IRS "Whistleblower" David A. Nielsen to Appear on 60 Minutes

[smac97]

A few summaries of news items on this issue from last night:

ABC4 News: 60 Minutes: Church of Jesus Christ of Latter-day Saints whistleblower speaks of alleged misuse of tithing funds

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SALT LAKE CITY (ABC4) — A whistleblower from the Church of Jesus Christ of Latter-day Saints appeared on 60 Minutes to discuss the alleged misuse of church finances on Sunday, May 14.

In 2019, David Nielsen, a former employee of the church’s investment firm Ensign Peak Advisors, claimed the misuse of billions of dollars in tithes — $100 billion to be exact.

On the CBS 60 Minutes show, Nielsen said he turned down an opportunity on Wall Street to work for Ensign Peak because he wanted to help “change the world.”

However he said instead of seeing charity work as he had anticipated, he saw “a clandestine hedge fund,” saying, “once the money went in, it didn’t go out.”

Nielsen explained the church receives around $7 billion yearly from tithing, $6 billion of which is used to pay for buildings and church programs. The remaining $1 billion goes to the investment firm, Ensign Peak.

The interviewer, Sharyn Alfonsi, said some estimates place that fund as high as $150 billion, however, Bishop W. Christopher Waddell who spoke in the interview said he could not confirm nor deny the estimate.

Nielsen said many Ensign Peak employees believe the funds are set aside for the Second Coming. Wadell said the money was not for the Second Coming but to continue church operations into the future.

Nielsen reportedly sent a 74-page letter to the IRS alleging the stockpile and misuse of the tithing money. Nielsen said hundreds of millions were used to bail out businesses with church ties. He also spoke of shell companies that were used to hide the church’s investment decisions.

He claimed one of his superiors told him privately if the assets and decisions were reported under Ensign Peak’s name, rather than the shell companies, it could bring attention that could lead to it losing its tax-exempt status. In the interview, Waddell said lawyers had advised Ensign Peak to create the shell companies.

Nielsen said he filed the letter to the IRS because he wants the Church to pay the taxes it owes. If the IRS investigates and determines he is right, Alfonsi said Nielsen could be rewarded with up to 30% of what’s collected from the Church.

When asked why he was speaking out now he said they have given the IRS and the SEC all the professional courtesy, but “this was too important to fall through the cracks.”

In February of 2023, the SEC charged the church and Ensign Peak Advisors for failing to file forms that would have disclosed the church’s investments, and for instead “filing forms for shell companies that obscured the Church’s portfolio and misstated Ensign Peak’s control over the Church’s investment decisions,” a press release states.

To settle the charges, Ensign Peak agreed to pay a $4 million penalty, while the church itself agreed to pay a $1 million penalty.

Also in February, Nielsen submitted a 90-page memorandum to the U.S. Senate Finance Committee demanding oversight into the church’s finances.

So this is just a high-altitude summary.  Nothing new.

CBS News: Whistleblower David Nielsen speaks out after reporting the Mormon church to IRS in 2019

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60 Minutes correspondent Sharyn Alfonsi traveled to Salt Lake City, Utah, and spoke to David Nielsen about his time at Ensign Peak Advisors and his decision to file a complaint to the IRS.

David Nielsen was a former Wall Street money manager who left New York for Utah to work for the Church of Jesus Christ of Latter-day Saints' financial arm, Ensign Peak Advisors, as a senior portfolio manager. As a devout Mormon, Nielsen explained he felt a calling to serve his church and community, and was excited to work somewhere that was "really going to make a difference." 

David Nielsen explained the concept of tithing, the payment that each Church of Jesus Christ of Latter-day Saints member is expected to make to the religion.

David Nielsen turned whistleblower in 2019, after reporting the church to the IRS because, as he told Sharyn Alfonsi and 60 Minutes, "this is too big a deal… this is not an example for how we should be." Unable to fix things from inside the firm, Nielsen says he turned to the government because "integrity is at stake."

 

Bishop Christopher Waddell defended the Church of Jesus Christ of Latter-day Saints' handling of its financial holdings and assets, and said Ensign Peak Advisors is "the church's treasury…they're just holding the assets, reserves, on behalf of the church…" 

When asked if the confidential nature of this fund could erode trust between the church and its members, Waddell said "no." He believes that total resources at Ensign Peak don't need to be disclosed, and that whistleblower Nielsen didn't have a full grasp on the situation.

"We do announce missionary work. We do share what we're doing with humanitarian work. I think part of the lack of trust or lack of confidence comes from statements or comments from a whistleblower who doesn't have all the information, who doesn't understand…" 

I think this bit is noteworthy: "David Nielsen turned whistleblower in 2019, after reporting the church to the IRS because, as he told Sharyn Alfonsi and 60 Minutes, 'this is too big a deal… this is not an example for how we should be.' Unable to fix things from inside the firm, Nielsen says he turned to the government because 'integrity is at stake.'"

So Nielsen here isn't claiming that the Church broke the law (which is, I think, the generalized concept behind "whistleblowing"), but instead wasn't handling its money in the ways he thinks it should.

Huh.

CBS News: Whistleblower: Mormon church investment fund stockpiled money, masqueraded as a charity

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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. 

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. 

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."

"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'm curious what he means here.

"'I thought we were going to change the world,' Nielsen said. 'And we just grew the bank account.'"

Again, the story seems to be more about Nielsen and what he thinks and wants the Church to do, as opposed to the legality and propriety of what the Church actually did.

Kathleen Flake nailed it back in 2019 (emphases added) :

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Pondering the merit of added transparency for the church’s finances, Flake asks why the church doesn’t simply open up its records.

Her answer: The alleged problem is not about financial malfeasance, “it’s about competing views of what should be done with Church money and who gets to say so.”

“In other words,” Flake concludes, “this is a power struggle ... and one that we’ve seen before from those who don’t understand Mormonism and how it handles its money.”

Yep.

This next one is good because it has a transcript:

CBS News: Mormon who left Wall St. to work for charity blows whistle on what he says is his church's "clandestine hedge fund"'

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Every religion has its mysteries. One of the closest guarded secrets of The Church of Jesus Christ of Latter-day Saints has been its wealth. In this report, you will hear for the first time about its remarkable size from a former manager at the church's investment firm. David Nielsen says that during his nine years managing money at the church firm, the value of its investments ballooned past $100 billion. That would make it the largest treasure held by any religious fund in America. But instead of spending that money to do good, David Nielsen alleges it was used in ways that bent the law ... and broke his faith.

David Nielsen: I thought I was gonna work for a charity. I thought that's what my skills were gonna do…was help build the charity and do good with things. And the funds were never used for that. It was really a clandestine hedge fund.

Again, this story is more about Nielsen and his expectations and preferences than about the Church.

His use of loaded terminology merits some attention.  "Hedge fund" is a term that I suspect most folks don't really understand, but it sounds sinister and dark.  See, e.g., here:

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A hedge fund is a type of investment fund that pools capital from a group of investors and uses a variety of strategies to generate returns. Hedge funds are typically only open to accredited investors, such as high net worth individuals and institutional investors, and are not subject to the same regulatory requirements as traditional mutual funds.
...
Hedge funds have become increasingly popular in recent years, with the total assets under management in the hedge fund industry reaching over $3 trillion in 2020. However, hedge funds have also been the subject of much controversy. One of the main criticisms of hedge funds is that they are seen as vehicles for the wealthy to make even more money, while the average investor is left out. Additionally, hedge funds are often criticized for their lack of transparency and their tendency to take on excessive risk.

Another is their disguised use of leverage. Hedge funds often use leverage, or borrowing money to invest, to amplify returns. This can lead to high levels of risk, as a small market downturn can have a significant impact on the fund’s returns. More so, hedge funds have been criticized for their role in financial crises, such as the 2008 financial crisis. Some argue that hedge funds contributed to the crisis by taking on excessive risk and making bets on the housing market.

