The Church, the Investment Advisor, and the SEC

By now, I assume you’ve heard that the church and Ensign Peak Advisors have settled an SEC investigation, with EPA agreeing to pay a $4 million fine and the church agreeing to pay a $1 million fine. (If you haven’t, you can see some excellent reportage on the issue here, here, and here, among other places.)

So what should practicing members make of this? I think it’s tough, and I’ll try to address that at the end of the post. But first, what exactly happened?

On Not Filing Form 13F

To understand what’s going on here, we need to start with Rule 13f. Under Rule 13f, investment managers must file a quarterly report with the SEC where (a) they “exercise investment discretion” over (b) accounts containing at least $100 million of (c) “13(f) securities.” (13(f) securities are basically stock traded on a securities exchange.)

Between 1997 (when it was formed) and 2019, Ensign Peak Advisors did not file a Form 13F.

But it’s not just that EPA didn’t file a 13F for 22 straight years. It’s that EPA, at church leaders’ behest, structured their investment to avoid the rules.

Let’s Avoid the Rules!

For most of the rest of this, I’m going to draw from the SEC’s Order. According to the SEC, the church formed Ensign Peak Advisors in 1997 and seeded it with about $7 billion, a significant portion of which were the type of publicly-traded securities that need to be reported. By the following year, EPA was aware that it needed to file a 13F. And it told the First Presidency and the Presiding Bishopric[fn] that it needed to file the disclosure. The First Presidency and/or the Presiding Bishopric worried that if it got out that the church had $7 billion in investments, it would lead to negative consequences.

How would it get out? Apparently people knew that EPA was affiliated with the church. So in 2001, EPA recommended forming a trust to own an LLC. And the LLC, which was formed in California and wasn’t obviously connected to the church, would file the 13F. Four years later, the church realized that the public might put two and two together, because the guy signing the LLC’s 13F was a church employee, listed in some kind of church directory. So in 2005, the First Presidency and the Presiding Bishopric approved a new LLC, one which would be harder for Wall Street or the media to connect to the church.

As the portfolio got bigger and bigger, the church worried that its filings would become too obvious, so the First Presidency and the Presiding Bishopric approve a plan to further splinter the reporting, ultimately approving 13 different LLCs.

And here’s the thing: if EPA had actually contributed assets to these LLCs and allowed the LLCs to make investment decisions on their own, it looks to me like there would have been no SEC investigation or fine. The problem? The LLCs didn’t actually control the investments. They and EPA signed Investment Management Agreements which formally allocated investment control to the LLCs, but, in spite of that, the SEC says, EPA exercised control over the LLCs. It looks like whenever EPA acquired new securities, it would assign those securities to one of the LLCs by the end of the relevant quarter. (It’s also worth noting that each LLC has a “business manager” whose sole role was to sign the Form 13F. And sometimes EPA submitted the 13Fs with an electronic signature before the business manager actually physically signed it.)

What to Make of This?

I’ve spent a lot of time explaining why the Sturm und Drang over the EPA’s taxes is overblown. And I stand by that. With what has been brought to light by the whistleblower and by other investigators, EPA and the church are perfectly compliant with federal tax law.

But not with securities law. It’s telling that in their release, the church stated that it “regret[s] mistakes made,” a statement that, frankly, as passive as it is, is as close to an expression of wrongdoing as I’ve heard the church make.

But here’s the thing: the church didn’t make a mistake. It’s not that it was unaware that EPA had a filing requirement—EPA informed the top church hierarchs almost immediately that it needed to file 13Fs.

But rather than comply with the law, top church leaders decided to obfuscate, to stretch the law to (or, imho, beyond) the breaking point. It’s not that mistakes were made—it’s that the church took deliberate action to do wrong.

And how should we, as active members, look at this deliberate action to do wrong? I don’t think there’s any way to justify it, and I don’t think members should be asked to justify it. After all, we believe in being honest. To receive a temple recommend, we have to affirm that we’re honest in our dealings. Seriously, honesty is such a lonely word.

