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Mormon blows whistle on church’s alleged “clandestine hedge fund” | 60 Minutes

Mormon blows whistle on church’s alleged “clandestine hedge fund” | 60 Minutes

2023-05-15 02:52:45

Each faith has its mysteries. One of many closest guarded secrets and techniques of The Church of Jesus Christ of Latter-day Saints has been its wealth. Tonight you’ll hear for the primary time about its exceptional dimension, from a former supervisor on the church’s funding agency. David Nielsen says that in his 9 years managing cash on the church agency…the worth of its investments ballooned previous $100 billion. That may make it the most important treasure held by any non secular fund in america. However as an alternative of spending that cash to do good, David Nielsen alleges it was utilized in ways in which bent the regulation..and broke his religion.

David Nielsen: I believed I used to be gonna work for a charity. I believed that is what my expertise had been gonna do…was assist construct the charity and do good with issues. And the funds had been by no means used for that. It was actually a clandestine hedge fund.

Sharyn Alfonsi: A clandestine hedge fund. How so?

David Nielsen: These funds weren’t used the way in which they had been appropriated for use.

Sharyn Alfonsi: So how had been they getting used?

David Nielsen: Effectively, as soon as the cash went in, it did not exit.

David Nielsen was a senior portfolio supervisor for the funding arm of the church…referred to as Ensign Peak Advisors. 

In 2009, Nielsen, who says he was a religious Mormon, was recruited away from a profitable job on Wall Avenue to work for the agency… a block from church headquarters in Salt Lake Metropolis…

David Nielsen left his job at Ensign Peak Advisors, the Church of Jesus Christ of Latter-day Saints’ funding agency, and filed an IRS whistleblower grievance.

60 Minutes

David Nielsen: You realize this. Wall Avenue, you spend your expertise workin’ to make actually wealthy folks just a little bit extra wealthy – however there’s something totally different concerning the prospect of puttin’ your expertise to work for somethin’ that you simply assume is actually gonna construct the dominion. It is actually gonna make a distinction.

However Nielsen says he grew troubled by what he noticed at Ensign Peak. He says the agency used false information and statements to masquerade as a charity, stockpiling cash and deceptive church members.

Yearly, the church collects an estimated $7 billion in contributions from its 17 million members. 

The church expects members to contribute about 10% of their revenue…a observe often called tithing.

Sharyn Alfonsi: Clarify how the tithe is meant for use.

David Nielsen: Tithing is what’s used to construct buildings, it is what’s used to pay gentle payments. Tithing is what’s used to– function a number of the church’s applications.

No matter is left over…a few billion {dollars} a 12 months…is put right into a reserve fund at Ensign Peak and invested…as a result of Ensign Peak is registered as a nonprofit…all of it grows tax free.

David Nielsen says because it was created in 1997, the reserve fund has swelled past $100 billion …twice the dimensions of Harvard’s endowment or the Invoice and Melinda Gates Basis.

David Nielsen: You could possibly clear up large issues with $100 billion.

Sharyn Alfonsi: And is that the factor that bothers you about all this? 

David Nielsen: I believed we had been gonna change the world. And we simply grew the checking account.

Sharyn Alfonsi: Did any of your former bosses clarify how the cash was gonna be used sooner or later?

David Nielsen: The reply was all the time, “The second coming.” And it’s kind of tongue in cheek. However deep down, I feel a lotta the staff actually did imagine that.

Publicly, church leaders referred to as it a wet day fund. However in 2013, Nielsen says considered one of his bosses shared this  doc at a gathering that confirmed $1.4 billion from the fund….went to a mall being constructed on land owned by the church and $600 million was used to prop-up a for-profit church-owned insurance coverage firm referred to as Useful Life.

David Nielsen: Look, I am not an professional on charities. However I would been across the block sufficient to know that charitable organizations cannot bail out for revenue companies and keep their charitable standing. 

David Nielsen and Sharyn Alfonsi

60 Minutes

Sharyn Alfonsi: And so after they gave this cash to bail out a for revenue enterprise, what was your response?

