Church fined by SEC

[smac97]

1 hour ago, ttribe said:

I don't claim complete knowledge, but I've only ever seen Rule 10b-5 used for financial statement fraud (i.e. intentional misstatements on the Balance Sheet, Profit and Loss Statement, Statement of Cash Flows, Statement of Stockholders' Equity, and/or related footnotes and disclosures). Perhaps the Lion Bio example was a novel application of Rule 10b-5, or their actions so egregious that the SEC elevated the charges.

I think you are correct.  The Lion Bio order (linked to in my previous post) pertained to what appears to be actual fraudulent behavior:

Quote

From September 2013 to March 2014, Lion, through its former Chief Executive Officer, Manish Singh, engaged in a scheme to mislead investors by commissioning over 10 internet publications and 20 widely distributed emails promoting Lion to potential investors that purported to be independent from the company when, in fact, they were paid promotions.  Singh engaged Lidingo Holdings, a stock promotion firm, to pay writers to publish articles about Lion on investment websites as well as to coordinate the distribution of articles to thousands of electronic mailboxes.  Singh actively participated in Lidingo’s promotional work for Lion and understood that Lidingo was using writers who would not disclose that Lion was indirectly compensating them for their publications.  These omissions, and in some cases, affirmative misstatements by writers that they were not receiving compensation for their articles, created the misleading impression that the views contained in the publications were objective and independently formed.
...
As a consequence of this conduct, Lion violated and caused violations of the anti-fraud provisions and caused violations of the anti-touting provisions of the federal securities laws and engaged in improper “gun-jumping.”  
...
As a result of the conduct described above, Lion violated Securities Act Sections 17(a)(1) and (3) and Exchange Act Section 10(b) and Rules 10b-5(a) and (c) thereunder, which prohibit fraudulent conduct in the offer or sale of securities and in connection with the purchase or sale of securities.  

As a result of the conduct described above, Lion caused Lidingo’s and certain writers’ violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5 thereunder, which prohibit fraudulent conduct in the offer or sale of securities and in connection with the purchase or sale of securities. 

(Emphases added.)

In contrast, the SEC Order against EPA makes no allegations of "fraudulent conduct."

Thanks,

-Smac

[Danzo]

14 hours ago, pogi said:

“If” they would have followed the rules, they would have followed the rules - that seems to go without saying.  They didn’t do that. 

 

 

 

No one, (except yourself) is accusing the church of not following the rules for tax exempt organizations, the accusation is that the church did not follow the SEC rules on reporting their securities, Which has nothing to do with whether or not they are a tax exempt organization.  

[pogi]

2 minutes ago, Danzo said:

No one, (except yourself) is accusing the church of not following the rules for tax exempt organizations, the accusation is that the church did not follow the SEC rules on reporting their securities, Which has nothing to do with whether or not they are a tax exempt organization.  

Your missing the context (which is in response to Sam's comments/questions, and the "if they would have..." comment he made) of my comments.  You seemed to be missing the "if", I was just highlighting that for you in the context of what he was saying.   I am not making any accusations.  But his comments don't erase all questions, as you seem to imply. 

[Danzo]

12 hours ago, smac97 said:

I have not been following this part of the discussion, but I'll dive in anyway.

Wouldn't Rule 10b-5 (17 CFR § 240.10b-5) apply to inaccurately filling out 13F forms?

This rule has been applied to misstated 13F forms (see, e.g., here (an "Order Instituting Cease-and-Desist regarding "Lion Biotechnologies, Inc.")

However, paragraph 36 of the SEC Order against EPA does not cite to Rule 10b-5, but instead states that "Ensign Peak violated Section 13(f)(1) of the Exchange Act {codified as 15 U.S.C. § 78m(f)(1)} and Rule 13f-1 thereunder {codified as 17 CFR 240.13f-1}."  These recite the requirements for filling out Form 13F.

Thanks,

-Smac

I think you make my point.  The SEC knows what perjury and false statements are.  They are capable of making a referral to the department of justice. They also know what perjury is.

None of this is included in the SEC decision.

[pogi]

11 minutes ago, Danzo said:

I think you make my point.  The SEC knows what perjury and false statements are.  They are capable of making a referral to the department of justice. They also know what perjury is.

None of this is included in the SEC decision.

Is it not true that the SEC often decides to settle cases instead of pursuing charges where they could?  If they decide not to pursue charges (they don't have any incentive to go after the little guy "managers"), then they are not going to use criminal language and accusations like "perjury" that the church/"managers" can't defend itself against in a court of law.  Also, keep in mind that the SEC order is a negotiated statement between the SEC and church lawyers.   

