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whistleblower on Church finances


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Posted
32 minutes ago, helix said:

I posted in the Reddit latterdaysaints sub the following:

From the Letter to an IRS Director

The allegations are two-fold:

1) The first allegation is that an auxiliary non-profit 501(c)(3) unit cannot be used solely to invest, even if the overall parent 501(c)(3), the church, spends far more money on non-profit expenses. A 501(c)(3) auxiliary unit of the church (Ensign) allegedly annually invests 1/7th of church tithing income ($1 billion), while the other 6/7th is spent on church functions. Further, Ensign is alleged to not have spent any investment on charity in 22 years.

  • The source of the $1B in tithing is a single PowerPoint slide, which doesn't call it tithing, but rather money "granted to [Ensign] on an annual basis" (page 43).
  • It further doesn't state whether some or all of this $1B came from non-profit or for-profit sources.
  • The source for $7B in annual tithing is a second-hand recollection of someone else's guess (page 20).
  • The Washington Post notes no evidence was provided for the claim of $0 spent on charity from Ensign.

2) The second allegation is that the same 501(c)(3) auxiliary unit used non-profit money fraudulently to backstop two for-profit church units.

  • A single summary PowerPoint slide (page 43) is given to support these claims, specifically that the investment fund can be used to backstop taxable entities.
  • However, no evidence was given that these payments were done fraudulently.
  • No evidence was given regarding if or how two alleged backstop payments were reported to the IRS and/or taxed, or whether the funds came from acceptable sources.

Further, the critic also alleges the church has $100 billion in accumulated wealth.

  • This $100B value is fully estimated and no evidence beyond speculation is given to support these claims.

----

The evidence is scant.  Really scant.  He hinges everything on a single PowerPoint slide, and he makes big assumptions from it. 

Here is my guess what occurred:

  • The $1 B in income to Ensign is a mix of funds, not just tithing
  • Ensign manages both for-profit and non-profit investments (non-profits can own for-profits)
  • Some for-profit investment money was used for Beneficial Life and City Creek

That's it.  I just don't see anything nefarious here.

 

 

I've seen it said elsewhere that the whistle blower had only worked for the church for a couple of months.  Does anyone know if that's true?

Posted
7 minutes ago, rockpond said:

If you are going to claim the time and resources of a member serving a mission than you would need to do it on both sides:  claim those hours as contributions to the church and then claim them as donations by the church to other causes.  It would be a wash so there isn't really a point.

I don't think the Church claims the hours of service provided by church members because those "hours" belong to the individual members and they are not donating them to the church, they are donating them to the specific cause they are working for at the time.

Not getting your logic. 

Normally when we make a contribution to the church in money, we call the money our contribution and when the church spends it it is part of the churches functional expenses. The money that one gives to one organization isn't offset by what is spent by that organization.

The same with Donations of Time.  Time donated isn't cancelled by the use of the time by the organization.  

This is recognized by tax law.  You are allowed to deduct unreimbursed volunteer expenses only if they are done for a qualified organization, you cant just go out and volunteer (In this country or another country) and deduct your expenses. It has to be for a valid organization.  

Posted
20 minutes ago, rockpond said:

It's good public relations on the Church's part:  The opinion piece communicates to members that there is nothing of concern in the article.  It re-directs to the positive while downplaying (or ignoring altogether) the actual accusations.

The accusations are so phantasmal they are hard to refute if they wanted to. It is illegal for a nonprofit to have a large reserve? No. There are some line items this guy thinks are shady even though he does not have any details about it? How do you refute that?

People will think the church has too much money? That is not a legal accusation and it is even hard to form a moral accusation out of it. Instead we have condemnation on what it should have been spent on instead. It is just an excuse to rehash yet again some people’s favorite rhetorical appeal.

Posted
3 minutes ago, alter idem said:

And why anyone thinks this is a 'loss of trust'--I don't understand

Maybe some have a sense that right now is a time we (as in themselves or their local community) need to be saved,  but the Church is deciding our troubles don’t merit their aid. 

And maybe there is some fear that the leaders will always look at the future as worse than the now, so hoard for the ultimate disaster that never happens. 

I don’t think that is a realistic view, but given we can’t really conceive of what 100$ billion means nor do we have access to comparisons of income vs expenses...I can see why some might have that reaction. 

