Feds fine Mormon church for illicitly hiding $32 billion investment fund behind shell companies
The Church of Jesus Christ of Latter-day Saints and a nonprofit entity that it controlled have been fined $5 million by the Securities and Exchange Commission over accusations that the religious institution failed to properly disclose its investment holdings. In an order released Tuesday, the SEC alleged that the church illicitly hid its investments and their management behind multiple shell companies from 1997 to 2019. In doing so, it failed to disclose the size of the church’s equity portfolio to the SEC and the public.
The church was concerned that disclosure of the assets in the name of the nonprofit entity, called Ensign Peak Advisors, which manages the church's investments, would lead to negative consequences in light of the size of the church’s portfolio, the SEC said. The allegations of the illicit shell company structure first emerged in 2018, when a group formerly called MormonLeaks — now known as the Truth and Transparency Foundation — claimed that year the extent of the church's investments had reached $32 billion. The following year, a whistleblower filed a complaint to the Internal Revenue Service, according to a 2020 Wall Street Journal report; that year, the newspaper said the church's holdings had grown to $100 billion.
“For more than half a century, the Mormon Church quietly built one of the world’s largest investment funds,” the Journal said. “Almost no one outside the church knew about it.” The SEC accused the church Tuesday of going to "great lengths" to avoid disclosing its investments and, in doing so, "depriving the commission and the investing public of accurate market information.”
After the SEC expressed concern about Ensign Peak’s reporting approach in June 2019, the church said, Ensign Peak "adjusted its approach and began filing a single aggregated report. This settlement relates to how the forms were filed previously," the church said. "Ensign Peak and the Church have cooperated with the government over a period of time as we sought resolution. We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed."
A billion here, a billion there . . . pretty soon you're talking real money!