Edited March 7, 2023 by pogi

[Danzo]

14 hours ago, pogi said:

You’re not really addressing my response.  See:

“Expecting them to lie on legal documents is an ethics violation, legal/perjury or not.”  The rest of the legal jargon is less important to me personally.  He was interviewing Sam Brunson and other legal experts, so it may have been Brunson that used the word perjury.  Honestly, I have more reason to trust their opinion than yours.  But like I said, perjury or not, you are ignoring the ethics of what they did.  To expect “managers” who don’t really manage anything, but were designated because of their common/generic names and small social media presence, to sign off on these documents was just morally wrong.  No legal argument will convince me otherwise.  You are free to use your own moral judgment in this matter, but I will listen to the still small voice in my own heart, and it tells me to RUN as fast as you can from a company that puts you in a position like that.  And that is exactly what some of them ended up doing.  

 

 

The problem with your position is that you don't have to trust Mr Brunson, or trust me.  These things are public knowledge and you can research the issue yourself if you really care to know.  But as you admit "no legal argument will convince me"  It appears in your mind that the value of Mr Brunsons opinion is only in how it convicts or exonerates the actions EPA.  Wouldn't it be better if you actually to the time to learn about tax exempt organizations and see what makes them tax exempt and how an organization might lose its tax exempt status?

You seem to be willing to use "legal arguments" made by the SEC without understanding them to convict EPA of doing something that the SEC doesn't accuse them of doing. 

 

 

[Danzo]

3 hours ago, Teancum said:

I  am curious as to your thoughts on EPA in the tax issue.  I am not an expert at all on NFP tax issue having intentionally avoided that area of tax law my entire career.   In general and tax exempt organization is allowed to invest $$ that will be used for their tax exempt purpose and pay no tax on the income correct?  I assume endowment funds for colleges can invest $$ and pay no tax on the earnings or capital gains.  I have consulted with clients who want to donate appreciated property to a charitable organization ad as you are aware the client can deduct the fair value of the asset and avoid paying the capital gain tax on the asset.  The NFP can then sell the asset and not incur tax.  Are there requirements for endowment funds to distribute a certain amount of their assets annually to not run into issues with tax regulations?  It appears that Harvard distributes a certain % of their endowment fund annually.  Perhaps they are not required to do so but rather they do it as a policy.  It would seem that the Church uses EPA as an endowment fund of sorts.  But it least to date it has not really distributed any of it for charitable purposes.  I am wondering if that could be problematic in the future if that pattern is continued.

The facts as I understand them is that EPA is wholly owned and controlled by the church.  As a church there are no IRS restrictions that I know of on the accumulation of funds or their investments.  The main issue I consult with my clients on is the issue of private benefit.  If it were found that there were significant benefits flowing to church leaders (other than salaries that are properly reported), that could jeopardize its tax exempt status.

Churches are a bit unusual in that they are not required to register as a 501(c)(3) organization and they are not required to file a 990 so the law purposely has few controls over churches.  Only when its obvious that a church only exists to shield money from taxes for the benefit of private individuals will it lose its status.  

I am aware of a case here locally (he was a stake president at the time) where the person was accuse and convicted of tax evasion and one of the ways he did it was to start a church in his name (on paper), donate the money to the church and have the church cover his living expenses.  Obviously, since all the money ended up in his personal control for his benefit, this didn't work, and along with his wife, he has a felony conviction on his record.

 

[ttribe]

2 minutes ago, Danzo said:

The facts as I understand them is that EPA is wholly owned and controlled by the church.  As a church there are no IRS restrictions that I know of on the accumulation of funds or their investments.  The main issue I consult with my clients on is the issue of private benefit.  If it were found that there were significant benefits flowing to church leaders (other than salaries that are properly reported), that could jeopardize its tax exempt status.

Churches are a bit unusual in that they are not required to register as a 501(c)(3) organization and they are not required to file a 990 so the law purposely has few controls over churches.  Only when its obvious that a church only exists to shield money from taxes for the benefit of private individuals will it lose its status.  

I am aware of a case here locally (he was a stake president at the time) where the person was accuse and convicted of tax evasion and one of the ways he did it was to start a church in his name (on paper), donate the money to the church and have the church cover his living expenses.  Obviously, since all the money ended up in his personal control for his benefit, this didn't work, and along with his wife, he has a felony conviction on his record.

 

That was creative...but stupid.

[pogi]

4 minutes ago, Danzo said:

The problem with your position is that you don't have to trust Mr Brunson, or trust me.  These things are public knowledge and you can research the issue yourself if you really care to know.  But as you admit "no legal argument will convince me"  It appears in your mind that the value of Mr Brunsons opinion is only in how it convicts or exonerates the actions EPA.  Wouldn't it be better if you actually to the time to learn about tax exempt organizations and see what makes them tax exempt and how an organization might lose its tax exempt status?

You seem to be willing to use "legal arguments" made by the SEC without understanding them to convict EPA of doing something that the SEC doesn't accuse them of doing. 