And, in spite of our teachings and belief, the top church leaders chose dishonesty. They chose not only to bend the law, but to break it.

And it’s worth noting that, since 2019, Ensign Peak Advisors has filed its Forms 13F. The church and EPA acknowledged that they had acted wrongly. They fixed the problem and paid the necessary fine.

Which leads to the last line of the church’s statement: “We affirm our commitment to comply with the law, regret mistakes made, and now consider this matter closed” (emphasis added).

So here’s the thing: the church may consider the matter closed. But it’s not. This represents a real betrayal to the millions of church members who have worked hard to live up to their standards, to be honest even where it’s hard, to obey the law even where it’s inconvenient. It represents a deeply disappointing disclosure to the millions of Saints who have looked to the church as a model for how to act and how to live.

And saying “this matter [is] closed” doesn’t address that betrayal, that disappointment, that hypocrisy. To move forward, the church needs to address its error. Not to the SEC—it’s already done that—but to its membership. It needs to explain what went wrong, why it went wrong, how it will ensure it doesn’t go wrong again. Members have believed that the church represents a model for their lives for a long time. And, even in the wake of this news, the church can do that: it can model how to repent and come back from severe errors.

But simply paying a fine, then ignoring the harm, is not that model. Church members deserve better. The institutional church deserves better.

[fn] If you’re following along in the SEC Order, you’ll see that all the things I attribute to the First Presidency and the Presiding Bishopric were done by “senior leadership of the Church.” On page 2 of the Order, the SEC writes, “As referenced in this
Order, ‘senior leadership of the Church’ consists of the Church’s First Presidency and Presiding Bishopric.”

Photo by AbsolutVision on Unsplash


  1. I remember reading in Henry B. Eyring’s Biography that when he was Presiding Bishop that it was discussed how to move funds without causing market swings. They believed that they owned sufficient assets that they were market movers. I don’t know if that’s true or not. But it left me with the impression that they didn’t want to be seen as a big market player. Would these 13 LLC’s have been small enough to not be considered a big market player that could move markets?

  2. $30-40 billion in publicly traded securities absolutely could be market-moving (depending on the mix), but that’s a poor excuse for not filing accurate 13Fs, for at least two reasons. One is, the whole point is for transparency of potential market movers. That’s why it only applies to investment advisors with at least $100 million under management.

    And second, an advisor doesn’t have to file until 45 days after the close of the quarter. By that time, the information is at least a little stale—presumably they’ve changed their portfolio by the time they disclose.

  3. The fact that the church played a shell game to hide ownership of it’s portfolio is disappointing, but not surprising. And I don’t mean that in too much of a negative way. The right to privacy seems to have some distinct American individualist flair that extends to companies in many ways that other nations don’t follow. A church could be more likely viewed as an individual when it comes to protective privacy rights rather than a publicly traded company in that view. I can see the council meetings saying it’s none of anyone’s business what kind of assets the church has. That can not only affect willingness to pay tithing, but willingness to serve, right down to various communities, businesses or real estate transactions looking at the church with dollar signs their eyes. Yes, everyone knew the church had money, but when you find out your neighbor has a few billion more than expected it’s not surprising to have some resentment or demands come up. Surely that at a minimum puts the church on the defensive having to explain itself rather than focus on its mission.

    Could there be a first amendment case to be made? If the church views this information as damaging, and wanted it witheld, wouldn’t government requirements to release the info be interference in free exercise of religion? Not that the church would make that argument as they would as this whole ordeal from the shell company to later agreeing to disclose seems to be done with wanting to avoid too much press.

    A big first amendment case that could go all the way to the supreme court would go counter to the church not wanting to draw attention to its assets in the first place.

    It’s also interesting to note the policy appears to have been signed off under Pres. Hinckley and reversed under Pres. Nelson.