Posted (edited)
22 minutes ago, rockpond said:

If you are going to claim the time and resources of a member serving a mission than you would need to do it on both sides:  claim those hours as contributions to the church and then claim them as donations by the church to other causes.  It would be a wash so there isn't really a point.

There is very much a point.  You are differentiating between the Church and its members.  You are suggesting that Church-directed-and-administered humanitarian and service efforts don't "count."

I must take exception to that.  My missionary service was consecrated, given, to the Church.  Of course the Church can "claim" what I have freely given to it.  

Quote

I don't think the Church claims the hours of service provided by church members because those "hours" belong to the individual members

What does this mean?  Members of the Church donate more than just money to the Church.  We also donate time and effort.  How does this not "count"?

Quote

and they are not donating them to the church,

Many times, yes, we are "donating" our time to the Church, just as we do with our money.

Quote

they are donating them to the specific cause they are working for at the time.

Huh?

-Smac

Edited by smac97
Posted
45 minutes ago, smac97 said:

From an opinion piece in today's Deseret News: The Washington Post says the Church of Jesus Christ has billions. Thank goodness

Hmm.  If this is such a scandal, why is the Church-owned paper publishing an opinion piece that more attention should be paid to it?

They essentially have to.  It's a news story and it involves the Church.  It's reaching across the country at this point.  If they don't talk about it they are fooling themselves.  Luckily it was an artful deflection it seems to me, coming off as damage control, spinning the negative into a positive.  

45 minutes ago, smac97 said:

Instead, we are seeing shrill histrionics.

Where are you seeing that?  

45 minutes ago, smac97 said:

The Church is being pilloried for being a wise steward of its funds.  Weird.

That misses the point, i'd say.  

45 minutes ago, smac97 said:

Doesn't matter, though.  In the end, for some folks the Church is darned if does, darned if doesn't, darned no matter what it does.

Sure doesn't.  To some folks the Church is bless-ed if it does and bless-ed if it doesn't, bless-ed no matter what it does.  

45 minutes ago, smac97 said:

In other words, a lot of money is going into the Church, and a lot of money is being spent.

As alleged the money it's taking in in investment exceeds the amount it spends, add to that the amount it takes in as donations...and we see billions being added to it coffers each year.  

45 minutes ago, smac97 said:

Meanwhile, is there any evidence that those with access to and control over the Church's funds (the General Authorities) are living profligately?  Jets and mansions and yachts?  Nope, nope and nope.  Many GAs take a substantial pay cut when they are asked to serve in that capacity.  

That's missing the issue.  

45 minutes ago, smac97 said:

Yep.

Good points, all.

Again, yep.

Thanks,

-Smac

 

Posted (edited)
1 hour ago, Danzo said:

Not getting your logic. 

Normally when we make a contribution to the church in money, we call the money our contribution and when the church spends it it is part of the churches functional expenses. The money that one gives to one organization isn't offset by what is spent by that organization.

The same with Donations of Time.  Time donated isn't cancelled by the use of the time by the organization.  

This is recognized by tax law.  You are allowed to deduct unreimbursed volunteer expenses only if they are done for a qualified organization, you cant just go out and volunteer (In this country or another country) and deduct your expenses. It has to be for a valid organization.  

I think he is saying the Church isn’t claiming these hours as part of their donation income ( maybe in order to look like they are spending a higher percentage of income?)...but that would need to be reported publicly to say for sure and it isn’t as far as I know. 

Edited by Calm
Posted
26 minutes ago, smac97 said:

Are these discussions concluding with "And it is good and appropriate for us to think we are better than those not of our faith, and to shun them and make them feel inferior and unwelcome"?

I still don't understand.  Are the articles/comments you are referencing approving or disapproving the "shunning" and arrogance you are referencing here?

Sounds like gossip.  

I have a friend who came out of a polygamous community (I won't say which one).  He spoke often and at some length as to the dysfunction he and his siblings experienced.  I don't think gossiping about such things is appropriate, but there can be times and situations in which candid discussions about such problems is a good thing.

My dad's parents both grew up there.  My dad has visited there many times.  I've been there once.

So you are complaining about clannishness and mistreatment from 75-100 years ago?

Sorry, I am still not understanding your position.  