Danzo, you are not following me at all and you are conflating different statements/posts I am making about tax exempt status vs moral/ethical issues.  The comment you are responding to here was about ethical issues regarding the "managers", and not about taxes at all.  My comment was an ethical one, not a legal one - that is why I said "no legal argument will convince me otherwise".  That is because it is NOT a legal issue for me I was addressing. 

You don't seem to understand that Mr Brunson is not making any accusations.  Neither am I.  He is a legal expert that is explaining tax exempt status (completely separate line of thought from the post you are responding to here).  That is what this is all about.  I am trying to learn and discussing what I am learning.  I have no reason not to trust him over other legal experts who would explain it to me online.  We have to decide which experts we trust.  You are not one of them for me.  Brunson is.  

I could study for months about the intricate details of tax exempt status and that would do nothing for me because I don't have enough information to make any legal judgments.  But I know enough to have informed questions about the legality of what they did.   There is too much we don't know to make any conclusions about tax legality.    

[Danzo]

11 minutes ago, pogi said:

Is it not true that the SEC often decides to settle cases instead of pursuing charges where they could?  If they decide not to pursue charges (they don't have any incentive to go after the little guy "managers"), then they are not going to use criminal language and accusations like "perjury" that the church/"managers" can't defend itself against in a court of law.  Also, keep in mind that the SEC order is a negotiated statement between the SEC and church lawyers.   

Almost all criminal and civil accusations are resolved by settlement.  If there was criminal charges, they would be probably be settled.  A settlement usually means that the government got what it thought it could reasonably get a way with without to much work.

That is the same with the overwhelming majority of all Criminal and Civil cases.  Most Murder convictions are arrived by settlement. its pretty rare for something to go to trial. 

It is quite common for government agencies to go after the "little Guys" Usually for the purpose of getting them a deal to testify against the "big guys".

Look, I'm not saying they didn't violate the law, I am just trying  to get people to stick to what laws they actually violated and not have people make up their own crimes that they don't understand. I don't see why you think that you are a better expert on detecting and judging Securities Crime than the SEC is. 

 

 

[Danzo]

5 minutes ago, ttribe said:

That was creative...but stupid.

Definitely stupid.  But since he was a local stake president, his case is useful in that I bring him up any time a client who is a member of the church comes to me with some hair brained tax evasion scheme.  Members of the church can be gullible. 

In fact one of the thing that had me laughing out loud when I read the indictment is that our local stake president was introduced to the scheme by a guy in Orem Utah. Sucker!

[Danzo]

1 hour ago, ttribe said:

The signatory language on Form 13-f states the following:

"The institutional investment manager filing this report and the person by whom it is signed hereby
represent that the person signing the report is authorized to submit it, that all information
contained herein is true, correct and complete, and that it is understood that all required items,
statements, schedules, lists, and tables, are considered integral parts of this form."

While the form does not specifically make use of the term "perjury," there is a pretty clear honesty assertion being made by the signor. I don't think you see any mention of sanctioning the individuals who signed these documents because the SEC is not generally in the business of pursuing individuals who were signing something they didn't understand at the behest of their employer. Both Ensign Peak and the Church were held accountable for those actions:

36. As a result of the conduct described above, Ensign Peak violated Section 13(f)(1) of
the Exchange Act and Rule 13f-1 thereunder by failing to file Forms 13F in Ensign Peak’s name.
Ensign Peak also violated Section 13(f)(1) of the Exchange Act and Rule 13f-1 thereunder by
filing misstated Forms 13F in the names of LLCs created for the sole purpose of filing Forms 13F.

37. As a result of the conduct described above, the Church caused Ensign Peak’s
violations of Section 13(f)(1) of the Exchange Act and Rule 13f-1 thereunder.

 

As you point out, there are possible sanctions for making false statements on a federal form (although perjury is not one of them). The SEC knows how to make criminal referrals.  They also know the difference between a misstatement and fraud. 

The SEC themselves don't bring criminal charges but usually they are going to want to suspend the civil investigation if a criminal indictment is coming.   

This has to do with several factors, one being that if they can prove criminal behavior then they automatically get the civil (burden of proof is lower in civil and most of the issues will be collaterally estopped).  Also if they start a civil proceeding first, discovery can be used to mess with the criminal investigation.

That being said, I think it is reasonable to assume that the reason that a false statement and fraud accusations are not being made is because there was a good case for them.

 

[smac97]

9 minutes ago, Danzo said:

I think you make my point.  The SEC knows what perjury and false statements are.  They are capable of making a referral to the department of justice. They also know what perjury is.

None of this is included in the SEC decision.