"pools capital from a group of investors"

Nope.  EPA obtains capital from a single institution.

"Hedge funds are typically only open to accredited investors, such as high net worth individuals and institutional investors"

EPA is not open to anyone but the Church.

"and are not subject to the same regulatory requirements as traditional mutual funds"

My understanding is that hedge funds typically cater to sophisticated and high-net-worth individuals and institutional investors, while mutual funds are designed for retail investors.  In other words, hedge funds are more "high risk, high reward."  Regulators let "sophisticated and high-net-worth individuals and institutional investors" because they are better situated to assess and bear higher risks associated with hedge fund investments.  Mutual funds have more regulations to reduce risk and create more protections for less "sophisticated" investors.

The Church doesn't need the regulatory protections of mutual funds, but EPA it lacks most of the key attributes of hedge funds.

"One of the main criticisms of hedge funds is that they are seen as vehicles for the wealthy to make even more money, while the average investor is left out"

Again, this criticism doesn't apply to EPA, as it is only supposed to work for the Church (thus nobody is "left out").  And the Brethren aren't using EPA to enrich themselves, so it's not aptly characterized as a "vehicle for the wealthy to make even more money."

"Additionally, hedge funds are often criticized for their lack of transparency and their tendency to take on excessive risk."

The "lack of transparency" criticism has its footings in the notion that the hedge fund is investing money from "a group of investors."  That's not the case with EPA.

The "tendency to take on excessive risk" is also not attributable to EPA, as its investment strategy seems to be actually pretty conservative.

Nevertheless, Nielsen wants to make the Church look bad, so he uses risible terminology, despite its inaccuracy.  Ah well..

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Sharyn Alfonsi: A clandestine hedge fund. How so?

David Nielsen: Those funds weren't used the way they were appropriated to be used.

Sharyn Alfonsi: So how were they being used?

David Nielsen: Well, once the money went in, it didn't go out.

"Those funds weren't used the way they were appropriated to be used."

Again, Kathleen Flake nailed it: 

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Pondering the merit of added transparency for the church’s finances, Flake asks why the church doesn’t simply open up its records.

Her answer: The alleged problem is not about financial malfeasance, “it’s about competing views of what should be done with Church money and who gets to say so.”

“In other words,” Flake concludes, “this is a power struggle ... and one that we’ve seen before from those who don’t understand Mormonism and how it handles its money.”

This story is more about Nielsen and his expectations than about the Church.

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David Nielsen was a senior portfolio manager for the investment arm of the church, called Ensign Peak Advisors. 

In 2009, Nielsen, who says he was a devout Mormon, was recruited away from a lucrative job on Wall Street to work for the firm, a block from church headquarters in Salt Lake City.

David Nielsen: You know this. Wall Street, you spend your skills working to make really rich people a little bit more rich — but there is something different about the prospect of putting your skills to work for something that you think is really gonna build the kingdom. It's really gonna make a difference.

"there is something different about the prospect of putting your skills to work for something that you think is really gonna build the kingdom"

"It's really gonna make a difference."

This is interesting.  In a sense, I sort of feel sorry for Nielsen.  He is far from the first person to fault the Church for not doing what he thinks it ought to be doing.  I can appreciate that.  But his "whistleblowing" is about accusing the Church of legal wrongdoing, and that does not seem to be sticking.  His whistleblowing is also about a potential windfall to him, and that doesn't seem to be working, either.

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But Nielsen says he grew troubled by what he saw at Ensign Peak. He says the firm used false records and statements to masquerade as a charity, stockpiling money and misleading church members.

Nielsen and 60 Minutes are notably vague here. 

1. What "records and statements" is he referencing here? 
2. How were they "false?" 
3. How did EPA "masquerade as a charity?" 
4. Is he claiming the Church is not a charity?  
5. What is illegal about "stockpiling money?"
6. What did EPA to do "mislead church members?"

These are pretty basic questions, but either 60 Minutes did not ask them, or Nielsen did not answer them, or both.

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

The church expects members to contribute about 10% of their income…a practice known as tithing.

Sharyn Alfonsi: Explain how the tithe is supposed to be used.

David Nielsen: Tithing is what's used to build buildings, it's what's used to pay light bills. Tithing is what's used to— operate some of the church's programs.

Yep.  So the 6 billion is spent "to build buildings . . . pay light bills . . . operate some of the Church's programs," etc.

So far, so good.

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Whatever is left over — about a billion dollars a year — is put into a reserve fund at Ensign Peak and invested. Because Ensign Peak is registered as a nonprofit, it all grows tax-free.

Yes.  There is no provision in the doctrines of the Church or the laws of the land that prohibits the Church from investing a portion of tithed funds to grow those funds beyond themselves.  Indeed, the Parable of the Talents essentially requires wise stewardship, and these days wise stewardship necessarily involves prudent investments.

And I again note that EPA is not enriching the Brethren, just the Church.  

Nothing here seems to be illegal, and yet Nielsen seems to really really want to give the impression that the Church has broken the law.

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David Nielsen says since it was created in 1997, the reserve fund has swelled beyond $100 billion — twice the size of Harvard's endowment or the Bill and Melinda Gates Foundation.

David Nielsen: You could solve big problems with $100 billion.

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

David Nielsen: I thought we were gonna change the world. And we just grew the bank account.

"I thought we were gonna change the world."

This story is more about Nielsen and his expectations than about the Church.

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Sharyn Alfonsi: Did any of your former bosses explain how the money was gonna be used one day?

David Nielsen: The answer was always, "The second coming." And it's a bit tongue in cheek. But deep down, I think a lot of the employees really did believe that.

Oh, brother.

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Publicly, church leaders called it a rainy day fund. But in 2013, Nielsen says one of his bosses shared this  document at a meeting that showed $1.4 billion from the fund went to a mall being built on land owned by the church and $600 million was used to prop up a for-profit church-owned insurance company called Beneficial Life.

I don't think the "but" here is justified.  There is nothing wrong with prudently investing "a rainy day fund."  If the Church were to just let the funds sit in a bank account, unused, then the bank would go out and invest and make money.  The Church using the EPA lets the Church keep the ROI for itself.  I think that's great.

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David Nielsen: 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. 

This is a pretty facile perspective.  And I don't think Nielsen himself believes it.  He's too well-educated for that.  He's just pandering here.

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Sharyn Alfonsi: And so when they gave this money to bail out a for profit venture, what was your reaction?

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

David Nielsen says he hit his breaking point in 2018 after a website called "Mormonleaks" linked church members to companies that existed only on paper. Those shell companies held billions of dollars in stocks and bonds.

What nobody knew outside church leadership was those assets were actually controlled by Ensign Peak. Nielsen says the firm called an emergency meeting.

Sharyn Alfonsi: What was the explanation?

David Nielsen: "These entities were to hide the assets from the members." The chief investment officer said that if we were to change and start reporting these securities in our own name, it would bring undue attention to the firm. And that that attention would be potentially damaging. And after the meeting I went and confronted him. "What do you mean potentially damaging?" And he said "Dave, we are gonna lose our tax-exempt status." I knew in that moment that I was in the wrong place.

Candidly, I have some doubts this discussion took place.

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He resigned in 2019 and filed a 74-page whistleblower complaint with the Internal Revenue Service alleging that Ensign Peak violated its tax-exempt status by moving money to for-profit businesses.

Christopher Waddell: That's not just incorrect, that's flat-out wrong.

Both the facts and the law seem to support this statement from Bishop Waddell considerably better than the allegations made by Mr. Nielsen.

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Christopher Waddell says David Nielsen didn't have a full picture of Ensign Peak. Waddell is one of three church bishops who oversees finances.

Christopher Waddell: As a Christian church we believe that someday there, Jesus Christ will return. But that's not why we have those resources. It's for the continuing operation and for the future.

Nielsen is trying to foist a literally unbelievable "saving money for the Second Coming" motive onto the Church.  It's kind of weird that such an absurdity needs to be rebutted, but I'm glad Bishop Waddell does so here.