I think Latter-day Saints mistreating those not of our faith is bad.  It happens, and it's bad.  We need to stop that.  We need to reach out and friendship and kindness.

As for "standards," I think Latter-day Saints should keep their covenants, and should not feel ashamed about it.  During my time in the Army, I was sometimes ridiculed for believing in God, attending Church, reading scriptures, abstaining from alcohol and tobacco, abstaining from extramarital sex, and so on.  (There were also times in which people expressed admiration for these observances.)  Nevertheless, I don't think I ever lorded these things over my fellow soldiers.  I never flaunted or bragged.  I never shunned anyone.  I never criticized anyone for not doing the things I was doing, or for doing things from which I abstained.  I simply went my way.  

Thanks,

-Smac

I think I am going to go crawl back into my hole. Yes, yes, yes, yes these discussions ended with "and this is not good!" It is a fact that some Saints shun non-believers and don't allow their children to play with non-member children, but it is not good. I never said it was good. I never said anyone in the Church said it was good. I never said the Church taught this or approved of it. I simply said it happens. It has happened to my wife and I as non-members attending a ward. It has happened and been documented in articles in LDS Living. We have discussed it in our ward. If you know Colonia Juarez, you know it is a small town that can be clannish. That isn't a criticism; it is pretty much an acknowledged fact. Everyone in the conversations said it wasn't good and shouldn't happen . . . but it does! As I said in my post, the LeBaron story had nothing to do with my original post, I just thought it was interesting and thought I would share it. It wasn't gossip. It is cited in histories of the LeBarons and seems to be documented by the children and grandchildren of those who were directly involved. You indicate "We need to reach out and friendship and kindness." No one disputes that. The only shunning I know is what we sometimes feel in the ward here by a very small percentage of the folks. The vast majority are welcoming and kind. I am so sorry I haven't said what I meant in a better way. If your dad has visited here in the past few years I probably have met him. Come back and see us some time. 

Posted
Just now, stemelbow said:

They essentially have to. 

Right.

Just now, stemelbow said:

It's a news story and it involves the Church. 

And calling for more attention is appropriate because...?

Just now, stemelbow said:

It's reaching across the country at this point.  If they don't talk about it they are fooling themselves.  Luckily it was an artful deflection it seems to me, coming off as damage control, spinning the negative into a positive.  

Funny, I thought the "spin" was coming from elsewhere.

Just now, stemelbow said:

As alleged the money it's taking in in investment exceeds the amount it spends, add to that the amount it takes in as donations...and we see billions being added to it coffers each year.  

And the dastardly aspect of money being added to coffers is . . . what, exactly?  

Just now, stemelbow said:
Quote

Meanwhile, is there any evidence that those with access to and control over the Church's funds (the General Authorities) are living profligately?  Jets and mansions and yachts?  Nope, nope and nope.  Many GAs take a substantial pay cut when they are asked to serve in that capacity.  

That's missing the issue.  

Really?  What is "the issue"?

Are you suggesting there was some sort of moral failing?  Or are you claiming a purely legalistic, didn't-comply-with-IRS-regulations sort of thing?

Thanks,

-Smac

 

Posted
3 minutes ago, Navidad said:

I think I am going to go crawl back into my hole.

I did not intend to hound you.  My apologies if I gave that impression.

3 minutes ago, Navidad said:

Yes, yes, yes, yes these discussions ended with "and this is not good!" It is a fact that some Saints shun non-believers and don't allow their children to play with non-member children, but it is not good. I never said it was good. I never said anyone in the Church said it was good. I never said the Church taught this or approved of it. I simply said it happens. It has happened to my wife and I as non-members attending a ward. It has happened and been documented in articles in LDS Living. We have discussed it in our ward.

Okay.  So what was your purpose in bringing this issue to our attention?

Members of the Church sometimes do things that contravene the teachings of the Church.  I get that.

3 minutes ago, Navidad said:

If you know Colonia Juarez, you know it is a small town that can be clannish. That isn't a criticism; it is pretty much an acknowledged fact. Everyone in the conversations said it wasn't good and shouldn't happen . . . but it does! As I said in my post, the LeBaron story had nothing to do with my original post, I just thought it was interesting and thought I would share it. It wasn't gossip. It is cited in histories of the LeBarons and seems to be documented by the children and grandchildren of those who were directly involved. You indicate "We need to reach out and friendship and kindness." No one disputes that. The only shunning I know is what we sometimes feel in the ward here by a very small percentage of the folks. The vast majority are welcoming and kind. I am so sorry I haven't said what I meant in a better way. If your dad has visited here in the past few years I probably have met him. Come back and see us some time. 