A summary of the discussion on "perjury" so far:

• From Rockpond: "Church employees were either coerced or voluntarily perjured themselves by signing the 13F forms."
• From Stormin' Mormon: "This was bad legal advice, not perjury. This was failing to adhere to federal regulations, not breaking the law.  And that's still bad optics and not a great look for the church. I'm not really trying to deny that.  But perjury? Coercion? Violation of federal law? That really is jumping to the worst possible interpretation."
• From Rockpond: "I think the SEC order indicates that the LLC business managers who signed the 13F's have perjured themselves."
• From Pogi: "There is a lot of talk about the law vs regulation as if any of this softens the moral violation in the web of deceit (lying, according to the LDS definition) or expecting "managers" to potentially perjure themselves by legally attesting to the accuracy by signing documents with false addresses and verifying info that they can't verify."
• From Danzo: "What are you even talking about? I am beginning to think that you don't really know what perjury is. Maybe you should find out what perjury is before making these kinds of accusations. The government (who investigated this a lot more than you did, does not allege perjury)."
• From Pogi: "Choosing not to go after these managers for perjury is not the same as saying that it didn't happen."
• From Danzo: "The SEC did not refer this to the Department of Justice to prosecute perjury, and they had access to more facts than you do. ... No where has anyone accused anyone of perjury except people who don't know what perjury is."
• From Pogi: "The legal experts who spoke about this on Doug Fabrizio used the word 'perjury.'"
• From Danzo: "The SEC Report accuses the Church of misstatements, not wire fraud, not perjury, not false statements, not any of the many things that they could have accused the Church of.   I don't know who this Doug Fabrizio is but if he used perjury, then I don't have a lot of confidence in his legal opinions."
• From ttribe: "While the {13F} form does not specifically make use of the term 'perjury,' there is a pretty clear honesty assertion being made by the signor."
• From Danzo: "The SEC knows what perjury and false statements are.  They are capable of making a referral to the department of justice. They also know what perjury is.  None of this is included in the SEC decision."
• From Pogi: "Is it not true that the SEC often decides to settle cases instead of pursuing charges where they could?  If they decide not to pursue charges (they don't have any incentive to go after the little guy 'managers'), then they are not going to use criminal language and accusations like 'perjury' that the church/'managers' can't defend itself against in a court of law."

On Balance, I think Danzo has provided the most correct assessment.  A few thoughts:

1. The gravamen of "perjury" is, I think, twofold, namely, both falsity and intent.  According to Black's Law Dictionary, perjury is defined as "the act of willfully and knowingly making a false statement about a material fact while under oath or affirmation in a court or other proceeding where such statement is required by law to be made under penalty of perjury."  So the components are:

• willfully and
• knowingly
• making a false statement
• about a material fact
• while under oath or affirmation in a court or other proceeding where such statement is required by law to be made under penalty of perjury

2. "Willfully and knowingly" can seem like a tautology, but I don't think is, as I think both pertain to culpable intent.  "Willfully" means intentionally or purposely. It is used to describe a deliberate act, done with a conscious intent to violate the law or to do something that one knows is wrong. In the context of perjury, a false statement made "willfully" means that the person making the statement knew that it was false and chose to say it anyway, rather than accidentally or inadvertently making an untrue statement. This is an important element of the crime of perjury, as it distinguishes between innocent mistakes and intentional lies made under oath.  Meanwhile, "knowingly" means having actual knowledge of a fact or being aware of the high probability that a fact exists. It is used to describe a state of mind in which a person is aware of the nature of their actions or the consequences of their actions. In the context of perjury, a false statement made "knowingly" means that the person making the statement knew or should have known that it was false, and that they made the statement with the intent to deceive or mislead others. This is another important element of the crime of perjury, as it requires that the false statement be made with the intent to deceive, rather than simply being a mistake or a misunderstanding.

3. In the context of perjury, "willfully" and "knowingly" are distinct concepts that both play a role in determining whether a person has committed the crime of perjury.  "Willfully" refers to the intentional nature of the false statement. It means that the person making the statement knew that it was false and chose to say it anyway, rather than accidentally or inadvertently making an untrue statement.  "Knowingly," on the other hand, refers to the person's state of mind when making the false statement. It means that the person knew or should have known that the statement was false, and that they made the statement with the intent to deceive or mislead others.  Both "willfully" and "knowingly" are necessary elements of perjury. A false statement made without intent to deceive or mislead others would not constitute perjury, nor would a false statement made unintentionally or without awareness that it was false. In order for a person to be guilty of perjury, they must have intentionally made a false statement while knowing that it was false and with the intent to deceive or mislead others.

4. Under federal law, 18 U.S. Code § 1621 ("Perjury generally") states: "{Whoever} in any declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true is guilty of perjury."

5. While the word "knowingly" is not specifically included in the text of 18 U.S. Code § 1621, federal courts have generally interpreted the statute to require both a willful and knowing false statement for it to constitute perjury.  The Supreme Court has held that in order to prove perjury under 18 U.S. Code § 1621, the government must establish that the defendant made a false statement willfully and with knowledge of its falsity. See Bronston v. United States, 409 U.S. 352, 359 (1973).  In other words, the defendant must have intended to deceive the tribunal or person administering the oath, and must have known that their statement was false when they made it. This means that the defendant must have had a conscious awareness of the falsity of their statement and must have made it with the specific intent to deceive, rather than simply being mistaken or unaware of the true facts.  Thus, while the word "knowingly" is not expressly included in the text of 18 U.S. Code § 1621, federal courts have interpreted the statute to require both willful and knowing conduct in order for a false statement to constitute perjury.

