out it “pays taxes on any earnings it derives from income-producing events that are continuously carried on and are not considerably associated to its tax-exempt purposes.”The church usually collects approximately $7 billion each year in contributions from members, according to the complaint. Mormons, like members of a few other religion groups, are asked to provide a contribution 10 percent of their profits to the church, a practice known as tithing.While about $6 billion of that profits 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 inner accounting data from February 2018, the complaint estimates the portfolio has grown in value from $12 billion in 1997, when Ensign develop into formed, to approximately $100 billion today.The church also owns real estate value billions of bucks, according to the complaint, which focuses on surplus tithing money and says that the church may have additional holdings now not controlled by potential of Ensign.While collecting this wealth, Ensign has now not without delay funded any religious, academic or charitable events in 22 years, the complaint said.

No files are provided to help this claim, which is attributed to information David Nielsen gleaned from working at the company.Philip Hackney, a former IRS authentic who teaches tax law at the University of Pittsburgh, pointed out the complaint raised a “legitimate concern” approximately whether the church’s investment arm deserved its tax-exempt prestige.“If you have a charity that comfortably amasses a war chest year after year and does no longer spend any money for charity purposes, that does no longer meet the necessities 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 examine the whistleblower info.IRS rules dictate that a nonprofit organization must convey out charitable game that is “commensurate in scope with its financial substances” to maintain its tax-exempt prestige.

No threshold for this check is specified, and the corporation as an alternative considers examples case by means of case.In its statement Tuesday, the church mentioned the “vast majority” of the budget it gets from donations are “used automatically to meet the needs of the growing Church,” adding temples, education and missionary paintings.“Over many years, a component is methodically safeguarded thru wise monetary regulate and the building of a prudent reserve for the future,” the observation pointed out.

“This is a sound doctrinal and monetary principle taught by ability of the Savior in the Parable of the Talents and lived thru the Church and its individuals.

All Church price range exist for no other reason why than to tips the Church’s divinely appointed mission.”Details of the church’s bills on charitable paintings are not publicly available, even so in a lecture at the University of Oxford in 2016, a senior elder mentioned the church had spent about $40 million a year over the past 30 years on welfare, humanitarian help and other international projects. He did no longer mention Ensign. The church pointed out in a report final year that its charitable arm had spent $2.2 billion in counsel on account that 1985, having said that did now not deliver a breakdown on spending.While declining to discuss the volume of their holdings, church leaders have sought to provide an explanation for the train of proceeding to assemble tithes while collecting economic reserves.In a speech in March 2018, Caussé associated the church’s financial approach to the “prophecies about the last days.” Just as the church keeps grain silos and emergency warehouses, Caussé pointed out, so it “also methodically follows the train of surroundings aside a portion of its revenues both year to prepare for any feasible destiny demands.”According to the complaint, Ensign’s president, Roger Clarke, has told others that the accrued funds may be used in the event of the 2nd coming of Christ. Clarke did no longer respond to an email attempting comment.Nielsen’s complaint is sharply necessary of church leaders for proceeding to ask for tithes, even from members who are affliction financially, while the church sits on a fortune. “Would you pay tithing as a substitute of water, electricity, or feeding your circle of relatives if you knew that it could take a seat around by the billions until the Second Coming of Christ?” he wrote in a 74-page narrative that accompanied his complaint.He shows church leaders want continuing to assemble tithes to steer clear of “losing control over their contributors’ behavior” by way of releasing them from their monetary obligations. In June, the church raised the monthly cost paid by way of most families to cover the charge of their infants serving as missionaries from $400 to $500 in keeping with month.Leaders have always tried to downplay speculation approximately the quantity of the church’s wealth. Quoting a former church president throughout the speech last year, Caussé, talked about: “When all is spoke of and done, the only specific wealth of the church is in the religion of its people.”When interviewed by way of a German reporter in 2002 about tips that the church had amassed billions, then-President Gordon B.

Hinckley observed: “Yes, if you count all of our resources, yes, we are well-off. But the ones assets, you have to know this, are not cash-producing. Those supplies are money-consuming.”Unlike other nonprofits, religious organizations are now not required to publicly record their income or assets.Nielsen’s estimate of Ensign’s assets areas the Mormon investment organization among a few of the country’s wealthiest agencies and charities. Microsoft, Alphabet and Apple both dangle between $100 billion and $136 billion in cash, according to the maximum fresh company filings, even as Harvard University has the country’s largest academic endowment at $40.9 billion. The Bill and Melinda Gates Foundation is the biggest inner most philanthropic basis in the global at $47.8 billion.In addition to criticizing the scale of wealth accumulated by skill of the church, Nielsen’s complaint accuses church leaders of acting improperly on the rare events that budget 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 organisation and a shopping mall in Salt Lake City that turned into a joint project among the church and a fundamental exact estate business enterprise.Citing an inner presentation that he comprises as an exhibit, Nielsen alleges that in 2009, Ensign spent budget on rescuing the insurance company, Beneficial Life, which became soreness from its exposure to mortgage-backed securities amid the financial crisis.At the time, a church-owned newspaper suggested that a various 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, change into suggested to have said that no tithing money became used in the transaction.Yet the internal presentation offered to the IRS by Nielsen refers to a $600 million “withdrawal” from Ensign to Beneficial Life in 2009, bringing up a page from an Ensign slide presentation entitled “Framework and Exposures” and dated March 2013.