  4. Unfortunately the Church has a history of playing fast and loose with the truth. Wink, wink, they get away with it.

  5. Okay, it’s irksome that I got lessons where “honesty” meant “not using a paperclip from work on something personal” and “spending hours to track down a one-cent discrepancy on a ledger.”

    Another thing that strikes me here: I’ve always mentioned that, in contrast to some Evangelicals who seem to take pleasure in flouting laws to preach where it’s forbidden, the LDS Church tries to go in the front door. But with stuff like this and the structuring of Australian and Canadian tithing revenues to avoid taxes, it seems there’s long been a side door for cash.

  6. Do the 13 business managers of the LLCs face any legal liabilities for their participation in what appears to be a fraudulent scheme to hide money?

  7. sute, thanks for your comment. I don’t think, though, that there’s any religious liberty argument to be had here, and that’s for two reasons. First, being religious isn’t a get-out-of-complying-with-the-law-free card. Even if the church had a religious underpinning to its desire for financial privacy, that would have to be weighed against the government’s interest in encouraging the disclosure. And I don’t think the church wins.

    But more tellingly, the church is not shy about making religious liberty arguments, or about litigating. But it seems to not have believed that there was a religious liberty argument here. And I think that’s right. After all, churches aren’t exempt from filing 990s because of some constitutional right—they’re exempt because, in 1969, they lobbied Congress. And when they lobbied, churches—including the Mormon church and the Catholic Bishops—focused on practicalities, not Constitution.

    And TK, I think this is substantively different from Australia and Canada. In those cases, the church not only complied with the letter of the law, but they did the things that the laws intended (spending money on humanitarian aid and spending money on schools with Canadian students). The legislatures may not have anticipated the way the church did it, but the church acted squarely within the law; if Canada or Australia objected, they could change the laws.

  8. Scott, I doubt they do. Whatever legal exposure they may have had (and frankly, I don’t know whether or not they would have had any), I suspect this settlemet agreement covers it.

  9. Sam, I’m needing help to understand a basic premise here. If any securities investment goes beyond $100 million and would require a Form 13F filing with the SEC, then how is any of this LLC (shell company) method the church was using could even be sustainable? When I take EPA’s current $44 billion and divide it by the $100 million maximum (to avoid filing), I’m getting 440 necessary LLC’s to stay within the law. I’m just wondering how this would have even been scalable in the first place? What am I missing or misunderstanding?

  10. Richard, fair question. The LLCs were filing 13Fs on whatever share of the portfolio was allocated to them. (The church just wanted to make sure the filings couldn’t be traced back to the church.) And honestly, that would have been legally fine, except that EPA kept management control at the EPA level. So the LLCs weren’t the right parties to be filing–the forms were supposed to be filed by the entity with actual control over the portfolio.

  11. Mike Sanders says:

    Sam, you said that they did “wrong”. But in what sense are you using the word? Was there a moral failing here?

    The issue for SEC was pretty narrow, as you pointed out. It was attempting to break the fund down into smaller funds so as to attract less attention (which was perfectly legal), the only issue was maintaining investment authority over the aggregate. This seems like a pretty arcane corner of securities law. There isn’t even any allegations that doing this gave the fund an unfair advantage in practice.

    (An analogous situation where a person did obtain an advantage by going through several smaller companies would be Walt Disney buying land for DisneyWorld through several shell companies. Although, in that example, I’m not sure that there is even any laws against doing that today.)

    Finally, what say you to the idea that the meaning of laws isn’t fully known until they are tested? Was EPA’s reading of the statutes completely unreasonable?

  12. “…is as close to an expression of wrongdoing as I’ve heard the church make.”

    Sam, while you may right, that’s as close to being an apology as we are to Alpha Centauri.

  13. Given that so much of the church’s institutional rhetoric in lessons and general conference encourages black-and-white thinking, this legalistic approach to parsing the law — both in its bright line meaning and its intent — is wearisome.