Sounds good.

Thanks,

-Smac

Posted
32 minutes ago, rockpond said:

We have no idea how much of fast offering donations are used to feed, shelter, and care for the poor.  Literally no idea, the church doesn't share that information with those members who donate.

 

From an interview with President Hinckley in 2002 (http://www.mscbc.org/hinckley.htm) --

REPORTER:

IN MY COUNTRY, THE…WE SAY THE PEOPLE'S CHURCHES, THE PROTESTANTS, THE CATHOLICS, THEY PUBLISH ALL THEIR BUDGETS, TO ALL THE PUBLIC.

HINCKLEY:

YEAH. YEAH.

REPORTER:

WHY IS IT IMPOSSIBLE FOR YOUR CHURCH?

HINCKLEY:

WELL, WE SIMPLY THINK THAT THE…THAT INFORMATION BELONGS TO THOSE WHO MADE THE CONTRIBUTION, AND NOT TO THE WORLD. THAT'S THE ONLY THING. YES.

Right. The point is that the Fast offerings are helping worldwide and not just locally in wards that are donating more into it.  

Posted
17 minutes ago, bluebell said:

I've seen it said elsewhere that the whistle blower had only worked for the church for a couple of months.  Does anyone know if that's true?

In his rant, er, 74 page expose, he posted his emails from October 2016.  He also has information from 2018.  So it's definitely more than a couple of months. 

Posted
19 minutes ago, pogi said:

If only our government could be as financially sound and live off of interest, and get our taxes down to 10% or lower.

Some will probably make a bigger fuss over this 100 billion in reserves, than the 23 Trillion national debt.

While that sounds nice it would not work in the US. Suppose tomorrow the government went from 23 trillion in debt to having that much in reserve. If they throw it into banks interest rates plummet as supply of money to borrow will vastly exceed demand. If they throw it into the stock market it will skyrocket stock values and tank dividends. The end result would be that it would not generate the interest to cover everything. Government bonds, one of the foundations of the economy, would vanish as well. What works on the micro level for a church or a company or a household does not work on the macro level.

Posted

The Church has published a response to this story:

Quote

David A. Nielsen, a former employee for the investment arm of The Church of Jesus Christ of Latter-day Saints, filed an IRS complaint last month alleging the church should be forced to pay taxes on returns made from invested tithing funds and challenging the faith’s investment strategy, humanitarian efforts and tax-exemption status.

Meanwhile, Nielsen’s twin brother has posted to YouTube videos and a link to 74 pages of documents he said Nielsen took from his former employer to back his claims. Lars Nielsen spoke to the Washington Post, which was first to publish a story on the IRS complaint Monday evening.

Reaction to that story brought reaction from the church in a statement released Tuesday morning:

“We take seriously the responsibility to care for the tithes and donations received from members. The vast majority of these funds are used immediately to meet the needs of the growing church including more meetinghouses, temples, education, humanitarian work and missionary efforts throughout the world. Over many years, a portion is methodically safeguarded through wise financial management and the building of a prudent reserve for the future. This is a sound doctrinal and financial principle taught by the Savior in the Parable of the Talents and lived by the church and its members. All church funds exist for no other reason than to support the church’s divinely appointed mission.

“Claims being currently circulated are based on a narrow perspective and limited information. The church complies with all applicable law governing our donations, investments, taxes and reserves. We continue to welcome the opportunity to work with officials to address questions they may have.”

Hmm.  I suspect this statement will be borne out in the IRS investigation.

Quote

David Nielsen, 41, resigned from church employment in August because, according to the Post, his wife and children had left church membership. Nielsen alleges in the complaint that Ensign Peak Advisors, the church’s investment arm, has holdings worth between $99 billion and $101 billion. He claims Ensign Peak is not meeting IRS regulations for using a percentage of its funds annually for religious, educational or charitable purposes.

Nielsen is seeking a whistleblower’s reward of a percentage of any back taxes the IRS recovers, according to the Post.