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

Christopher Waddell: The Church actually owned Beneficial Life. And— and fortunately the church had the resources to bail out Beneficial Life during the Financial Crisis, 2008, 2009.

Think about how many policyholders would have been left with worthless paper.  As Bishop Waddell aptly notes, "fortunately the church had the resources to bail out Beneficial Life during the Financial Crisis."  Imagine, then, the narrative if the Church, despite having had the resources to allow Beneficial Life to make good on its obligations, it instead let Beneficial Life crash and burn and its policy holders and beneficiaries go without.

Instead, the Church financially stabilized Beneficial Life, stopped its sales of policies of of 8/31/09, is slowly going out of business, but will do so having honored its financial obligations to its policy holders. 

And this, in Nielsen's view, is a bad thing.

It is also worth noting that the failure of Beneficial Life was "completely tied to the meltdown in the financial markets, which we face just like everybody else does."  It wasn't about the malfeasance or corruption.  

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Sharyn Alfonsi: And the mall?

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

Sharyn Alfonsi: And you are receiving returns on that investment?

Christopher Waddell: Oh, absolutely. Yeah. It was an investment.

So the Church invested wisely, and is receiving a good ROI.

And this, in Nielsen's view, is a bad thing.

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Waddell says the insurance company has paid back most of the bailout money. But the church would not disclose the details of that deal or the mall investment. Unlike other nonprofits, religious organizations don't have to fully disclose all financial information to the IRS.

Beneficial Life "has paid back most of the bailout money."  The Church financially stabilized Beneficial Life during the financial crisis, and Beneficial has paid "most of" that money back.

So thousands and thousands of policy holders and beneficiaries will receive the money they were promised, and "most of" the money needed to stabilize Beneficial and allow it to honor those insurance policies has been paid back.

And this, in Nielsen's view, is a bad thing.

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Sharyn Alfonsi: What is the value right now of Ensign Peak's assets?

Christopher Waddell: Yeah…that's something I can't share with you right now. I know there've been— there've been reports on— on approximates and that kind of thing, and— and that's as far as we can go right now.

Sharyn Alfonsi: It's been estimated at $150 billion. Does that sound correct?

Christopher Waddell: That's an estimate that some have made.

Sharyn Alfonsi: Are we in the ballpark or no?

Christopher Waddell: We have significant resources.

I admire Bishop Waddell's here.  

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Sharyn Alfonsi: Give us a sense of what percentage is going out the door of the money under management. 

Christopher Waddell: To be honest, we— we've never looked at it as a percentage. We looked at it based on needs to make sure that we're comfortable with how many years worth we have in case of financial difficulties, in case of financial crisis to make sure we can continue church operations. We just want to make sure that that is sufficient. 

The long-term financial viability of the Church is an important consideration, particularly given the seeming decline in the Church in the affluent West and its growth in many impoverished areas in Asia, Africa and South America.

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David Nielsen says he did not intend for his complaint to the IRS to become public. But in 2019, his brother shared it with the Washington Post. 

Nielsen, who in his free time, races motorcycles, says he was shunned by some of his friends and neighbors in Salt Lake City. 

It wasn't until 2021, two years later, that David Nielsen heard from investigators — not from the IRS, but the Securities and Exchange Commission which launched its own probe into Ensign Peak after that website story linked the church to shell companies.

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

David Nielsen: Everything. I helped them see the big picture.

To protect market fairness and transparency, any firm with more than $100 million in securities must file accurate reports on its holdings with the SEC.

But in February, the SEC announced the Church of Latter-day Saints and Ensign Peak failed to do that.

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. 

David Nielsen: Here they had these back-office accountants, who had never bought a bond or sold stock a day in their life, signing signatory pages for a portfolio that didn't exist.

The SEC fined the church and Ensign Peak a total of $5 million. Bishop Christopher Waddell told us it was the church's lawyers who advised them to create the shell companies.

Sharyn Alfonsi: What about, you know, the idea that secrecy builds mistrust?

Christopher Waddell: Well, we don't feel it's being secret. We feel it's being confidential.

Sharyn Alfonsi: What's the difference?

Christopher Waddell: The difference is-— I guess it's a point of view… 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.

Sharyn Alfonsi: But don't you agree this would be a non-issue if there was more transparency?

Christopher Waddell: No, because then everyone would be telling us what they wanted us to do with the money.

Well said.

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Last year the church says it spent over a billion dollars on humanitarian aid, including food production.

Christopher Waddell: In any given month you may have an average of nine transfers going from Ensign Peak back to the church to fund all church operations. All humanitarian work— education work, all the work of the church they fund. 

David Nielsen: Money's going in and out of the cash accounts all the time. But Ensign Peak's funds were never used for any charitable purpose, as to my knowledge the whole time I was there. So there's a bit of a distinction here that's important.

Sharyn Alfonsi: Explain that to me.

David Nielsen: Well, it's the difference between your checking account and maybe your retirement account. They're used for different purposes. And you don't get to pretend that one is affecting the other.

Phil Hackney: The fundamental claim to me is that Ensign Peak brings money in and it's the Hotel California. It never comes out.

Phil Hackney worked in the Office of Chief Counsel of the IRS and teaches tax law.  He concedes it's complex and the case falls into a gray area.

Sharyn Alfonsi: The church would say, "We give millions of dollars out every year in humanitarian work." How much is enough by the standards of the IRS?

Phil Hackney: We know within private foundations it's 5% of assets. There's no clarity when it comes to public charities— and certainly not with churches. But I would expect to see something like 2%, 3% of assets being spent out to justify that status.

Sharyn Alfonsi: But how do you know if they're spending 2% or 3% of assets if we don't know what the assets are?

Phil Hackney: We have to rely on them behaving well.

Sharyn Alfonsi: They said they bailed out this insurance company. That's the words they used. Is that a problem?

Phil Hackney: It is a problem in my opinion if they have moved money from the nonprofit to a for-profit. 

Sharyn Alfonsi: So how likely do you think it would be that the IRS would ever investigate this?

Phil Hackney: Slim. The political risk is so great that it comes with real danger. At the same time, there's a real risk to the rule of law if the IRS doesn't come in and enforce those rules.

David Nielsen says honesty is a tenet of the faith. He wants Ensign Peak Advisors to pay the taxes he says it owes on the $100 billion built from tithing. If the IRS decides Nielsen is right, he could be rewarded with up to 30% of what's collected. The IRS does not comment on whistleblower complaints.

Sharyn Alfonsi: Why are you speaking now?

David Nielsen: It's time, Sharyn. We gave the IRS and the SEC all the professional courtesy. This is just too important to fall through the cracks.

Sharyn Alfonsi: It's possible that you were dead wrong?

David Nielsen: No. I know what I saw. I know what I know.

Interesting stuff.

Thanks,

-Smac

[Tacenda]

Why does it take things like this and situations like Sam Young before the church changes it's ways??

[Kenngo1969]

I think Ms. Alfonsi's piece would have benefitted from some historical perspective.  Such perspective might be gained by at least a mention of the following (this comes from the Deseret News op-ed I linked to earlier):

• The troubles the Church of Jesus Christ of Latter-day Saints experienced circa 1837, in the widespread banking crisis
• Additional economic troubles it experienced, along with other entities and various sectors of the economy, in the 1890s
• The fact that, very nearly, with the Edmunds-Tucker Act and other legislation, the Church of Jesus Christ effectively was disincorporated, its members, effectively, were disenfranchised, and, very nearly, it ceased to exist as an institution
• The Church, like very nearly every other institution and many, many individuals, was adversely affected by the Great Depression
• In the late 1950s and early 1960s, the financial standing of the Church of Jesus Christ was affected adversely by various unwise decisions that seem to have violated the principle of Mosiah 4:27, and the Church was neither set on an better course nor was the previous course abandoned until President N. Eldon Tanner was called into the First Presidency.