    Organizations that capture large amounts of the world’s resources, whether they be financial or physical, eventually pass a point where they (the organizations) become systemically important (to borrow a phrase from the 2008 financial crisis). In concentrating so much wealth into so few hands, systemically important entities become like nation states, accountable to no one. And like billionaires who can’t possibly spend all their money, their assets circulate infrequently, leaving on the sideline resources that could be put to more intensive use by the people actually here on earth (as opposed to god in his heavens who asks “what is property to the Lord?”).

    We believe we’re sent to earth to learn to choose. That’s all well and good when you have resources, but nigh impossible when you don’t. Put concretely: we shouldn’t rely on the whims and largesse of billionaires or wealthy churches to funnel money into ______(insert pressing public need)_____ when the resources actually exist but remain outside the public’s control. Utah waits with bated breath to hear what the church with its extensive senior water rights will do to address the dying Great Salt Lake. Really? Seems like this environmental tragedy in the making illustrates how systemically important entities rob the people of their ability to act in concert to address urgent needs.

    In the years leading up to the American Revolution, colonies (e.g., New York) acted to disestablish churches. Why? Because they locked up too much wealth. Some of the shenanigans in Kirtland — including, in part, the church’s legal organization or lack thereof and the Kirtland Anti-bank Safety Society — reflected attempts to get around restrictions on church asset ownership. This later played out in Nauvoo, the ecclesiastical office of Trustee-in-Trust and the mess separating church from personal properties following Joseph’s death.

    The repetitional damage from this and other recent public disclosures add weight to the question: is all this secrecy worth it?

  14. Sam, you state: “But rather than comply with the law, top church leaders decided to obfuscate, to stretch the law to (or, imho, beyond) the breaking point. It’s not that mistakes were made—it’s that the church took deliberate action to do wrong.” However, you chose not to include the portion of the Church’s statement that it relied on legal advice in making its decision regarding how to comply with SEC reporting requirements. As a lawyer, you know that neither the fact that the SEC alleged that the Church’s actions were non-compliant, nor the Church’s offer to settle the allegation by paying a fine is equal to a legal determination that the actions did, in fact, violate applicable laws. When evaluating their legal obligations, organizations frequently rely on legal advice from their attorneys. If a government agency challenges the organization’s action, it is not at all unusual for the organization to settle with the agency rather than to become involved in expensive and time-consuming administrative or legal proceedings.

  15. Sam, couple of quick questions for people who don’t have your knowledge of regulatory and tax law.
    1. 13Fs only apply to US stocks, right? Meaning the SEC is not concerned about other asset classes (like international equity, real estate, natural resources, hedge funds, PE, etc.)
    2. Are 13Fs just for individual stocks? So if the Church moved 100% of it’s US equity exposure to an S&P500 fund, would they still need to report?
    3. My understanding was that EPA doesn’t pay taxes because it’s a non profit (assumed this was also true for university endowments). Is that largely correct? (Wondering if they worry about capital gains if an investment does really well and they want to sell)


  16. @Richard, if I understand right, the purpose of the LLCs was not to avoid filing Form 13F, and, in fact, a Form 13F was filed for each LLC. The goal was to file the forms under LLC names that couldn’t be traced back to the Church. And they would have gotten away with it too if it wasn’t for those meddling kids who made the connection through the LLCs’ domain name registrations.

  17. MM, good questions. 13Fs apply mostly to publicly-traded stocks (I don’t know enough to know if it’s limited to securities traded on a US exchange or not and don’t have time right now to do that research (or Google search)). So it’s very possible that EPA has assets under management that wouldn’t show up on a 13F. To your second question, I don’t know. I’m sure there’s an answer but it’s outside of my area of expertise.

    As for your third, yes. EPA is a tax-exempt entity so it wouldn’t pay taxes on capital gains.

  18. Despite all this, I’m guessing the church auditor’s report that gets read during General Conference in April will still be the exact same boilerplate that has been read verbatim year after year.