David Nielsen: What are we doin’? How is that this OK?

David Nielsen says he hit his breaking level in 2018 after an internet site referred to as “Mormonleaks” linked church members to corporations that existed solely on paper. These shell corporations held billions of {dollars} in shares and bonds.

What no one knew outdoors church management was these belongings had been truly managed by Ensign Peak. Nielsen says the agency referred to as an emergency assembly.

Sharyn Alfonsi: What was the reason?

David Nielsen: “These entities had been to cover the belongings from the members.” The chief funding officer mentioned that if we had been to vary and begin reporting these securities in our personal identify, it will deliver undue consideration to the agency. And that that spotlight could be probably damaging. And after the assembly I went and confronted him. “What do you imply probably damaging?” And he mentioned “Dave, we’re gonna lose our tax-exempt standing.” I knew in that second that I used to be within the flawed place.

He resigned in 2019 and filed a 74-page whistleblower grievance with the Inner Income Service alleging that Ensign Peak violated its tax-exempt standing by transferring cash to for-profit companies.

Christopher Waddell: That is not simply incorrect, that is flat-out flawed.

Bishop Christopher Waddell with Sharyn Alfonsi

60 Minutes

Christopher Waddell says David Nielsen did not have a full image of Ensign Peak. Waddell is considered one of three church bishops who oversees funds.

Christopher Waddell: As a Christian church we imagine that sometime there– Jesus Christ will return. However that is not why we’ve these sources. It is for the persevering with operation and for the long run.

Sharyn Alfonsi: David Nielsen alleged that Ensign Peak violated its tax-exempt standing by directing cash to church companies. How would you characterize how that cash was used?

Christopher Waddell: The Church truly owned Useful Life. And– and fortuitously the church had the sources to bail out Useful Life in the course of the Monetary Disaster, 2008, 2009.

Sharyn Alfonsi: And the mall?

Christopher Waddell: The mall was not a bailout. The mall was an funding.

Sharyn Alfonsi: And you might be receiving returns on that funding?

Christopher Waddell: Oh, completely. Yeah. It was an funding.

Waddell says the insurance coverage firm has paid again a lot of the bailout cash. However the church wouldn’t disclose the main points of that deal or the mall funding. In contrast to different nonprofits, non secular organizations haven’t got to completely disclose all monetary data to the IRS.

Sharyn Alfonsi: What’s the worth proper now of Ensign Peak’s belongings?

Christopher Waddell: Yeah…that is one thing I am unable to share with you proper now. I do know there’ve been– there’ve been studies on– on approximates and that form of factor, and– and that is so far as we are able to go proper now–

Sharyn Alfonsi: It has been estimated at $150 billion. Does that sound right?

Christopher Waddell: That is an estimate– that some have made.

Sharyn Alfonsi: Are we within the ball park or no?

Christopher Waddell: We’ve important sources.

Sharyn Alfonsi: Give us a way of what share goes out the door of the cash beneath administration. 

Christopher Waddell: To be trustworthy, we– we have by no means checked out it as a share. We looked– at it primarily based on must ensure that we’re snug with what number of years value we’ve in case of economic difficulties, in case of economic disaster to verify we are able to proceed church operations. We simply wish to ensure that that’s enough. 

David Nielsen says he didn’t intend for his grievance to the IRS to change into public. However in 2019, his brother shared it with the Washington Submit. 

Nielsen, who in his free time, races bikes, says he was shunned by a few of his associates and neighbors in Salt Lake Metropolis. 

It wasn’t till 2021, two years later, that David Nielsen heard from investigators…– not from the IRS…however the Securities and Trade Fee which launched its personal probe into Ensign Peak after that web site story linked the church to shell corporations.

Sharyn Alfonsi: What data did you give to the SEC?

David Nielsen: Every little thing. I helped them see the large image.

To guard market equity and transparency, any agency with greater than $100 million in securities should file correct studies on its holdings with the SEC.

However in February, the SEC introduced the Church of Latter-day Saints and Ensign Peak failed to try this.