My $0.02, actual value $0.01759638271.  

 

[Kenngo1969]

5 minutes ago, Tacenda said:

Why does it take things like this and situations like Sam Young before the church changes it's ways??

With regard to SEC reporting, the Church of Jesus Christ of Latter-day Saints did change its ways, back in 2018.  While Mr. Nielsen has alleged that the Church of Jesus Christ of Latter-day Saints has violated United States tax law, unless you know something he doesn't (no offense, but color me doubtful  ), I'm wondering how, exactly, you would suggest that the Church of Jesus Christ "change[ ] it's ways" [sic].

[Kenngo1969]

What happened to Lars?  Why isn't Lars on board here, still?    

[smac97]

20 minutes ago, Tacenda said:

Why does it take things like this and situations like Sam Young before the church changes it's ways??

I think this is demonstrative of the "Cherry Picking" fallacy:

Quote

Cherry Picking

(also known as: ignoring inconvenient data, suppressed evidence, fallacy of incomplete evidence, argument by selective observation, argument by half-truth, card stacking, fallacy of exclusion, ignoring the counter evidence, one-sided assessment, slanting, one-sidedness)

Description: When only select evidence is presented in order to persuade the audience to accept a position, and evidence that would go against the position is withheld.  The stronger the withheld evidence, the more fallacious the argument.

Thanks,

-Smac

[teddyaware]

47 minutes ago, smac97 said:

A few summaries of news items on this issue from last night:

ABC4 News: 60 Minutes: Church of Jesus Christ of Latter-day Saints whistleblower speaks of alleged misuse of tithing funds

So this is just a high-altitude summary.  Nothing new.

CBS News: Whistleblower David Nielsen speaks out after reporting the Mormon church to IRS in 2019

I think this bit is noteworthy: "David Nielsen turned whistleblower in 2019, after reporting the church to the IRS because, as he told Sharyn Alfonsi and 60 Minutes, 'this is too big a deal… this is not an example for how we should be.' Unable to fix things from inside the firm, Nielsen says he turned to the government because 'integrity is at stake.'"

So Nielsen here isn't claiming that the Church broke the law (which is, I think, the generalized concept behind "whistleblowing"), but instead wasn't handling its money in the ways he thinks it should.

Huh.

CBS News: Whistleblower: Mormon church investment fund stockpiled money, masqueraded as a charity

"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'm curious what he means here.

"'I thought we were going to change the world,' Nielsen said. 'And we just grew the bank account.'"

Again, the story seems to be more about Nielsen and what he thinks and wants the Church to do, as opposed to the legality and propriety of what the Church actually did.

Kathleen Flake nailed it back in 2019 (emphases added) :

Yep.

This next one is good because it has a transcript:

CBS News: Mormon who left Wall St. to work for charity blows whistle on what he says is his church's "clandestine hedge fund"'

Again, this story is more about Nielsen and his expectations and preferences than about the Church.

His use of loaded terminology merits some attention.  "Hedge fund" is a term that I suspect most folks don't really understand, but it sounds sinister and dark.  See, e.g., here:

"pools capital from a group of investors"

Nope.  EPA obtains capital from a single institution.

"Hedge funds are typically only open to accredited investors, such as high net worth individuals and institutional investors"

EPA is not open to anyone but the Church.

"and are not subject to the same regulatory requirements as traditional mutual funds"

My understanding is that hedge funds typically cater to sophisticated and high-net-worth individuals and institutional investors, while mutual funds are designed for retail investors.  In other words, hedge funds are more "high risk, high reward."  Regulators let "sophisticated and high-net-worth individuals and institutional investors" because they are better situated to assess and bear higher risks associated with hedge fund investments.  Mutual funds have more regulations to reduce risk and create more protections for less "sophisticated" investors.

The Church doesn't need the regulatory protections of mutual funds, but EPA it lacks most of the key attributes of hedge funds.

"One of the main criticisms of hedge funds is that they are seen as vehicles for the wealthy to make even more money, while the average investor is left out"

Again, this criticism doesn't apply to EPA, as it is only supposed to work for the Church (thus nobody is "left out").  And the Brethren aren't using EPA to enrich themselves, so it's not aptly characterized as a "vehicle for the wealthy to make even more money."

"Additionally, hedge funds are often criticized for their lack of transparency and their tendency to take on excessive risk."

The "lack of transparency" criticism has its footings in the notion that the hedge fund is investing money from "a group of investors."  That's not the case with EPA.

The "tendency to take on excessive risk" is also not attributable to EPA, as its investment strategy seems to be actually pretty conservative.

Nevertheless, Nielsen wants to make the Church look bad, so he uses risible terminology, despite its inaccuracy.  Ah well..

"Those funds weren't used the way they were appropriated to be used."

Again, Kathleen Flake nailed it: 

This story is more about Nielsen and his expectations than about the Church.

"there is something different about the prospect of putting your skills to work for something that you think is really gonna build the kingdom"

"It's really gonna make a difference."

This is interesting.  In a sense, I sort of feel sorry for Nielsen.  He is far from the first person to fault the Church for not doing what he thinks it ought to be doing.  I can appreciate that.  But his "whistleblowing" is about accusing the Church of legal wrongdoing, and that does not seem to be sticking.  His whistleblowing is also about a potential windfall to him, and that doesn't seem to be working, either.

Nielsen and 60 Minutes are notably vague here. 

1. What "records and statements" is he referencing here? 
2. How were they "false?" 
3. How did EPA "masquerade as a charity?" 
4. Is he claiming the Church is not a charity?  
5. What is illegal about "stockpiling money?"
6. What did EPA to do "mislead church members?"

These are pretty basic questions, but either 60 Minutes did not ask them, or Nielsen did not answer them, or both.

Yep.  So the 6 billion is spent "to build buildings . . . pay light bills . . . operate some of the Church's programs," etc.

So far, so good.

Yes.  There is no provision in the doctrines of the Church or the laws of the land that prohibits the Church from investing a portion of tithed funds to grow those funds beyond themselves.  Indeed, the Parable of the Talents essentially requires wise stewardship, and these days wise stewardship necessarily involves prudent investments.

And I again note that EPA is not enriching the Brethren, just the Church.  

Nothing here seems to be illegal, and yet Nielsen seems to really really want to give the impression that the Church has broken the law.

"I thought we were gonna change the world."

This story is more about Nielsen and his expectations than about the Church.

Oh, brother.

I don't think the "but" here is justified.  There is nothing wrong with prudently investing "a rainy day fund."  If the Church were to just let the funds sit in a bank account, unused, then the bank would go out and invest and make money.  The Church using the EPA lets the Church keep the ROI for itself.  I think that's great.

This is a pretty facile perspective.  And I don't think Nielsen himself believes it.  He's too well-educated for that.  He's just pandering here.

Candidly, I have some doubts this discussion took place.

Both the facts and the law seem to support this statement from Bishop Waddell considerably better than the allegations made by Mr. Nielsen.

Nielsen is trying to foist a literally unbelievable "saving money for the Second Coming" motive onto the Church.  It's kind of weird that such an absurdity needs to be rebutted, but I'm glad Bishop Waddell does so here.

Think about how many policyholders would have been left with worthless paper.  As Bishop Waddell aptly notes, "fortunately the church had the resources to bail out Beneficial Life during the Financial Crisis."  Imagine, then, the narrative if the Church, despite having had the resources to allow Beneficial Life to make good on its obligations, it instead let Beneficial Life crash and burn and its policy holders and beneficiaries go without.

Instead, the Church financially stabilized Beneficial Life, stopped its sales of policies of of 8/31/09, is slowly going out of business, but will do so having honored its financial obligations to its policy holders. 

And this, in Nielsen's view, is a bad thing.

It is also worth noting that the failure of Beneficial Life was "completely tied to the meltdown in the financial markets, which we face just like everybody else does."  It wasn't about the malfeasance or corruption.  