  19. I appreciate the explanation. I’m disappointed in the church leadership’s action. I honestly believe that within church leadership there’s a bunch of conservative nutcakes that kind of behave like mainstream conservative nutters. It is to say the least, disappointing.
    I think the church needs to apologize. I think there needs to be some disclosures on what actions will be taken. And obviously, some discussion about the intentions for the funds. I personally do not have a huge problem with the existence of such a fund, but I think it’s fundamentally better for the membership to have some idea of what the leadership thinks should be done with it. The church is very paranoid of scrutiny because of its history and I understand that, but it needs to ignore that and look at the bigger picture a bit more often than it does. SLC is a fishbowl in that regard at times.

  20. Responding to questions about the church’s moral culpability in this situation.

    SEC rules are complicated and arcane. However, from a moral perspective, it clarifies things a lot if we keep in mind the basic reason for these rules. The government regulates the stock market because the stock market works only when everyone has fair access to information about it. The SEC’s disclosure requirements are there to prevent people from hiding important information.

    Huge investors have the power to move the market by their investment decisions. This is the kind of information that other investors need to know when they make their own investment decisions. When you decide to buy or sell stock, you want to evaluate what is causing that stock’s price to go up or down. Is it because of the way the company is being managed? Or might it be for some other reason—like the decisions of an investor that has tens of billions of dollars’ worth of stock under management?

    Church leaders understood that this is the reason Form 13F is required. They are culpable because they were trying to hide the information that this SEC regulation is designed to make known to other investors. The church’s reason for hiding that information is irrelevant. The fact that lawyers gave bad advice is irrelevant. Moral culpability stems from their willingness to undermine the purpose of the securities laws.

  21. A Turtle Named Mack says:

    This is a win for the Church. The fine is trivial (and most of it is borne by EPA). Whatever benefit they feel was derived by these actions surely surpasses the fine they have to pay. Also, since he changed the practice in 2019, it seems like yet another opportunity for President Nelson to throw previous leaders under the bus. I don’t agree with either of those, personally, but the view from SLC may be less worrisome.

    And I don’t think they’re too worried about the public fallout from this, either. They consider “this matter closed”. The furor will die down, and they certainly won’t bring it up again. It will surface from time to time in our remote corner of the internet, but that will be it. Although, if you were a Church leader preparing a talk on honesty to give at some conference around 5 weeks from now, you may be told to hold off for a few months.

  22. Mike Roberts says:

    As a lawyer, I do not accept the “blame the lawyers” excuse; legal advice is usually provided to guide a client’s policy objectives (in this case, secrecy), and I expect would have been given with a full presentation of the risks and possible ramifications of this conduct. It makes me angry that the General Authorities who condoned these actions have brought the name of the Church that I love into disrepute. In other organizations, accountability for similar conduct is often demonstrated by the resignation of the (surviving) responsible parties, but given that these decisions were approved at the highest levels, I have no illusions that that will occur. I don’t think that our leaders understand how much these poor decisions hurt members who are already struggling to stay in the Church.

  23. Mike, unsurprisingly, I mostly agree. I said it on Twitter, but I can envision the legal advice coming in at least a couple ways. One is what you lay out: the attorneys are told the client’s request and say, “You could created these LLCs, but there’s only a 25% chance that a court would find that complied with the law.” That’s good lawyering, and the attorney wouldn’t bear moral (or, for that matter, legal) culpability.

    Otoh, maybe the church said, “We want financial privacy,” and the attorney said, “I’ve got you!” and designed this LLC plan. That doesn’t relieve the church of culpability, but it does implicate bad lawyering.

    And we just don’t know which model the attorneys took. But either way, church leaders knew what they wanted, and that was to avoid mandated disclosure.

  24. Mike Sanders says:


    “church leaders knew what they wanted, and that was to avoid mandated disclosure.”

    And apparently all they would have had to do differently in order to gain this desire without falling out of compliance would have been to devolve investment authority to the LLCs, right?

