Mormon whistleblower calls church investments “a clandestine hedge fund”
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The Church of Jesus Christ of Latter-day Saints’ finances faced renewed scrutiny Sunday when CBS aired an interview with a whistleblower who alleges the church tried to hide billions of dollars and violated its tax-exempt status.
What they’re saying: The church’s former investment adviser David Nielsen described on “60 Minutes” the religious body’s investment portfolio as “a clandestine hedge fund.”
“Those funds weren’t used the way they were appropriated to be used. … Well, once the money went in, it didn’t go out,” he added.
Why it matters: Although Nielsen’s allegations had already been widely publicized, the high-profile TV show’s segment could hurt the church’s public image.
A church leader repeatedly refused to answer questions from CBS’ Sharyn Alfonsi during the segment on how much money it has and hesitated when asked why the church is secretive about its finances.
The church historically has withheld details of its finances not only from the public, but also from its members.
Catch up quick: Nielsen in 2019 filed a whistleblower complaint with the federal regulators alleging the church’s investment arm, Ensign Peak Advisors, abused its tax-exempt status by collecting billions of dollars without spending any of it on charity.
It did, however, spend a combined $2 billion on for-profit businesses the church owns, Nielsen said.
He also alleged the church created 13 shell companies to divide its investments and obscure the true scale of its wealth.
After the SEC determined the church masked its assets for 20 years, the church and Ensign Peak agreed in February to pay a $5 million settlement.
By the numbers: Nielsen, who worked for Ensign Peak for about 10 years starting in 2009, provided accounting documents showing the church had $100 billion in investments as of 2018, the Washington Post reported in 2019.
When asked to confirm updated estimates of $150 billion, Christopher Waddell, a church leader who helps oversee finances, told Alfonsi: “That’s something I can’t share with you right now.”
When Alfonsi asked whether that was “in the ballpark,” Waddell replied, “Um, we have significant resources.”
The other side: Waddell said the church won’t disclose its total value “because then everyone would be telling us what they want us to do with the money.”
The church says it spent over $1 billion on humanitarian aid last year.
Between the lines: Nielsen said on “60 Minutes” that he went public after waiting for regulators to take action.
“We gave the IRS and the SEC all the professional courtesy,” he told Alfonsi. “This is just too important to fall through the cracks.”
The IRS hasn’t taken public action on Nielsen’s claims, even after he filed a more detailed complaint with the U.S. Senate Finance Committee, and the SEC fine was small relative to the $32 billion the church was accused of concealing.
What we’re watching: Tax law professor and former IRS regulator Phil Hackney told CBS the likelihood of IRS action is “slim.”
“The political risk is so great that it comes with real danger,” Hackney said. “At the same time, there’s a real risk to the rule of law if the IRS doesn’t come in and enforce those rules.”
Content retrieved from: https://www.axios.com/2023/05/15/mormon-whistleblower-60-minutes-church-finances.