So the Church invested wisely, and is receiving a good ROI.

And this, in Nielsen's view, is a bad thing.

Beneficial Life "has paid back most of the bailout money."  The Church financially stabilized Beneficial Life during the financial crisis, and Beneficial has paid "most of" that money back.

So thousands and thousands of policy holders and beneficiaries will receive the money they were promised, and "most of" the money needed to stabilize Beneficial and allow it to honor those insurance policies has been paid back.

And this, in Nielsen's view, is a bad thing.

I admire Bishop Waddell's here.  

The long-term financial viability of the Church is an important consideration, particularly given the seeming decline in the Church in the affluent West and its growth in many impoverished areas in Asia, Africa and South America.

Well said.

Interesting stuff.

Thanks,

-Smac

In consideration of the fact that there are abundant prophecies in the scriptures that forewarn there are going to be constant wars throughout the world, widespread cataclysmic destructions on a unprecedented scale, financial catastrophes throughout the world (including an eventual worldwide economic collapse), prior to the Second Coming, why is it “absurd” to believe that the Lord would want his Church to avoid sure financial bondage by amassing as much capital and financial wherewithal as possible in preparation for tribulations of the last days that are surely going to descend upon a world fully ripened in iniquity?

While I don’t doubt that Bishop Waddell’s explanation is also true, to imagine that the way the church manages its finances doesn’t also have something to do with preparation for the coming days of great tribulation is tantamount to suggesting the church leaders aren’t taking the Lord’s solemn warnings to be prepared for the coming latter-day woes seriously. Bishop Waddell’s explanation may serve to partially pacify some of the ravening wolves who think a belief in the Second Coming is the product of a deranged mind, but to imagine that the leaders aren’t also focused keenly on the prophesied extreme difficulties of the latter-days is unimaginable. This is especially true in light of the fact that President Nelson has recently twice testified that WE are the generation Nephi saw in his great vision of the last days, and in 1 Nephi 14 the prophet makes it perfectly clear that it’s this very generation that’s going to see all hell break loose as this wicked world deservedly descends into the prophesied days of great tribulation.

[JAHS]

2 hours ago, smac97 said:

A few summaries of news items on this issue from last night:

ABC4 News: 60 Minutes: Church of Jesus Christ of Latter-day Saints whistleblower speaks of alleged misuse of tithing funds

So this is just a high-altitude summary.  Nothing new.

CBS News: Whistleblower David Nielsen speaks out after reporting the Mormon church to IRS in 2019

I think this bit is noteworthy: "David Nielsen turned whistleblower in 2019, after reporting the church to the IRS because, as he told Sharyn Alfonsi and 60 Minutes, 'this is too big a deal… this is not an example for how we should be.' Unable to fix things from inside the firm, Nielsen says he turned to the government because 'integrity is at stake.'"

So Nielsen here isn't claiming that the Church broke the law (which is, I think, the generalized concept behind "whistleblowing"), but instead wasn't handling its money in the ways he thinks it should.

Huh.

CBS News: Whistleblower: Mormon church investment fund stockpiled money, masqueraded as a charity

"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'm curious what he means here.

"'I thought we were going to change the world,' Nielsen said. 'And we just grew the bank account.'"

Again, the story seems to be more about Nielsen and what he thinks and wants the Church to do, as opposed to the legality and propriety of what the Church actually did.

Kathleen Flake nailed it back in 2019 (emphases added) :

Yep.

This next one is good because it has a transcript:

CBS News: Mormon who left Wall St. to work for charity blows whistle on what he says is his church's "clandestine hedge fund"'

Again, this story is more about Nielsen and his expectations and preferences than about the Church.

His use of loaded terminology merits some attention.  "Hedge fund" is a term that I suspect most folks don't really understand, but it sounds sinister and dark.  See, e.g., here:

"pools capital from a group of investors"

Nope.  EPA obtains capital from a single institution.

"Hedge funds are typically only open to accredited investors, such as high net worth individuals and institutional investors"

EPA is not open to anyone but the Church.

"and are not subject to the same regulatory requirements as traditional mutual funds"

My understanding is that hedge funds typically cater to sophisticated and high-net-worth individuals and institutional investors, while mutual funds are designed for retail investors.  In other words, hedge funds are more "high risk, high reward."  Regulators let "sophisticated and high-net-worth individuals and institutional investors" because they are better situated to assess and bear higher risks associated with hedge fund investments.  Mutual funds have more regulations to reduce risk and create more protections for less "sophisticated" investors.

The Church doesn't need the regulatory protections of mutual funds, but EPA it lacks most of the key attributes of hedge funds.

"One of the main criticisms of hedge funds is that they are seen as vehicles for the wealthy to make even more money, while the average investor is left out"

Again, this criticism doesn't apply to EPA, as it is only supposed to work for the Church (thus nobody is "left out").  And the Brethren aren't using EPA to enrich themselves, so it's not aptly characterized as a "vehicle for the wealthy to make even more money."

"Additionally, hedge funds are often criticized for their lack of transparency and their tendency to take on excessive risk."

The "lack of transparency" criticism has its footings in the notion that the hedge fund is investing money from "a group of investors."  That's not the case with EPA.

The "tendency to take on excessive risk" is also not attributable to EPA, as its investment strategy seems to be actually pretty conservative.

Nevertheless, Nielsen wants to make the Church look bad, so he uses risible terminology, despite its inaccuracy.  Ah well..

"Those funds weren't used the way they were appropriated to be used."

Again, Kathleen Flake nailed it: 

This story is more about Nielsen and his expectations than about the Church.

"there is something different about the prospect of putting your skills to work for something that you think is really gonna build the kingdom"

"It's really gonna make a difference."

This is interesting.  In a sense, I sort of feel sorry for Nielsen.  He is far from the first person to fault the Church for not doing what he thinks it ought to be doing.  I can appreciate that.  But his "whistleblowing" is about accusing the Church of legal wrongdoing, and that does not seem to be sticking.  His whistleblowing is also about a potential windfall to him, and that doesn't seem to be working, either.

Nielsen and 60 Minutes are notably vague here. 

1. What "records and statements" is he referencing here? 
2. How were they "false?" 
3. How did EPA "masquerade as a charity?" 
4. Is he claiming the Church is not a charity?  
5. What is illegal about "stockpiling money?"
6. What did EPA to do "mislead church members?"

These are pretty basic questions, but either 60 Minutes did not ask them, or Nielsen did not answer them, or both.

Yep.  So the 6 billion is spent "to build buildings . . . pay light bills . . . operate some of the Church's programs," etc.

So far, so good.

Yes.  There is no provision in the doctrines of the Church or the laws of the land that prohibits the Church from investing a portion of tithed funds to grow those funds beyond themselves.  Indeed, the Parable of the Talents essentially requires wise stewardship, and these days wise stewardship necessarily involves prudent investments.

And I again note that EPA is not enriching the Brethren, just the Church.  

Nothing here seems to be illegal, and yet Nielsen seems to really really want to give the impression that the Church has broken the law.

"I thought we were gonna change the world."

This story is more about Nielsen and his expectations than about the Church.

Oh, brother.

I don't think the "but" here is justified.  There is nothing wrong with prudently investing "a rainy day fund."  If the Church were to just let the funds sit in a bank account, unused, then the bank would go out and invest and make money.  The Church using the EPA lets the Church keep the ROI for itself.  I think that's great.

This is a pretty facile perspective.  And I don't think Nielsen himself believes it.  He's too well-educated for that.  He's just pandering here.

Candidly, I have some doubts this discussion took place.

Both the facts and the law seem to support this statement from Bishop Waddell considerably better than the allegations made by Mr. Nielsen.

Nielsen is trying to foist a literally unbelievable "saving money for the Second Coming" motive onto the Church.  It's kind of weird that such an absurdity needs to be rebutted, but I'm glad Bishop Waddell does so here.