SEC investigators discovered the church “went to nice lengths” to cover $32 billion in securities over almost 20 years. It created 13 shell corporations that had been “…assigned an area telephone quantity that may go on to voicemail” in case regulators checked-in. 

David Nielsen: Right here they’d these again workplace accountants, who had by no means purchased a bond or offered inventory a day of their life, signing signatory pages for a portfolio that did not exist.

The SEC fined the church and Ensign Peak a complete of $5 million. Bishop Christopher Waddell advised us it was the church’s legal professionals who suggested them to create the shell corporations.

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Sharyn Alfonsi: What about, you already know, the concept secrecy builds distrust?

Christopher Waddell: Effectively, we do not really feel it is being secret. We really feel it is being confidential.

Sharyn Alfonsi: What is the distinction?

Christopher Waddell: The distinction is– I suppose it is a standpoint… it is confidential to be able to keep the concentrate on what our objective is and what the mission of the church is, reasonably than the church has X amount of cash.

Sharyn Alfonsi: However do not you agree this is able to be a non-issue if there was extra transparency?

Christopher Waddell: No, as a result of then everybody could be telling us what they wished us to do with the cash.

Final 12 months the church says it spent over a billion {dollars} on humanitarian support, together with meals manufacturing.

Christopher Waddell: In any given month you could have a median of 9 transfers going from Ensign Peak again to the church to fund all church operations. All humanitarian work– schooling work, all of the work of the church they fund. 

David Nielsen: Cash’s going out and in of the money accounts on a regular basis. However Ensign Peak’s funds had been by no means used for any charitable objective, as to my information the entire time I used to be there. So there is a little bit of a distinction right here that is necessary.

Sharyn Alfonsi: Clarify that to me.

David Nielsen: Effectively, it is the distinction between your checking account and possibly your retirement account. They’re used for various functions. And you aren’t getting to fake that one is affecting the opposite.

Phil Hackney

60 Minutes

Phil Hackney: The elemental declare to me is that Ensign Peak brings cash in and it is the Lodge California. It by no means comes out.

Phil Hackney labored within the Workplace of Chief Counsel of the IRS and teaches tax regulation.  He concedes it is advanced and the case falls right into a grey space.

Sharyn Alfonsi: The church would say, “We give thousands and thousands of {dollars} out each year– in humanitarian work.” How a lot is sufficient by the requirements of the IRS?

Phil Hackney: We all know inside personal foundations it is 5% of belongings. There is not any readability relating to public charities– and definitely not with church buildings. However I might anticipate to see one thing like 2%, 3% of belongings being spent out to justify that standing.

Sharyn Alfonsi: However how are you aware in the event that they’re spending 2% or 3% of belongings if we do not know what the belongings are?

Phil Hackney: We’ve to depend on them behaving nicely.

Sharyn Alfonsi: They mentioned they bailed out this insurance coverage firm. That is the phrases they used. Is that an issue?

Phil Hackney: It’s a downside for my part if they’ve moved cash from the nonprofit to a for-profit. 

Sharyn Alfonsi: So how doubtless do you assume it will be that the IRS would ever examine this?

Phil Hackney: Slim. The political danger is so nice that it comes with actual hazard. On the similar time, there’s an actual danger to the rule of regulation if the IRS does not are available in and implement these guidelines.

David Nielsen says honesty is a tenet of the religion. He needs Ensign Peak Advisors to pay the taxes he says it owes on the $100 billion constructed from tithing. If the IRS decides Nielsen is correct, he may very well be rewarded with as much as 30% of what is collected. The IRS doesn’t touch upon whistleblower complaints.

Sharyn Alfonsi: Why are you talking now?

David Nielsen: It is time, Sharyn. We gave the IRS and the SEC all of the skilled courtesy. That is simply too necessary to fall by way of the cracks.

Sharyn Alfonsi: It is doable that you simply had been lifeless flawed?

David Nielsen: No. I do know what I noticed. I do know what I do know.

Produced by Man Campanile. Affiliate producers, Lucy Hatcher and Matthew Riley. Broadcast associates, Eliza Costas and Elizabeth Germino. Edited by Peter M. Berman.

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