6. In discussions of the law, it is generally prudent to be cautious and circumspect when using terms that have a legal meaning and application that is more precise and particularly defined as compared to casual, everyday usages by the general public.  Again, a false statement made without intent to deceive or mislead others ("willfully") would not constitute perjury, nor would a false statement made unintentionally or without awareness that it was false ("knowingly").

Thanks,

-Smac

[smac97]

47 minutes ago, pogi said:

Is it not true that the SEC often decides to settle cases instead of pursuing charges where they could? 

That is true.  The SEC has limited resources, and so it uses settlement much more often than litigation.  Whether it could actually mount a successful legal case would vary with each case.

47 minutes ago, pogi said:

If they decide not to pursue charges (they don't have any incentive to go after the little guy "managers"), then they are not going to use criminal language and accusations like "perjury" that the church/"managers" can't defend itself against in a court of law. 

All the more reason for bystanders to also not "use criminal language and accusations like 'perjury.'"

47 minutes ago, pogi said:

Also, keep in mind that the SEC order is a negotiated statement between the SEC and church lawyers.   

Yes.  But also keep in mind that the SEC order I linked to in re: Lion Bio (here) was also "a negotiated statement," between the SEC and the subject of its investigation, and yet in that order the SEC did use "criminal language" (specifically, "fraud").

Thanks,

-Smac 

[Danzo]

31 minutes ago, pogi said:

Danzo, you are not following me at all and you are conflating different statements/posts I am making about tax exempt status vs moral/ethical issues.  The comment you are responding to here was about ethical issues regarding the "managers", and not about taxes at all.  My comment was an ethical one, not a legal one - that is why I said "no legal argument will convince me otherwise".  That is because it is NOT a legal issue for me I was addressing. 

You don't seem to understand that Mr Brunson is not making any accusations.  Neither am I.  He is a legal expert that is explaining tax exempt status (completely separate line of thought from the post you are responding to here).  That is what this is all about.  I am trying to learn and discussing what I am learning.  I have no reason not to trust him over other legal experts who would explain it to me online.  We have to decide which experts we trust.  You are not one of them for me.  Brunson is.  

I could study for months about the intricate details of tax exempt status and that would do nothing for me because I don't have enough information to make any legal judgments.  But I know enough to have informed questions about the legality of what they did.   There is too much we don't know to make any conclusions about tax legality.    

Look, here are the facts that we are dealing with

1. The church ended up with a lot of money (too much?, not enough?, just right?)  nothing about having too much money is illegal or effects a churches tax exempt status.  The SEC report doesn't accuse it of having too much money

2.    The church didn't want its investments to become widely known (afraid members would not pay tithing? Afraid of lawsuits? Didn't what church members trying to follow its investment pattern?, Didn't want to manipulate the market? All of the above? none of the above?)   Nothing about wanting to keep a low profile that is illegal

3.    The church decided that the best way to do this was to split its nominal investments into several LLCs (shell companies?, Alter egos?) and report its holdings to the SEC on those companies instead of on one form. Sub corporations and layered LLCs, and multiple companies with common ownership are quite common and often have legitimate purposes.

4.    For reasons outlined in the SEC order, Reporting its investments this way was determined to be illegal, the church as punishment had to pay a fine, the church started reporting its holdings on one form about three years ago.

For the SEC the legal matter appears to be closed, for the church, the legal matter appears to be closed.  

There are no allegations of Fraud.  There are no allegations of Perjury, there are no challenges to the Church's tax exempt status. Maybe those will come in the future, but they do not appear to be on the table at this time.

 

[Danzo]

18 minutes ago, smac97 said:

A summary of the discussion on "perjury" so far:

• From Rockpond: "Church employees were either coerced or voluntarily perjured themselves by signing the 13F forms."
• From Stormin' Mormon: "This was bad legal advice, not perjury. This was failing to adhere to federal regulations, not breaking the law.  And that's still bad optics and not a great look for the church. I'm not really trying to deny that.  But perjury? Coercion? Violation of federal law? That really is jumping to the worst possible interpretation."
• From Rockpond: "I think the SEC order indicates that the LLC business managers who signed the 13F's have perjured themselves."
• From Pogi: "There is a lot of talk about the law vs regulation as if any of this softens the moral violation in the web of deceit (lying, according to the LDS definition) or expecting "managers" to potentially perjure themselves by legally attesting to the accuracy by signing documents with false addresses and verifying info that they can't verify."
• From Danzo: "What are you even talking about? I am beginning to think that you don't really know what perjury is. Maybe you should find out what perjury is before making these kinds of accusations. The government (who investigated this a lot more than you did, does not allege perjury)."
• From Pogi: "Choosing not to go after these managers for perjury is not the same as saying that it didn't happen."
• From Danzo: "The SEC did not refer this to the Department of Justice to prosecute perjury, and they had access to more facts than you do. ... No where has anyone accused anyone of perjury except people who don't know what perjury is."
• From Pogi: "The legal experts who spoke about this on Doug Fabrizio used the word 'perjury.'"
• From Danzo: "The SEC Report accuses the Church of misstatements, not wire fraud, not perjury, not false statements, not any of the many things that they could have accused the Church of.   I don't know who this Doug Fabrizio is but if he used perjury, then I don't have a lot of confidence in his legal opinions."
• From ttribe: "While the {13F} form does not specifically make use of the term 'perjury,' there is a pretty clear honesty assertion being made by the signor."
• From Danzo: "The SEC knows what perjury and false statements are.  They are capable of making a referral to the department of justice. They also know what perjury is.  None of this is included in the SEC decision."
• From Pogi: "Is it not true that the SEC often decides to settle cases instead of pursuing charges where they could?  If they decide not to pursue charges (they don't have any incentive to go after the little guy 'managers'), then they are not going to use criminal language and accusations like 'perjury' that the church/'managers' can't defend itself against in a court of law."

On Balance, I think Danzo has provided the most correct assessment.  A few thoughts:

1. The gravamen of "perjury" is, I think, twofold, namely, both falsity and intent.  According to Black's Law Dictionary, perjury is defined as "the act of willfully and knowingly making a false statement about a material fact while under oath or affirmation in a court or other proceeding where such statement is required by law to be made under penalty of perjury."  So the components are:

• willfully and
• knowingly
• making a false statement
• about a material fact
• while under oath or affirmation in a court or other proceeding where such statement is required by law to be made under penalty of perjury

2. "Willfully and knowingly" can seem like a tautology, but I don't think is, as I think both pertain to culpable intent.  "Willfully" means intentionally or purposely. It is used to describe a deliberate act, done with a conscious intent to violate the law or to do something that one knows is wrong. In the context of perjury, a false statement made "willfully" means that the person making the statement knew that it was false and chose to say it anyway, rather than accidentally or inadvertently making an untrue statement. This is an important element of the crime of perjury, as it distinguishes between innocent mistakes and intentional lies made under oath.  Meanwhile, "knowingly" means having actual knowledge of a fact or being aware of the high probability that a fact exists. It is used to describe a state of mind in which a person is aware of the nature of their actions or the consequences of their actions. In the context of perjury, a false statement made "knowingly" means that the person making the statement knew or should have known that it was false, and that they made the statement with the intent to deceive or mislead others. This is another important element of the crime of perjury, as it requires that the false statement be made with the intent to deceive, rather than simply being a mistake or a misunderstanding.

3. In the context of perjury, "willfully" and "knowingly" are distinct concepts that both play a role in determining whether a person has committed the crime of perjury.  "Willfully" refers to the intentional nature of the false statement. It means that the person making the statement knew that it was false and chose to say it anyway, rather than accidentally or inadvertently making an untrue statement.  "Knowingly," on the other hand, refers to the person's state of mind when making the false statement. It means that the person knew or should have known that the statement was false, and that they made the statement with the intent to deceive or mislead others.  Both "willfully" and "knowingly" are necessary elements of perjury. A false statement made without intent to deceive or mislead others would not constitute perjury, nor would a false statement made unintentionally or without awareness that it was false. In order for a person to be guilty of perjury, they must have intentionally made a false statement while knowing that it was false and with the intent to deceive or mislead others.

4. Under federal law, 18 U.S. Code § 1621 ("Perjury generally") states: "{Whoever} in any declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true is guilty of perjury."

5. While the word "knowingly" is not specifically included in the text of 18 U.S. Code § 1621, federal courts have generally interpreted the statute to require both a willful and knowing false statement for it to constitute perjury.  The Supreme Court has held that in order to prove perjury under 18 U.S. Code § 1621, the government must establish that the defendant made a false statement willfully and with knowledge of its falsity. See Bronston v. United States, 409 U.S. 352, 359 (1973).  In other words, the defendant must have intended to deceive the tribunal or person administering the oath, and must have known that their statement was false when they made it. This means that the defendant must have had a conscious awareness of the falsity of their statement and must have made it with the specific intent to deceive, rather than simply being mistaken or unaware of the true facts.  Thus, while the word "knowingly" is not expressly included in the text of 18 U.S. Code § 1621, federal courts have interpreted the statute to require both willful and knowing conduct in order for a false statement to constitute perjury.

6. In discussions of the law, it is generally prudent to be cautious and circumspect when using terms that have a legal meaning and application that is more precise and particularly defined as compared to casual, everyday usages by the general public.  Again, a false statement made without intent to deceive or mislead others ("willfully") would not constitute perjury, nor would a false statement made unintentionally or without awareness that it was false ("knowingly").