Think about how many policyholders would have been left with worthless paper.  As Bishop Waddell aptly notes, "fortunately the church had the resources to bail out Beneficial Life during the Financial Crisis."  Imagine, then, the narrative if the Church, despite having had the resources to allow Beneficial Life to make good on its obligations, it instead let Beneficial Life crash and burn and its policy holders and beneficiaries go without.

Instead, the Church financially stabilized Beneficial Life, stopped its sales of policies of of 8/31/09, is slowly going out of business, but will do so having honored its financial obligations to its policy holders. 

And this, in Nielsen's view, is a bad thing.

It is also worth noting that the failure of Beneficial Life was "completely tied to the meltdown in the financial markets, which we face just like everybody else does."  It wasn't about the malfeasance or corruption.  

So the Church invested wisely, and is receiving a good ROI.

And this, in Nielsen's view, is a bad thing.

Beneficial Life "has paid back most of the bailout money."  The Church financially stabilized Beneficial Life during the financial crisis, and Beneficial has paid "most of" that money back.

So thousands and thousands of policy holders and beneficiaries will receive the money they were promised, and "most of" the money needed to stabilize Beneficial and allow it to honor those insurance policies has been paid back.

And this, in Nielsen's view, is a bad thing.

I admire Bishop Waddell's here.  

The long-term financial viability of the Church is an important consideration, particularly given the seeming decline in the Church in the affluent West and its growth in many impoverished areas in Asia, Africa and South America.

Well said.

Interesting stuff.

Thanks,

-Smac

Isn't there a difference between a organization that is a charity and one that is a charitable organization? It seems to me that the Church is not a charity in the strictest sense, it is a religion that participates in charitable activities.  Examples of Charities are here. When you call an organization a charity you expect that all or most of the money is used for charity. This can't be so with a religion that is involved in many other church related activities. The question that is hard to answer is, how much should the church spend on charitable activities?

[freedad]

Did anyone notice at the end of the report the reporter mentioned that whistleblowers are entitled to 30% of whatever the government collects from the church?  This puts Mr. Nielson in a place to collect billions of dollars for himself.  This puts perspective on why he coming forward.  Does he plan to "change the world" with all the potential money he collects?

[CA Steve]

12 minutes ago, freedad said:

Did anyone notice at the end of the report the reporter mentioned that whistleblowers are entitled to 30% of whatever the government collects from the church?  This puts Mr. Nielson in a place to collect billions of dollars for himself.  This puts perspective on why he coming forward.  Does he plan to "change the world" with all the potential money he collects?

I think he said something about saving it for a rainy day.

[pogi]

7 minutes ago, teddyaware said:

In consideration of the fact that there are abundant prophecies in the scriptures that forewarn there are going to be constant wars throughout the world, widespread cataclysmic destructions on a unprecedented scale, financial catastrophes throughout the world (including an eventual worldwide economic collapse), prior to the Second Coming, why is it “absurd” to believe that the Lord would want his Church to avoid sure financial bondage by amassing as much capital and financial wherewithal as possible in preparation for tribulations of the last days that are surely going to descend upon a world fully ripened in iniquity?

 

Why is it absurd to hoard digital money to protect against "eventual worldwide economic collapse", you ask?  

Think it through a little. 

[Analytics]

2 hours ago, smac97 said:

I think this bit is noteworthy: "David Nielsen turned whistleblower in 2019, after reporting the church to the IRS because, as he told Sharyn Alfonsi and 60 Minutes, 'this is too big a deal… this is not an example for how we should be.' Unable to fix things from inside the firm, Nielsen says he turned to the government because 'integrity is at stake.'"

So Nielsen here isn't claiming that the Church broke the law (which is, I think, the generalized concept behind "whistleblowing"), but instead wasn't handling its money in the ways he thinks it should.

Misrepresenting information on tax filings demonstrates both a lack of integrity and a violation of the law. He isn't merely complaining that the Church "wasn't handling its money in the way he thinks it should."

2 hours ago, smac97 said:

His use of loaded terminology merits some attention.  "Hedge fund" is a term that I suspect most folks don't really understand, but it sounds sinister and dark.  See, e.g., here:

"Hedge fund" is a descriptive term that aptly describes Ensign Peak Advisors. There is nothing dark and sinister about it.

2 hours ago, smac97 said:

"pools capital from a group of investors"

Nope.  EPA obtains capital from a single institution.

A group of one is still a group.

2 hours ago, smac97 said:

"Hedge funds are typically only open to accredited investors, such as high net worth individuals and institutional investors"

EPA is not open to anyone but the Church.

Hedge funds are typically selective with whom they allow to participate. Ensign Peaks being superlatively selective doesn't mean it isn't effectively a hedge fund. 

2 hours ago, smac97 said:

"and are not subject to the same regulatory requirements as traditional mutual funds"

My understanding is that hedge funds typically cater to sophisticated and high-net-worth individuals and institutional investors, while mutual funds are designed for retail investors.  In other words, hedge funds are more "high risk, high reward." 

The term "hedge fund" connotes low risk, high reward. When risks are hedged, the aggregate risk goes down. 

2 hours ago, smac97 said:

"One of the main criticisms of hedge funds is that they are seen as vehicles for the wealthy to make even more money, while the average investor is left out"

Again, this criticism doesn't apply to EPA, as it is only supposed to work for the Church (thus nobody is "left out").

Everybody but the Church is left out!

2 hours ago, smac97 said:

  And the Brethren aren't using EPA to enrich themselves, so it's not aptly characterized as a "vehicle for the wealthy to make even more money."

The Church is a wealthy institution, and EPA is in fact a vehicle for this wealthy institution to make even more money. That is the entire point.

2 hours ago, smac97 said:

"Additionally, hedge funds are often criticized for their lack of transparency and their tendency to take on excessive risk."

The "lack of transparency" criticism has its footings in the notion that the hedge fund is investing money from "a group of investors."  That's not the case with EPA.

It reminds me of when Boyd K. Packer, as President of the Q12, went to EPA and asked for an overview of what they did. EPA had to embarrassingly tell him that this information was above his pay grade.

2 hours ago, smac97 said:

The "tendency to take on excessive risk" is also not attributable to EPA, as its investment strategy seems to be actually pretty conservative.

Make up your mind on this. A couple of months ago you were touting how many billions they had lost over the previous few quarters, and using that as evidence of how risky the investments were and how large the fund had to be to accommodate such risk.

2 hours ago, smac97 said:

Nevertheless, Nielsen wants to make the Church look bad, so he uses risible terminology, despite its inaccuracy.  Ah well..

I would say "hedge fund" is a term of art that he understands and you don't.

2 hours ago, smac97 said:

But his "whistleblowing" is about accusing the Church of legal wrongdoing, and that does not seem to be sticking.  His whistleblowing is also about a potential windfall to him, and that doesn't seem to be working, either.

Two quick points. First, because the IRS is extremely understaffed and because this is such a hot-button political issue, it's unlikely the IRS will investigate this. Their decision not to investigate doesn't mean the accusations don't merit an investigation. 

Regarding the potential windfall, that is pure cynicism on your part. If Nielsen was motivated by greed, he never would have taken a massive payout to work for EPA in the first place.

2 hours ago, smac97 said:

Nielsen is trying to foist a literally unbelievable "saving money for the Second Coming" motive onto the Church.  It's kind of weird that such an absurdity needs to be rebutted, but I'm glad Bishop Waddell does so here.

Don't gaslight us here. Nielsen didn't make this up. This is what Roger Clarke admits to having said, and later claimed that Nielsen misunderstood him.

2 hours ago, smac97 said:

Think about how many policyholders would have been left with worthless paper.  As Bishop Waddell aptly notes, "fortunately the church had the resources to bail out Beneficial Life during the Financial Crisis."  Imagine, then, the narrative if the Church, despite having had the resources to allow Beneficial Life to make good on its obligations, it instead let Beneficial Life crash and burn and its policy holders and beneficiaries go without.

