June 4, 2023

A former senior portfolio manager who worked at the investment arm of the Church of Jesus Christ of Latter-day Saints alleges the firm masqueraded as a charity and violated its tax exempt status by directing funds built from member donations to bail out business with ties to the church.

David Nielsen filed a whistleblower complaint with the IRS in 2019. Nielsen says that during his nine years working at Ensign Peak Advisors, the value of the firm’s investments ballooned past $100 billion. In his first public comments, Nielsen told 60 Minutes the firm used false records and statements to appear as a charity, while stockpiling money and misleading the church members.

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

Each year, the Church of Jesus Christ of Latter-day Saints collects an estimated $7 billion in contributions from its 17 million members. The church expects members to participate in tithing by contributing about 10% of their income. Tithing is used to pay the church’s bills and fund the church’s programs. Whatever is left over, about $1 billion a year, is put into a reserve fund at Ensign Peak and invested. 

As a registered nonprofit, those investments grow tax free, Nielsen said. Since it was created in 1997, he says the fund has swelled beyond $100 billion.

“You could solve big problems with $100 billion,” Nielsen told 60 Minutes’ Sharyn Alfonsi. 

David Nielsen and Sharyn Alfonsi

60 Minutes

Nielsen said he left Wall Street in 2009 to work at Ensign Peak because he wanted to work for what he thought was a charity. He recalled thinking he could use his skills to do good. 

“And the funds were never used for that,” Nielsen said. “It was really a clandestine hedge fund.”

In 2013, one of Nielsen’s bosses shared a document at a meeting that showed $1.4 billion from Ensign Peak went to a mall being built on land owned by the church, the whistleblower said. Another $600 million was used to help prop up a for-profit, church-owned insurance company called Beneficial Life. 

“Look, I’m not an expert on charities, but I’d been around the block enough to know that charitable organizations can’t bail out for-profit businesses and maintain their charitable status,” Nielsen said. 

Christopher Waddell, one of three church bishops who oversee Ensign Peak, said David Nielsen’s allegations are “flat-out wrong.”

“The church actually owned Beneficial Life and fortunately the church had the resources to bail out Beneficial Life during the financial crisis, 2008, 2009,” he said. 

Waddell said the money given to the mall project was an investment, on which the church was receiving returns. He declined to disclose details of the investments. Unlike other nonprofits, religious organizations do not have to fully disclose all financial information to the IRS. He declined to share the value of Ensign Peak’s assets with 60 Minutes. 

“That’s something I can’t share with you right now,” he said. “I know there’ve been reports on approximates and that kind of thing, and that’s as far as we can go right now.”

The bishop said Nielsen didn’t have a full picture of church finances. 

Bishop Christopher Waddell with Sharyn Alfonsi

60 Minutes

David Nielsen told us his breaking point came in 2018, when a website called “Mormonleaks” linked church members to companies that only existed on paper, Nielsen said. Those shell companies held billions of dollars in stocks and bonds, and were actually controlled by Ensign Peak.

Nielsen said the investment firm called an emergency meeting at which the chief investment officer said that if Ensign Peak were to start reporting the securities in the firm’s own name, it could cause problems..

“I knew in that moment that I was in the wrong place,” Nielsen said. 

Nielsen resigned in 2019 and filed a whistleblower complaint with the IRS alleging that Ensign Peak violated its tax-exempt status by moving money to for-profit businesses. It wasn’t until 2021 that Nielsen heard from investigators, but they weren’t from the IRS, they were from the U.S. Securities and Exchange Commission. The SEC launched its own Ensign Peak probe after the “Mormonleaks” report linked the church to the shell companies. 

In February, the SEC fined the Mormon church and Ensign Peak a total of $5 million for using shell companies to obscure the size of its investment portfolio. SEC investigators found the church “went to great lengths” to hide $32 billion in securities over nearly 20 years. It created 13 shell companies that were “assigned a local phone number that would go directly to voicemail” in case regulators checked in. 

Waddell told 60 Minutes it was the church’s lawyers who advised the church and Ensign Peak to create the shell companies. He said it wasn’t about secrecy, but rather confidentiality.

“It’s confidential in order to maintain the focus on what our purpose is and what the mission of the church is, rather than the church has X amount of money,” Waddell said.

The status of the IRS investigation into the Mormon church and Ensign Peak isn’t clear. The IRS does not comment on whistleblower complaints, which can take an average of 11 years to be resolved. Nielsen felt it was time for him to speak out.

“We gave the IRS and the SEC all the professional courtesy,” Nielsen said. “This is just too important to fall through the cracks.”

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