  25. Was anyone harmed here, Sam?

  26. Mike, I think so. It still may have looked bad, but as far as I can see, it would have complied with the letter, and probably the spirit, of the law.

    MoPo, does it matter? I mean yes, I think people were hurt, but I also don’t see how that affects the fact that EPA, under church direction, violated the law.

  27. Sam, setting aside the question of whether there was a violation of reporting requirements, who was harmed by EPA’s actions and how?

  28. MoPo out here missing every Sunday school lesson on integrity. Was anyone harmed ? Yes. They harmed themselves, and now they harmed the good name and reputation of the Church in the eyes of its members.

  29. This might be a little off topic, but I was thinking yesterday about what the church should/could do now. I have every faith that the church is complying with the standard that it set for itself by putting aside %10 of the tithing it receives as kind of a tithing on tithing thing. This likely started as a rainy day fund. Back when it was set up, they probably couldn’t imagine the church being in the financial position that it is now. The original rule makers probably never clarified what to do should no rainy day actually occur. So I think it’s time that current church leadership set an expiry on rainy day funds. Declare that no rainy day should exceed 70 years. And with that, take the assets set aside 70 years ago and donate those to some other worthy cause. Then should a rainy day actually happen, stop letting rainy day funds expire.
    Or maybe give it a religious twist and make it something more like Jubilee and expire the funds at 50 years instead of 70 years.
    Of course that could create a problem where people become dependent upon expired funds which then go away when the church utilizes the funds for rainy day expenditures. Probably still worth it though.

  30. For all of you who are engaging in the familiar garment rending “The Church lied! They are hypocrites! They lack integrity!” overly emotional response to this nothing burger, I suggest you read this Q&A by Public Square where after consulting with securities lawyers they determined that this thing often happens and is the equivalent of you or me getting a traffic ticket.

    As one who has gotten more than one ticket in my life, is that unfortunate? Yes. Did I make a mistake? Yes. Am I now an immoral person who lacks integrity? To ask that question answers it.

    Any excuse to attack the Church, no matter how trivial.

  31. Mike — the idea that this would be a nonissue if the LLCs had managed their own portfolios is one of the things I keep coming back to, too. Are we really so averse to sharing power — even downstream within our own institution? Even when it would be the most ethical (and legal) thing to do? Even when it would involve absolutely no priesthood authority or doctrinal leadership whatsoever? Even when it would be the very, very easiest thing to do? If the church didn’t want everyone to see that they held a lot of money at the top, and went to all the trouble of making it look like the money was not held at the top, couldn’t they have just…not actually held it at the top?

  32. Nate,
    If you insisted on speeding all the time for nineteen years while simultaneously publicly insisting that you were abiding by traffic laws in a large conference every year, I feel like it would be appropriate to question your integrity. Also, although this isn’t relevant to the post, please don’t continue to link to those homophobic ne’er-do-wells who almost never argue in good faith.

  33. Nate, “For all of you who are engaging in the familiar garment rending “The Church lied! They are hypocrites! They lack integrity!” overly emotional response to this nothing burger.” Condescend and use hyperbole much?

  34. I saw a suggestion that President Nelson changed the reporting practice to comply with the law. Unless I have the timeline incorrect, the practice was only changed after a whistleblower told the world how much money the Church had in the fund. The change was not made to comply with basic rules of honesty that I was taught, in my opinion.

  35. Since I have a feeling many of you will not read the counter narrative especially if you think they are “homophobic ne’er-do-wells who almost never argue in good faith” (no evidence provided, even if thats true, how are they wrong on this subject?) I will highlight the most important points of the Public Square link, feel free to engage with these

    Were the “shell companies” the EPA used illegal?

    There’s no allegation that they were. These companies are the subsidiary LLCs that EPA used to reorganize in 2000. Most shell companies are used for legitimate purposes, particularly in the financial sector. They can be used to legitimately maintain the privacy of investors or better organize financial assets. The SEC’s claim is not that EPA’s organizational scheme was fraudulent, but that using that organization, EPA should have reported differently than they did.