Thanks,

-Smac

Thank you.

[jkwilliams]

1 minute ago, Danzo said:

Look, here are the facts that we are dealing with

1. The church ended up with a lot of money (too much?, not enough?, just right?)  nothing about having too much money is illegal or effects a churches tax exempt status.  The SEC report doesn't accuse it of having too much money

2.    The church didn't want its investments to become widely known (afraid members would not pay tithing? Afraid of lawsuits? Didn't what church members trying to follow its investment pattern?, Didn't want to manipulate the market? All of the above? none of the above?)   Nothing about wanting to keep a low profile that is illegal

3.    The church decided that the best way to do this was to split its nominal investments into several LLCs (shell companies?, Alter egos?) and report its holdings to the SEC on those companies instead of on one form. Sub corporations and layered LLCs, and multiple companies with common ownership are quite common and often have legitimate purposes.

4.    For reasons outlined in the SEC order, Reporting its investments this way was determined to be illegal, the church as punishment had to pay a fine, the church started reporting its holdings on one form about three years ago.

For the SEC the legal matter appears to be closed, for the church, the legal matter appears to be closed.  

There are no allegations of Fraud.  There are no allegations of Perjury, there are no challenges to the Church's tax exempt status. Maybe those will come in the future, but they do not appear to be on the table at this time.

 

Since no one asked me:

Do I think nonprofits should be as transparent as possible with their finances, at least to their donors? Yes.

Is it unethical to not be transparent? Not necessarily, but lack of transparency tends to result in problematic situations like this one.

Was it dishonest of the church to have "managers" report on funds they didn't manage and pretend they did? Yes.

Were the church's actions illegal? Apparently, the SEC thinks so.

Do I blame anyone for being troubled by all of this? Of course not. As my daughter put it, this smacks of "rules for thee but not for me." I remember having to answer about whether I was honest in all my doings. I'd say in this "doing," the church wasn't.

In the end, what I find most troubling isn't the church's actions (I've said what I think about that) but that people are not only denying that anything improper was done but are attacking the character of those who do find it troubling. That I will never understand.

[Danzo]

13 minutes ago, jkwilliams said:

Since no one asked me:

Do I think nonprofits should be as transparent as possible with their finances, at least to their donors? Yes.

Is it unethical to not be transparent? Not necessarily, but lack of transparency tends to result in problematic situations like this one.

Was it dishonest of the church to have "managers" report on funds they didn't manage and pretend they did? Yes.

Were the church's actions illegal? Apparently, the SEC thinks so.

Do I blame anyone for being troubled by all of this? Of course not. As my daughter put it, this smacks of "rules for thee but not for me." I remember having to answer about whether I was honest in all my doings. I'd say in this "doing," the church wasn't.

In the end, what I find most troubling isn't the church's actions (I've said what I think about that) but that people are not only denying that anything improper was done but are attacking the character of those who do find it troubling. That I will never understand.

I guess my perspective is a little different. I spend all day helping prepare forms for people that they sign under penalty of perjury,  Most of whom have no idea what they are signing, despite my best attempts at explaining.   So for you perhaps this may be a big deal, for me, its every single day.

[jkwilliams]

5 minutes ago, Danzo said:

I guess my perspective is a little different. I spend all day helping prepare forms for people that they sign under penalty of perjury,  Most of whom have no idea what they are signing, despite my best attempts at explaining.   So for you perhaps this may be a big deal, for me, its every single day.

I didn't say it was a "big deal." Again, I'm not particularly troubled or surprised by the church's actions, but I don't like the character attacks I'm seeing on those who are. 

[Danzo]

21 minutes ago, jkwilliams said:

Do I blame anyone for being troubled by all of this? Of course not. As my daughter put it, this smacks of "rules for thee but not for me." I remember having to answer about whether I was honest in all my doings. I'd say in this "doing," the church wasn't.

I think that your daughter has found out,  as I believe you have, that living the gospel is harder than preaching the gospel.   In reality you are not going to find strict obedience to all of Gods commandments in mortality.  Not among the church leaders, not even in ourselves.   The Message is good even when the messengers struggle.

[Danzo]

2 minutes ago, jkwilliams said:

I didn't say it was a "big deal." Again, I'm not particularly troubled or surprised by the church's actions, but I don't like the character attacks I'm seeing on those who are. 

I guess your main concern seems to be with the character of those who attack other's character.

[jkwilliams]

Just now, Danzo said:

I guess your main concern seems to be with the character of those who attack other's character.

As I said, I expect organizations run by humans to make mistakes, sometimes deliberate mistakes. But I don't condemn people for being troubled by those mistakes. When I worked for the church, I saw a few things that I would consider dishonest behavior, so again, this kind of stuff does not surprise me. It happens, and some people find it deeply troubling. That's just how it is. 

