SALT LAKE CITY (AP) — The Church of Jesus Christ of Latter-day Saints and its investment arm have been fined $5 million for using shell companies to obscure the size of the portfolio under church control, the U.S. Securities and Exchange Commission announced Tuesday.
“We allege that the LDS Church’s investment manager, with the Church’s knowledge, went to great lengths to avoid disclosing the Church’s investments, depriving the Commission and the investing public of accurate market information,” Gurbir S. Grewal, the agency’s enforcement director, said in a statement.
The faith, widely known as the Mormon church, maintains billions of dollars of investments in stocks, bonds, real estate and agriculture. Much of its portfolio is controlled by Ensign Peak Advisers, a nonprofit investment manager overseen by ecclesiastical leaders known as its presiding bishopric.
The church has agreed to pay $1 million and Ensign Peak will pay $4 million in penalties based on the violation.
Federal investigators said for 22 years, the firm hadn’t filed required paperwork to disclose the value of some assets in violation of the Securities Exchange Act and agency rules.
Instead, they said, with the church’s knowledge, Ensign Peak filed the forms through 13 shell companies they created, even as they maintained decision-making power. They also had “business managers,” most employed by the church, sign the required shell company filings.
“The Church was concerned that disclosure of its portfolio, which by 2018 grew to approximately $32 billion, would lead to negative consequences,” the agency said in a statement announcing the charges.
Since a whistleblower alleged in 2019 the church had stockpiled nearly $100 billion in funds, rather than directing it toward charitable causes, Ensign Peak has been a source of intrigue and mystery for the nearly 17-million member Utah-based faith, which encourages members worldwide to give 10% of their income in a what is known as “tithing.”
Increasingly, the church and its investment arm have faced scrutiny over the fact that tax law largely exempts religious groups from paying U.S. taxes. Ensign Peak is registered as a supporting organization and integrated auxiliary of the church.
In a statement, church officials said over the time period investigated, none of their holdings had gone unreported and all had been disclosed through the separate companies. They said they had “relied upon legal counsel regarding how to comply with its reporting obligations while attempting to maintain the privacy of the portfolio” and noted that Ensign Peak had changed its reporting approach after learning of the SEC’s concerns in 2019.
“We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed,” they said.