Nielsen pointed out the funds were taken mainly from the Ensign account that gets surplus tithing. Nielsen noted the transfer grow to be no longer treated as a loan and turned into not recorded as an investment on Ensign’s balance sheet.Despite the bailout, Beneficial Life announced it would terminate 150 of its 214 Utah personnel and stop writing new coverage policies.Neither Willes nor an reliable from Beneficial Life replied to messages attempting comment.Nielsen’s complaint extra alleges that among 2009 and 2014, Ensign pumped $1.4 billion in a few installments into the City Creek Center, a shopping mall in downtown Salt Lake City presenting a retractable roof. The mall, in part owned through the church, had also been hit by way of the monetary crisis.Amid lawsuits from participants approximately the church venturing into retail, church leaders have many times made assurances over a few years that no money from tithes might be spent on coming up the mall, a joint challenge with the Taubman specific estate group.“I wish to give the accomplished church the assurance that tithing budget have now not and will no longer be used to acquire this property. Nor will they be used in arising it for advertisement purposes,” Hinckley mentioned when plans for the mall were unveiled in 2003.On Monday, the church told The Post that via its involvement in the City Creek mall, it had “increased local monetary recreation all over a financial downturn and attracted guests and residents to Salt Lake City’s historical downtown.”A Taubman spokeswoman declined to comment.Hackney, the University of Pittsburgh tax law expert, spoke of the bills might raise red flags if they were indeed made to for-profit entities that were separate from Ensign and now not recorded as investments.While the church can also argue Ensign contributes to a broader devout and charitable mission, as a separate corporate entity, it have to reveal that “it furthers a charitable goal exclusively on its own,” Hackney pointed out.“Once that money comes in, it’s gotta cross back out,” he pointed out.

“They have to come up with a justification based on the entity alone. Looking at the other companies shouldn’t be a capability of justifying hoarding.”IRS rules state that nonprofits “have to not provide a huge benefit to inner most interests” and that the earnings of registered devout groups have to not benefit “any inner most private or shareholder” to avoid jeopardizing tax-exempt status.The Mormon Church’s wealth and investment acumen has been widely said.

A Time magazine cover tale, “Mormons, Inc.,” published in 1997, envisioned the church’s whole substances at $30 billion or more. A 2012 Reuters article suggested that the church owned “approximately $35 billion value of temples and assembly properties around the global, and controls farms, ranches, browsing malls and other advertisement ventures worth many billions more.”Nielsen’s complaint comes as many Mormons across the United States are engaged in discussions with their bishops, historically held in December, to “settle” their dues to the church. His estimate of $7 billion in annual earnings points to a fairly prime fee of contributions from the 15 million members.

By comparison, the Catholic church in the United States was suggested in 2005 to receive $8 billion in annual tithes. There were 75 million Catholics in the U.S. in 2010, according to Pew Research Center.The complaint filed via Nielsen comprised a signed Form 211, the formal piece of IRS forms for reporting tax avoidance, a notarized cover letter to officials, plus the 74-page narrative report co-written with his brother in which he distinct his allegations at length.These documents were sent to the IRS whistleblower place of business in Ogden, Utah, together with a thumb drive containing digital types of info and emails that Nielsen gathered during his time at Ensign, the complaint says. He also introduced advice on Ensign’s bank accounts and a list of employees whom officials need to contact.Nielsen told Ensign in a resignation letter dated Aug. 29 that his employment had become unworkable after his wife and toddlers left the Mormon Church and asked him to apply them, according to a copy of the letter offered by way of Lars Nielsen. David Nielsen presented to continue operating until Oct. 4.Ensign’s human resources director told him in a answer that managers had decided it may be best to terminate his employment Sept. 3.“We relish your years of carrier and the contributions you have made for the church,” the letter concluded.The complaint describes an competitive guarding of guidance by leaders at Ensign. Ensign employees “are expert to be particularly sensitive” approximately data flowing outside the corporation, the complaint states. “Of course, all groups desire to defend their advice, on the other hand the lengths that [Ensign] is going to borders on paranoia.”Only four senior Ensign executives are approved to visit the company’s full financial statements, according to the complaint, and investment team of workers contributors may get right of entry to guidance most effective on the Ensign assets bearing on to their own arena of work.Little has been publicly disclosed by ability of Ensign, whose website deal with redirects readers to the church’s homepage.The organisation data abbreviated annual tax returns that document the taxes it paid on the small fraction of its investment sport that is taxable. The returns, which are publicly available, exhibit that in a few recent years, the organization has suggested losses of millions of greenbacks — a duration in which, according to the complaint, a fuller accounting of its operations would have shown billions of greenbacks in profits.This limited category of tax return requires Ensign to divulge the entire cost of its holdings, which the complaint asserts, has for years run to tens of billions of bucks.

On the ones returns, Ensign has sometimes stated that it held $1 million, other times “more than $1,000,000,” and it once left this part of the forms unfilled.During his 2002 interview with a German reporter, Hinckley changed into told that a couple of principal denominations in Germany published data of their price range.

Why now not the Mormons?“We quite simply think that assistance belongs to the ones who made the contribution, and not to the international,” observed Hinckley, who died in 2008.Correction: An earlier version of this story misstated the number of Catholics in the U.S., a population of 75 million in 2010, not 170 million. A graphic accompanying this tale overstated the size of Harvard’s endowment, which is $40.9 billion, not $49.3 billion. The story has also been up to date to include additional statements from the church approximately its charitable giving.Steven Rich and Alice Crites contributed to this record.

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