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© Temple Square in Salt Lake City
A whistleblower complaint filed at the Internal Revenue Service in November by a knowledgeable church member alleges that a non-profit supporting organization controlled by the Church of Jesus Christ of Latter-day Saints used member tithes to amass more than $100 billion in a set of investment funds and the Church misled members about uses of the money.

The complaint may be the most important look at LDS finances in decades, a window into one of the wealthiest religious organizations in the United States and the world. Details of the IRS filing reveal financial assets largely hidden from the church's membership (often known as "Mormons") and the public view.

The 74-page document filed with the IRS and obtained by Religion Unplugged shows that Ensign Peak Advisors, Inc. (EPA) owned assets under management grew to more than $100 billion from $10 billion in the past 22 years, fueled by a mix of investment strategy and tithe money from church members.

Religion Unplugged reached EPA's managing director Roger Clarke by phone on Monday, offering to explain key parts of this story and to ask questions for EPA to give a response. "We don't really answer questions with the public press. So thanks," he said, before hanging up the phone.

Ensign Peak Advisors' articles of incorporation confirm Ensign Peak is an arm of the Church of Jesus Christ of Latter-day Saints. As registered under section 509(a)3 of the Internal Revenue Code, Ensign Peak Advisors, Inc. (EPA) is a "supporting organization" of the Church under article 3 in its registration document. Upon dissolution, all Ensign Peak assets go the Church or affiliated organizations according to article 5 and that article cannot be changed without "the written consent of The First Presidency" of the Church. Because Ensign Peak Advisers is a support organization to a church it is not subject to disclosure requirements that other non-profit organizations are required to make.

A former Church member in Minnesota named Lars Nielsen published a 74-page document filed with the IRS that makes several allegations. The filing also included several internal EPA documents including an EPA Policy book, an EPA master plan, an EPA New Staff Orientation Guide, statements of financial condition and data downloads and analysis of the firm's investment portfolio. One presentation slide in the document from March of 2013 is labeled "New Staff Orientation Deck" and shows a Church investment governance structure including a "Council on Disposition of Tithes" that allocates funds from tithes to holding organizations in the church such as EPA.

Nielsen learned of the allegations from an LDS church member, who prefers to be unnamed. The whistleblower worked with Nielsen on a two-month research project to research and explain the inner workings of EPA. The complaint (Form 211) was filed with the IRS whistleblower office on Nov. 15, 2019 and received by the IRS on Nov. 22, 2019. Nielsen has chosen to go public with the allegations by releasing the report online and explaining the allegations in videos.

"I started to suspect that EPA was not compliant with its 501c3 or acting in accordance with its Articles of Incorporation around 2013," the whistleblower writes on a notarized cover letter to the IRS obtained by Religion Unplugged. "I raised several flags and concerns over the years."

A secret $100 billion stockpile

The document tallies assets in EPA using downloaded spreadsheets of assets from across its portfolio from March 22, 2018. The document indicates that the firm receives billions each year from tithe revenue — the donations church members make to the church — and estimates EPA assets from tithes and investment growth is more than $100 billion at present.

The organization's IRS 990-t forms also show an opaque but growing organization. In 2007, the organization listed "investing" as its primary business activity, lists a $1 million book value of all assets at year end. In 2015, it listed a book value "over" $1 million. By 2017, EPA listed "investing in partnerships" as its primary business, did not disclose its book value, reported $17.6 million in capital gain net income and lists $1.25 million as tax overpayment. Meanwhile, a letter on EPA stationery from Jan. 9, 2017, signed by vice president Greg Tarbet offered credit information about the firm saying, "Ensign Peak does not distribute financial statements. Assets, however, are well in excess of $5 billion, and Ensign Peak is essentially without debt."

An internal EPA slide presentation from 2013 states that during the financial crisis period of 2008 and 2009, the firm "experienced a temporary drawdown" of close to $13 billion, noting that amount was greater than 30 percent of its portfolio at the time.

The whistleblower complaint said EPA had 75 employees in 2019, up from 20 in 2010. They work in a building in Salt Lake City, Utah, (60 East South Temple, Suite 400) that does not have a sign on the building or in the downstairs lobby according to the complaint. The company does not have a public web site. A LinkedIn search of Ensign Peak Advisors lists 64 people who work there including people in typical finance roles such as compliance officer, investment manager, investment analyst, portfolio manager, equity trader, private equity associate and accountant.

"Supporting organizations raise funds. They invest funds. Depending on how the investment fund was set up, it could well be proper," says Arthur Rieman, an attorney at The Law Firm for Non-Profits in Studio City, Calif. "If it's set up as an investment fund and increased 1,000 percent in 20 years, that's a pretty good return."

The whistleblower document alleges that EPA has given away $0 to religious, educational or charitable purposes. Non-profit experts such as Rieman note that EPA's registration as a 509(a)3 supporting organization to the LDS Church could protect it from having to make charitable distributions because churches are not required to disclose finances to the public.

"The Church of Jesus Christ of Latter-day Saints pays all taxes that are required by law," says an LDS Church statement about its tax status.

Nielsen says the Mormon "giga-church" needs "a place to park its cash" and has used EPA to do so. Nielsen alleges EPA grew from regular tithes by members of the LDS Church, most of whom had no idea of how their money was being spent or invested given the lack of public financial disclosure by the church since 1959.

Certainly, other religions and denominations — Islam, Hinduism, Judaism, Catholicism, Episcopalians, Orthodox Christians and protestants — have property and wealth. Calculating that wealth is often difficult because of varied organization structures. For example, Catholic News Service reported in June that the Institute for the Works of Religion, often referred to the Vatican bank, held assets worth $5.6 billion at the end of 2018. But that does not capture the vast real estate and financial profile of the Roman Catholic Church and its thousands of dioceses around the world, according to experts who spoke with TheStreet.com in 2015.

Historic Significance

If true as the whistleblower alleges, the size of the LDS Church holdings at EPA would represent a massive pool of capital of interest to the financial world, which pays close attention to the investment moves of large pension funds and major university endowments.

Religion Unplugged called the media relations office of the LDS Church on Monday and sent several questions by email. Church spokesman Eric D. Hawkins responded by email saying, "the Church does not provide information about specific transactions or financial decisions." He sent language from the Church's website such as its "Principles of Church Finances" section that includes, "Following sound financial principles over an extended period of time, the Church has grown from meager beginnings into a worldwide organization able to support its divine mission."

Exhibits in the whistleblower complaint include internal documents, a masterplan and presentation slides from EPA where it describes the purposes of its reserves to support prophetic initiatives, church operating budgets, backstops to pension plans and collateral for church purposes.

"The corporation's property is irrevocably dedicated to religious, educational and charitable purposes meeting the requirements for exemption provided by Section 501(c)3 of the Internal Revenue Code, and no part of the net income or assets of this corporation shall ever inure to the benefit of any trustee, officer or member thereof or to the benefit of any private person," says one provision of the Articles of Incorporation.

The filing to the IRS alleges that EPA has made zero religious, educational or charitable distributions in 22 years. According to tax experts, that may not be a problem for a 509(a)3 organization, depending on more nuanced details of its registration which are not publicly available on the IRS website or the organizations 990-t annual filings.

"EPA is the reserve of the reserves," a whistleblower is quoted as saying in the document. It suggests tithing surplus flows to EPA where it is "merged, sliced and diced into portfolios and limited liability companies designed to fly under radars and reporting limits." The document obtained by Religion Unplugged makes several additional allegations about EPA.

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