The church offered no specific comment about the complaint or Nielsen prior to the Post’s story. Instead it directed the Post and other media to past comments by church leaders about church finances. Leaders previously have said the faith provides $40 million a year to address famines, respond to natural disasters, aid refugees, give medical care and training and more through its humanitarian arm, Latter-day Saint Charities.

Latter-day Saint Charities reported in February that the figure is even larger. Its 2018 annual report says the charity has provided more than $2.2 billion, or an average of $64.7 million a year, in 197 countries since its creation in 1985.

“Latter-day Saint Charities has provided more than $2 billion in aid to assist those in need throughout the world,” President Russell M. Nelson said two months ago at the church’s semiannual general conference. “This assistance is offered to recipients regardless of their church affiliation, nationality, race, sexual orientation, gender, or political persuasion.”

The church also operates other charitable concerns. For example, local bishops and branch presidents — leaders of the faith’s 30,500 individual congregations around the world — help members with food, housing and other welfare needs on a daily basis.

Nonprofit groups, including religious organizations, are exempted from paying taxes on income in the United States. Ensign Peak Advisors is an integrated auxiliary and supporting organization of the church and is tax exempt.

David Nielsen did not speak to the Washington Post and has not commented publicly. In his letter, he asked the IRS to remove Ensign Peak’s tax-exempt status and compel it to pay billions in back taxes.

His twin, Lars, a Minnesota-based health care consultant, posted videos this week in which he accused church leaders of making fraudulent statements, derided BYU — his alma mater — for penny pinching and mocked the religious reasons cited by Ensign Peak and church leaders for having a large reserve fund.

This is a pretty even-handed response to some mean-spirited stuff from Lars Nielsen.

Here's the interesting part:

Quote

The Nielsens claimed that Ensign Peak made two payments from the fund that violate federal tax rules.

They claimed that in 2009 Ensign Peak bailed out Beneficial Financial Group, a life insurance company owned by the church’s for-profit arm, Deseret Management Corp., which also owns the Deseret News. They alleged that Ensign Peak delivered $600 million to Beneficial in 2009.

In fact, Beneficial made full disclosure to the Utah Department of Insurance that Deseret Management Corp., its owner, provided $594 million to Beneficial during the 2008 financial crisis to strengthen its balance sheet. Those public filings are on file with Utah Department of Insurance and were reported in two articles published by the Deseret News at the time.

Since 2009, Beneficial has paid dividends of almost a half billion dollars back to Deseret Management Corp., according to public filings at the Utah Department of Insurance.

So was this bailout illegal?  It seems . . . not.

Quote

The second payment challenged by the Nielsens was made as part of the church’s City Creek development in Utah’s capital city. The Nielsens alleged that Ensign Peak Advisors improperly sent $1.4 billion from 2010 to 2014 to the church entity funding City Creek, Property Reserve Inc. The church did invest in the housing and parking elements of City Creek while Taubman Centers, Inc., a nationally recognized shopping center developer, owns and operates the shopping center.

So was the $1.4 billion sent?  If so, was such a transfer illegal?

Quote

The Nielsens also said church leaders should exempt church members from paying tithing or give them a rebate because the church could cover its operations with the investment income of its reserves.

This is the part where the Nielsens when off the rails.  They went from whistleblowers to hectoring busybodies.  What the Church "should" do is not the province of a whistleblower, particularly one who has recently become disaffected from the Church.

Quote

While tithing is a source of income for the church, it is regarded within the faith as much more than a financial principle. Tithing is a biblical principle practiced in many faiths with components far beyond church operations. Abraham and Jacob paid 10% of their increase to God, and Jesus Christ also taught the principle. Muslims and Christians including Latter-day Saints believe tithing is inherently important because it sanctifies the individual.

The church teaches its members to be self-reliant and build a personal or familial reserve. Its leaders say the church follows the same principles.

Presiding Bishop Gérald Caussé referred to those principles last year in a public talk and published later in a book, “The church applies this same principle in its own savings and investments. In addition to food and emergency supplies, the church also sets aside funds each year for future needs. These funds are added to church reserves, which include stocks and bonds, taxable businesses, agricultural interests and commercial and residential property. Investments can be accessed in times of hardship or to meet the emerging needs of a growing, global faith in its mission to preach the gospel to all nations and prepare for the Second Coming of Jesus Christ.”