The technical answer to this question is zero policyholders would have been left with worthless paper. If the Church wouldn't have bailed out Beneficial Life, its assets and liabilities would have gone into receivership by the Utah Insurance Department, and if needed the policyholders would have been bailed out by the Utah Life & Health Insurance Guarantee Association and other state Guarantee Associations.

2 hours ago, smac97 said:

Instead, the Church financially stabilized Beneficial Life, stopped its sales of policies of of 8/31/09, is slowly going out of business, but will do so having honored its financial obligations to its policy holders. 

And this, in Nielsen's view, is a bad thing.

It is also worth noting that the failure of Beneficial Life was "completely tied to the meltdown in the financial markets, which we face just like everybody else does."  It wasn't about the malfeasance or corruption.  

So the Church invested wisely, and is receiving a good ROI.

And this, in Nielsen's view, is a bad thing.

Beneficial Life "has paid back most of the bailout money."  The Church financially stabilized Beneficial Life during the financial crisis, and Beneficial has paid "most of" that money back.

Since the money was mostly paid back, the updated answer to the charitable activities that EPA has engaged on are the following two things:

1- Building a mall project

2- Bailing out an insurance company floating an insurance company some capital in a liquidity crisis

The Church did the right thing to bail out Beneficial Life. Of course. But the details of that don't contradict Nielsen's claims that EPA is not a public charity but rather is a private foundation, and ought to be taxed as such.

 

[Analytics]

14 minutes ago, pogi said:

Why is it absurd to hoard digital money to protect against "eventual worldwide economic collapse", you ask?  

Think it through a little. 

Bingo.

[sunstoned]

2 hours ago, Tacenda said:

Why does it take things like this and situations like Sam Young before the church changes it's ways??

It does seem that policy changes and revelations come because of strong outside pressures.  The end of polygamy, the end of the racist priesthood ban, and the 180 retraction of the policy of exclusion are just a few examples.

[bluebell]

2 minutes ago, sunstoned said:

It does seem that policy changes and revelations come because of strong outside pressures.  The end of polygamy, the end of the racist priesthood ban, and the 180 retraction of the policy of exclusion are just a few examples.

Good information leads to good inspiration, and all that.

Maybe that's one of the reasons that the scriptures teach that it can be dangerous when everyone says that "all is well in zion"?  We are much less likely to be seeking revelation when we already believe that everything is peachy keen and working great.  And if we don't seek revelation, it seems that God doesn't often (ever?) send it.

[Calm]

2 hours ago, CA Steve said:

I think he said something about saving it for a rainy day.

 

Beautiful, lol; out of points so posted instead. 

[Calm]

2 hours ago, Analytics said:

Since the money was mostly paid back, the updated answer to the charitable activities that EPA has engaged on are the following two things:

1- Building a mall project

2- Bailing out an insurance company floating an insurance company some capital in a liquidity crisis

You do not have access to the accounts to know this. And yet you keep stating this assumption as if it was a statement of fact. We don’t know for sure those were all the expenditures; given the Church’s predilection to not share info, those two items could have been simply the two out of many or few items that whoever was doing the presentation wanted to share.
 

But let’s assume they were the only expenditures up till that time. I can’t remember when Nielsen saw the info to begin with, at minimum it is 4 years out of date, years that includes some massive expenditures by the Church to help with various disasters and crises, including Covid relief efforts. 
 

Quote

Regarding the potential windfall, that is pure cynicism on your part. If Nielsen was motivated by greed, he never would have taken a massive payout to work for EPA in the first place.

I am not making any claims to his motivations, but people can change. Motivations don’t stay the same even when people change in significant ways. Nielsen is no longer a believer. It is obvious his motivations have changed enough that he has quit working for the Church and is even willing to  damage its reputation where before he was willing to sacrifice for it. If that motivation changed so significantly, one can’t exclude the possibility that greed might have moved from so low on the priority list as to have no influence to close to top or even top priority when it comes to church related choices. 

[JAHS]

11 minutes ago, Calm said:

2 hours ago, CA Steve said:

I think he said something about saving it for a rainy day.

 

Beautiful, lol; out of points so posted instead. 

Perhaps he is expecting a hurricane in his future 😊

[Tacenda]

1 hour ago, bluebell said:

Good information leads to good inspiration, and all that.

Maybe that's one of the reasons that the scriptures teach that it can be dangerous when everyone says that "all is well in zion"?  We are much less likely to be seeking revelation when we already believe that everything is peachy keen and working great.  And if we don't seek revelation, it seems that God doesn't often (ever?) send it.

☝️💯🫶

[Tacenda]

1 hour ago, sunstoned said:

It does seem that policy changes and revelations come because of strong outside pressures.  The end of polygamy, the end of the racist priesthood ban, and the 180 retraction of the policy of exclusion are just a few examples.

Thanks for the other examples sunstoned!

[JAHS]

5 minutes ago, Tacenda said:

2 hours ago, sunstoned said:

It does seem that policy changes and revelations come because of strong outside pressures.  The end of polygamy, the end of the racist priesthood ban, and the 180 retraction of the policy of exclusion are just a few examples.

Thanks for the other examples sunstoned!

Emma Smith's influence on the revelation of Word of Wisdom.

[smac97]

1 hour ago, Analytics said:

Misrepresenting information on tax filings demonstrates both a lack of integrity and a violation of the law.

I think you (and Nielsen) are conflating things here.  He appears to be referencing the same things James Huntsman did in his lawsuit:  City Creek and Beneficial Life.

• "David Nielsen ... claimed the misuse of billions of dollars in tithes — $100 billion to be exact."
• "Nielsen said he filed the letter to the IRS because he wants the Church to pay the taxes it owes."
• "{EPA} is not an example for how we should be."
• "{The Church} violated its tax exempt status by directing funds built from member donations to bail out business with ties to the church."
• "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.'"
• "'You could solve big problems with $100 billion,' Nielsen told 60 Minutes."
• "'{C}haritable organizations can't bail out for-profit businesses and maintain their charitable status.'"
• "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."

I can't help but wonder if Nielsen, recognizing that his complaint to the IRS is DOA, is trying to regain some relevance by attaching supposed tax law issues (arising from Beneficial Life and City Creek) to supposed securities law issues relating to EPA's compliance with SEC reporting requirements.  The former seems to be going nowhere, so Nielsen is now trying to hitch his wagon to the latter (months after the SEC settled with the Church).

There seem to be three "angles" here:

• Angle 1: The Church allegedly violated tax laws (the province of the IRS) by, as Nielsen put it, "directing funds built from member donations to bail out business with ties to the church" (this is the crux of Nielsen's 2019 complaint to the IRS).

• Angle 2: The Church committed civil fraud by bailing out Beneficial Life and investing in City Creek (this is the substance of Huntsman's lawsuit).

• Angle 3: The Church allegedly violate securities laws (the province of the SEC) by failing to properly comply with reporting requirements to the SEC.

Angle 1 and Angle 2 are interconnected, as they both deal with Beneficial Life and City Creek.  AFAICS, there is no nexus between Nielsen's 2019 complaint to the IRS and and EPA's compliance fine (Angle 3).

Angle 1 seems more or less dead in the water.  The IRS has, AFAICS, taken no action on Nielsen's complaint despite the passage of 3.5 years.  And every expert who has spoken publicly about City Creek and Beneficial Life has concluded that the chances of the IRS taking any action against the Church are slim to none.  So Nielsen's 2019 complaint seems to be going nowhere fast.

Angle 2 is not faring much better.  Huntsman's lawsuit was dismissed via summary judgment.  Nielsen tried to help it along by submitting a supporting affidavit, but the federal judge found that it did nothing to shore up Huntsman's claims.

Angle 3 was resolved months ago, with the Church paying a small fine for its and EPA's purported failure to fully comply with SEC reporting requirements.  That's fine by me.  If the Church messes up, it ought to take its legal lumps like anyone else.

