A former senior portfolio manager who worked at the investment arm of the Church of Jesus Christ of Latter-day Saints alleges the firm masqueraded as a charity and violated its tax exempt status by directing funds built from member donations to bail out business with ties to the church.
David Nielsen filed a whistleblower complaint with the IRS in 2019. Nielsen says that during his nine years working at Ensign Peak Advisors, the value of the firm’s investments ballooned past $100 billion. In his first public comments, Nielsen told 60 Minutes the firm used false records and statements to appear as a charity, while stockpiling money and misleading the church members.
“I thought we were going to change the world,” Nielsen said. “And we just grew the bank account.”
Each year, the Church of Jesus Christ of Latter-day Saints collects an estimated $7 billion in contributions from its 17 million members. The church expects members to participate in tithing by contributing about 10% of their income. Tithing is used to pay the church’s bills and fund the church’s programs. Whatever is left over, about $1 billion a year, is put into a reserve fund at Ensign Peak and invested.
As a registered nonprofit, those investments grow tax free, Nielsen said. Since it was created in 1997, he says the fund has swelled beyond $100 billion.
“You could solve big problems with $100 billion,” Nielsen told 60 Minutes’ Sharyn Alfonsi.
David Nielsen and Sharyn Alfonsi
60 Minutes
Nielsen said he left Wall Street in 2009 to work at Ensign Peak because he wanted to work for what he thought was a charity. He recalled thinking he could use his skills to do good.
“And the funds were never used for that,” Nielsen said. “It was really a clandestine hedge fund.”
In 2013, one of Nielsen’s bosses shared a document at a meeting that showed $1.4 billion from Ensign Peak went to a mall being built on land owned by the church, the whistleblower said. Another $600 million was used to help prop up a for-profit, church-owned insurance company called Beneficial Life.
“Look, I’m not an expert on charities, but I’d been around the block enough to know that charitable organizations can’t bail out for-profit businesses and maintain their charitable status,” Nielsen said.
Christopher Waddell, one of three church bishops who oversee Ensign Peak, said David Nielsen’s allegations are “flat-out wrong.”
“The church actually owned Beneficial Life and fortunately the church had the resources to bail out Beneficial Life during the financial crisis, 2008, 2009,” he said.
Waddell said the money given to the mall project was an investment, on which the church was receiving returns. He declined to disclose details of the investments. Unlike other nonprofits, religious organizations do not have to fully disclose all financial information to the IRS. He declined to share the value of Ensign Peak’s assets with 60 Minutes.
“That’s something I can’t share with you right now,” he said. “I know there’ve been reports on approximates and that kind of thing, and that’s as far as we can go right now.”
The bishop said Nielsen didn’t have a full picture of church finances.
Bishop Christopher Waddell with Sharyn Alfonsi
60 Minutes
David Nielsen told us his breaking point came in 2018, when a website called “Mormonleaks” linked church members to companies that only existed on paper, Nielsen said. Those shell companies held billions of dollars in stocks and bonds, and were actually controlled by Ensign Peak.
Nielsen said the investment firm called an emergency meeting at which the chief investment officer said that if Ensign Peak were to start reporting the securities in the firm’s own name, it could cause problems..
“I knew in that moment that I was in the wrong place,” Nielsen said.
Nielsen resigned in 2019 and filed a whistleblower complaint with the IRS alleging that Ensign Peak violated its tax-exempt status by moving money to for-profit businesses. It wasn’t until 2021 that Nielsen heard from investigators, but they weren’t from the IRS, they were from the U.S. Securities and Exchange Commission. The SEC launched its own Ensign Peak probe after the “Mormonleaks” report linked the church to the shell companies.
In February, the SEC fined the Mormon church and Ensign Peak a total of $5 million for using shell companies to obscure the size of its investment portfolio. SEC investigators found the church “went to great lengths” to hide $32 billion in securities over nearly 20 years. It created 13 shell companies that were “assigned a local phone number that would go directly to voicemail” in case regulators checked in.
Waddell told 60 Minutes it was the church’s lawyers who advised the church and Ensign Peak to create the shell companies. He said it wasn’t about secrecy, but rather confidentiality.
“It’s confidential in order to maintain the focus on what our purpose is and what the mission of the church is, rather than the church has X amount of money,” Waddell said.
The status of the IRS investigation into the Mormon church and Ensign Peak isn’t clear. The IRS does not comment on whistleblower complaints, which can take an average of 11 years to be resolved. Nielsen felt it was time for him to speak out.
“We gave the IRS and the SEC all the professional courtesy,” Nielsen said. “This is just too important to fall through the cracks.”
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