In 2018 the church published this Q&A on church finances.

"Investments can be accessed in times of hardship or to meet the emerging needs of a growing, global faith in its mission to preach the gospel to all nations and prepare for the Second Coming of Jesus Christ."

Thanks,

-Smac

Posted
1 hour ago, SeekingUnderstanding said:

The church has an endowment of 100 billion and spends zero. Bill and Melinda Gates have an endowment of 46.8 billion and spend 5 billion while taking in 2.4 billion. 

 Based upon your numbers the Gates are invading corpus.  No big charitable organization does that.  I don't believe your first sentence is correct. 

Posted (edited)

To show how flimsy this is even Jana Riess is deeply skeptical.

She of course still argues that open financials would have prevented this and I still disagree with her but she think the whistleblower’s story is doubtful.

Edited by The Nehor
Posted
7 minutes ago, helix said:

In his rant, er, 74 page expose, he posted his emails from October 2016.  He also has information from 2018.  So it's definitely more than a couple of months. 

That's what I was assuming.  Thanks!

Posted

Does anyone find it strangley peculiar that Daniel Peterson released a series of articles about the finances of the Church and then this hits the fan? Either they were responding to it or it's a mighty bizarre coincidence

Posted
3 minutes ago, smac97 said:

And the dastardly aspect of money being added to coffers is . . . what, exactly? 

How much wealth accumulation is enough? Should the church continue to accumulate as it has? Is accumulating wealth for no stated purpose a reasonable activity for a tax exempt organization?

Posted
2 hours ago, Avatar4321 said:

You realize that if your family is starving the Church will give you food right?

Not all members live close to a bishops storehouse.  Food is not always readily available.

Posted
10 minutes ago, smac97 said:

I did not intend to hound you.  My apologies if I gave that impression.

Okay.  So what was your purpose in bringing this issue to our attention?

Members of the Church sometimes do things that contravene the teachings of the Church.  I get that.

Sounds good.

Thanks,

-Smac

I just read your profile. I think I may know your dad from spending a whole day with him and his grandkids up in the mountain colonies. He was here to visit sites and he gave a fireside talk. It was a great day!

Posted
14 minutes ago, smac97 said:

Right.

And calling for more attention is appropriate because...?

Funny, I thought the "spin" was coming from elsewhere.

And the dastardly aspect of money being added to coffers is . . . what, exactly?  

Really?  What is "the issue"?

Are you suggesting there was some sort of moral failing?  Or are you claiming a purely legalistic, didn't-comply-with-IRS-regulations sort of thing?

Thanks,

-Smac

 

I have two main concerns with the issues raised.

1.  The poorest among us are required (at least to reach heaven) to donate money to the Church and as it turns out the Church can operate in the exact same way it has without any more donations.  It's grown into an enormous corporation off the backs of the poor and the poor or no one really has any knowledge of where that money goes and what its used for.  This gives us some light--the money goes to make more money.

2.  If the Church is a large corporation it certainly should be treated like one.  If it is intent on being amongst the most lucrative corporations in the world it should be treated like one.  Large corporations are externally audited, made public (for the most part) and actually pay taxes.  If the Church is building wealth off investments, off the backs of members and through it's business interests it should bear the burden of taxes, without such that burden falls on all of us instead.  If these allegations are true, the Church is benefitting from all of us, whether donors or not, to build more wealth.  

 

Posted
56 minutes ago, alter idem said:

I don't need to think about it.  I don't trust the whistleblower's motives at all.  I think he's looking to harm the church and get rich. And if it turns out to be unfounded, well.... IMO, he doesn't care since it will benefit him either way. 

With respect, I don't think you have any feel for how awful it is to be a whistleblower. I'd suggest reading up on Harry Markopolos and Cynthia Cooper,  for example. 

Posted
1 minute ago, 2BizE said:

Not all members live close to a bishops storehouse.  Food is not always readily available.

You don't have to live near a bishop's storehouse to be fed by the church.  I've been involved with providing food to families in places where we did not have access to a storehouse.  That didn't matter, we just took them to the grocery store.  

And if food isn't readily available for anyone, then not paying tithing wouldn't change that.  

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