My point is this: I don't think that Angle 3 has anything to do with Angle 1 or Angle 2, with David Nielsen and his 2019 complaint to the IRS.  The SEC had no qualms with the substantive points raised by Nielsen (that is, the Church spending $ on Beneficial Life and City Creek).  Instead, the SEC found fault with how the Church complied with reporting requirements.  As a result, the Church paid a (relatively) small fine (as to compliance with SEC reporting requirements), altered how EPA handles its reporting to the SEC, and the matter was resolved.  Months ago. 

And yet here Nielsen is, continuing to bang away about Beneficial Life and City Creek (Angle 1 and Angle 2), this time by attempting to tie it to the SEC issue (Angle 3).  From above: 

Quote

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. 

And here:

Quote

David Nielsen says he hit his breaking point in 2018 after a website called "Mormonleaks" linked church members to companies that existed only on paper. Those shell companies held billions of dollars in stocks and bonds.

What nobody knew outside church leadership was those assets were actually controlled by Ensign Peak. Nielsen says the firm called an emergency meeting.

Sharyn Alfonsi: What was the explanation?

David Nielsen: "These entities were to hide the assets from the members." The chief investment officer said that if we were to change and start reporting these securities in our own name, it would bring undue attention to the firm. And that that attention would be potentially damaging. And after the meeting I went and confronted him. "What do you mean potentially damaging?" And he said "Dave, we are gonna lose our tax-exempt status." I knew in that moment that I was in the wrong place.

I question this.  Back in 2019, his narrative was that "his employment with the organization had become 'unworkable' because his wife and children had left the church and wanted him to follow."

Now, the supposed "breaking point" that told him he "was in the wrong place" was the MormonLeaks stuff.  And now, in 2023, five years later (and conveniently months after the SEC's fine), Nielsen is publishing - apparently for the first time - hearsay statements from a bigwig at EPA about how its tax status would be imperiled.

Wow.  Quite the bombshell revelation, that. 

Funny how he did not include it in his complaint to the IRS. 

Funny how it didn't make the news in 2019 regarding his complaint to the IRS.

Funny how he didn't mention anything about SEC compliance in his August 2021 affidavit in support of James Huntsman.

Funny how he didn't report these (hearsay) statements until after the SEC fine became public knowledge. 

Funny how these newly-recollected (hearsay) statements create a connection, albeit a fairly tenuous one, between his IRS complaint and the SEC compliance issue.

Funny how in 2019 he said he quit because his wife and children had left the Church, but in 2023, the "breaking point" was the SEC issue.

I am certainly open to correction about this.  I don't recall a single news item back in 2019 in which Nielsen raised any issue about SEC compliance concerns, and yet now in 2023 he is calling this his "breaking point."

1 hour ago, Analytics said:

He isn't merely complaining that the Church "wasn't handling its money in the way he thinks it should."

Well, yes, he is.  His entire narrative against the Church was, until last night, about how it spends its money.

• "David Nielsen ... claimed the misuse of billions of dollars in tithes — $100 billion to be exact."
• "{EPA} is not an example for how we should be."
• "{The Church} violated its tax exempt status by directing funds built from member donations to bail out business with ties to the church."
• "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.'"
• "'You could solve big problems with $100 billion,' Nielsen told 60 Minutes."
• "'{C}haritable organizations can't bail out for-profit businesses and maintain their charitable status.'"
• "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."

This sure sounds like he's faulting the Church for handling its money in the ways he things it should.

1 hour ago, Analytics said:

"Hedge fund" is a descriptive term that aptly describes Ensign Peak Advisors.

It does not.

1 hour ago, Analytics said:

A group of one is still a group.

I invite you to reconsider this.  A "group" is, by definition, more than "one."

1 hour ago, Analytics said:

Hedge funds are typically selective with whom they allow to participate. Ensign Peaks being superlatively selective doesn't mean it isn't effectively a hedge fund. 

That is not accurate.  EPA is not "selective" at all.  It is an integrated auxiliary of the Church.  It takes its marching orders from the Church.  

1 hour ago, Analytics said:

Two quick points. First, because the IRS is extremely understaffed and because this is such a hot-button political issue, it's unlikely the IRS will investigate this.

Sheer speculation on your part.

1 hour ago, Analytics said:

Their decision not to investigate doesn't mean the accusations don't merit an investigation. 

And the complaint, in and of itself, doesn't create that merit either.

1 hour ago, Analytics said:

Regarding the potential windfall, that is pure cynicism on your part.

Oh, malarky.  Here is what I said:

Quote

This is interesting.  In a sense, I sort of feel sorry for Nielsen.  He is far from the first person to fault the Church for not doing what he thinks it ought to be doing.  I can appreciate that.  But his "whistleblowing" is about accusing the Church of legal wrongdoing, and that does not seem to be sticking.  His whistleblowing is also about a potential windfall to him, and that doesn't seem to be working, either.

I haven't said he is solely in it for the money, but it's absurd to say that money is not a part of his purposes.  That's not cynicism, that's just reality.

1 hour ago, Analytics said:

If Nielsen was motivated by greed, he never would have taken a massive payout to work for EPA in the first place.

I didn't say he was "motivated by greed."

1 hour ago, Analytics said:

Quote

Nielsen is trying to foist a literally unbelievable "saving money for the Second Coming" motive onto the Church.  It's kind of weird that such an absurdity needs to be rebutted, but I'm glad Bishop Waddell does so here.

Don't gaslight us here. Nielsen didn't make this up. This is what Roger Clarke admits to having said, and later claimed that Nielsen misunderstood him.

Meh.  Even Nielsen has (finally) admitted that "it's a bit tongue in cheek."  And as you note, Clark said that Nielsen "misunderstood him."

1 hour ago, Analytics said:

The technical answer to this question is zero policyholders would have been left with worthless paper. If the Church wouldn't have bailed out Beneficial Life, its assets and liabilities would have gone into receivership by the Utah Insurance Department, and if needed the policyholders would have been bailed out by the Utah Life & Health Insurance Guarantee Association and other state Guarantee Associations.

Oh, well, that's good to know.  And the State would have "bailed out" the policyholders by using moneys originating from the forced taxation of the residents of the State of Utah.

The Church, rather than dumping this burden on taxpayers, kept the burden for itself.  And this, in your view, is a bad thing?

1 hour ago, Analytics said:

Since the money was mostly paid back, the updated answer to the charitable activities that EPA has engaged on are the following two things:

1- Building a mall project

2- Bailing out an insurance company floating an insurance company some capital in a liquidity crisis

The Church did the right thing to bail out Beneficial Life.

I agree.  So Nielsen asking the IRS to strip the Church of its tax-exempt status for doing "the right thing" seems a bit . . . odd.

1 hour ago, Analytics said:

Of course. But the details of that don't contradict Nielsen's claims that EPA is not a public charity but rather is a private foundation, and ought to be taxed as such.

Nielsen is trading on such technicalities.  He's going for righteous indignation/outrage against the Church (and, I suspect, its leaders).

Thanks,

-Smac

[Benjamin McGuire]

Without considering any of the other issues, the really cynical part of me is thinking that Nielsen is really hoping for his 10-30% finder's fee from the IRS ...

[CA Steve]

6 minutes ago, Benjamin McGuire said:

Without considering any of the other issues, the really cynical part of me is thinking that Nielsen is really hoping for his 10-30% finder's fee from the IRS ...

Why does it have to be a cynical assessment?  The likelihood here is he is motivated by a variety of reasons. He could very well believe he is exposing wrong doing and hope to profit by doing so. 

[JustAnAustralian]

His "change the world" comment has got me wondering what he though he was actually going to be doing at EPA?

• Did he start working for the church's investment arm thinking he was going to be regularly writing large cheques to other charities?
• Did he assume that the back end of the church was going to be the same as the local level and that he'd essentially be a ward financial clerk on a bigger scale?

How did he get through the job description, interview, and contract stages of employment at EPA without knowing what he was going to be doing?