[pogi]

1 hour ago, Danzo said:

Look, I'm not saying they didn't violate the law, I am just trying  to get people to stick to what laws they actually violated and not have people make up their own crimes that they don't understand.

Danzo, I am not accusing them of anything.  Again, this is not as much about the law for me.  I don't care what legal term you give for what they did. 

I didn't make anything up.  Again, I was quoting a legal experts opinion on the case.   It is an opinion you seem to vehemently disagree with, to the point of attacking me personally for quoting a legal expert.  That is not healthy dialogue.  If you disagree with their assessment, fine.  Plainly state why you disagree without making this about me and attacking me.    

1 hour ago, Danzo said:

I don't see why you think that you are a better expert on detecting and judging Securities Crime than the SEC is. 

I don't see why you think that I think that I know better.  That is a mystery to me. 

I will also note that if they did detect "securities Crime", they wouldn't necessarily say so in a settlement case.  

1 hour ago, Danzo said:

Look, here are the facts that we are dealing with

1. The church ended up with a lot of money (too much?, not enough?, just right?)  nothing about having too much money is illegal or effects a churches tax exempt status.  The SEC report doesn't accuse it of having too much money

2.    The church didn't want its investments to become widely known (afraid members would not pay tithing? Afraid of lawsuits? Didn't what church members trying to follow its investment pattern?, Didn't want to manipulate the market? All of the above? none of the above?)   Nothing about wanting to keep a low profile that is illegal

3.    The church decided that the best way to do this was to split its nominal investments into several LLCs (shell companies?, Alter egos?) and report its holdings to the SEC on those companies instead of on one form. Sub corporations and layered LLCs, and multiple companies with common ownership are quite common and often have legitimate purposes.

4.    For reasons outlined in the SEC order, Reporting its investments this way was determined to be illegal, the church as punishment had to pay a fine, the church started reporting its holdings on one form about three years ago.

For the SEC the legal matter appears to be closed, for the church, the legal matter appears to be closed.  

There are no allegations of Fraud.  There are no allegations of Perjury, there are no challenges to the Church's tax exempt status. Maybe those will come in the future, but they do not appear to be on the table at this time.

Why you think I disagree with any of this is a mystery to me too.  Once again, you are making this about the law.  I am making it about the ethical questions that arise for me in the order - a statement that was negotiated and agreed upon by church lawyers so I have significant reason to believe the so called "facts" in the statement are fairly accurate representation of what happened.  I don't think that church lawyers would have let completely false statements and descriptions of events in the statement about the "managers" etc. if it didn't really happen as described.  

You only list 4 "facts", but the SEC has quite a bit longer list of "facts" about questionable ethical behavior that you are completely ignoring here.

Yes, the legal case is closed.  Glad that is settled.  Now, after 56 pages, will you please note that there are ethical questions that can be troubling to some? 

[pogi]

1 hour ago, Danzo said:

I guess my perspective is a little different. I spend all day helping prepare forms for people that they sign under penalty of perjury,  Most of whom have no idea what they are signing, despite my best attempts at explaining.   So for you perhaps this may be a big deal, for me, its every single day.

You think this scenario is equivalent to what you do?  The church and EPA were completely clueless as to what they were doing?  They were all just blindly going along without understanding the legal implications (even after the CAD warning)?  If so, they should all be fired.  No, I think they knew there were ethical violations and highly questionable legal practices at the very minimum. 

We might not be having this conversation if the EPA was ethical enough to hire someone like you to explain to their "managers" exactly what they were signing.  Nope, they intentionally withheld information from them and had them sign documents to verify the accuracy and correctness of false information, potentially placing them at legal peril (I wont use the word "perjury", but to pretend like they didn't knowingly place those managers in legal/ethical danger is nonsense). 

[pogi]

2 hours ago, smac97 said:

All the more reason for bystanders to also not "use criminal language and accusations like 'perjury.'"

The reason they didn't use the language may not be because they think it didn't happen, but was simply a part of the negotiated settlement to avoid that language.  I think it is fair to ask the question given the fact that it could potentially have happened and settled without charge and without any written accusation.   I will withhold judgment on the matter because I don't know enough, but I think it is fair for legal experts to opine on and for me to bring up here to discuss what legal experts have said. 

2 hours ago, smac97 said:

Yes.  But also keep in mind that the SEC order I linked to in re: Lion Bio (here) was also "a negotiated statement," between the SEC and the subject of its investigation, and yet in that order the SEC did use "criminal language" (specifically, "fraud").

 There could be several reasons why they would mention it in that order but not the church order.  The severity could be an issue, the financial harm caused, the motive for financial gain, the fact that it is not a church and may not be as careful in the accusations, maybe they didn't have as good or well-paid of lawyers.  While it is interesting to note, it doesn't really speak to the SEC motivations on this specific case.

Edited March 7, 2023 by pogi