    Is getting fined by the SEC a big problem for an investment fund or relatively common?

    Obviously, a fund never wants to be fined. But fines like this are common. About 5% of investment funds are fined by the SEC each year. Experts compare it to a traffic ticket.

    These kinds of investigations are also especially common when multiple entities are involved, such as in the case of the EPA.

    If these kinds of fines are so common, why has there been so much media coverage?

    We can only speculate why individual newsrooms have decided to report on the story, but as media professionals, we see that this story has several elements that would be attractive to journalists that have nothing to do with the severity or unusualness of the matter.

    The Church of Jesus Christ is still a curiosity for many Americans, and as a result, articles that can refer to the Church in their headlines generate more traffic. And because of the Church’s position on moral issues, it can be used as a lightning rod in culture war debates, which can motivate both journalists and their readers. Moreover, EPA is considered a large fund and manages a large sum of money. All these reasons taken together could generate sufficient newsworthiness.

    What changes have Ensign Peak Advisors made to avoid these issues in the future?

    This was a narrow issue. And the narrow issue has been fixed for more than three years now. While it is unfortunate that there was ever a misunderstanding about disclosure requirements based on the advice of counsel, it’s also probably unavoidable that in its more than 25-year history EPA would make some mistake on its disclosure requirements. Once again, its overall record on compliance is impeccable.

    What do this investigation and penalty say about the Church’s priorities and values?

    Not much. The Church invests in its fund to fulfill its mission, which in addition to its religious mission, includes humanitarian aid that totaled nearly a billion dollars last year.

    While it’s appropriate that the Church expressed regrets for mistakes made, these kinds of fines are commonplace even among organizations doing their best to be in compliance because of the extraordinarily complicated nature of the regulations.

    ***Thats just a small portion of the link. I’ve noticed reading the progressive critics of the Church that if even the tiniest innocent mistakes are made by Church leaders (who never claim to be perfect or that the church is perfectly run) that tiny molehill will be stretched and tortured into Mount Everest any way possible.

    Any excuse to attack the Church, no matter how trivial.

  36. Nate, I read the the article you linked to. It doesn’t really change anything in the OP here. Care to actually respond to anything in the OP? Or are you just here to attack ‘progressive’ critics of the Church? Sheesh.

  37. Was the “legal counsel” the Kirton McConkie law firm? How much has the legal counsel been paid by the Church over the years? Do tithe-paying members have a right to know the answers to these and similar questions?

  38. “the equivalent of you or me getting a traffic ticket.”

    Queue talk by Elder Komatsu, demonstrating what integrity looks like, by choosing not to turn left at a red light early in the morning, even when no one would know….because he would know…..and the Lord would know……so there’s that I guess.

    In this instance, the Church chose to turn left at a red light. And now we all know.

  39. Mike Sanders says:

    “In this instance, the Church chose to turn left at a red light. And now we all know.”

    I think that it is closer to turning right at a red light without knowing if that is legal in that state that you are currently in.

  40. Well that’s your opinion Brian that it dosent change anything, but it changes quite a bit for me. Sam, with all due respect to him, alleged that the Church leaders engaged in a “real betrayal” to the members and that they were not living up to the commandment and temple recommend question to be honest in their dealings with their fellow man. After reading both his OP and the Public Square Q&A I feel that is an extremely uncharitable accusation to make, especially over an issue that is quite common among large fund managers who are trying to navigate extremely complex securities law. Again the Q&A mentions how EPA had an impeccable record before this so this seems to me to be overblown. Can we please have a bit more charity to the leaders of the Church?

  41. Nate, great, so you just think that the PS thing is the end all, who cares what this OP says, no need to address it or any of the relevant comments here. Nice. Very convincing.

    I think you and Mike Sanders and everyone else with the traffic light comments are missing is that the Church was deliberately obfuscating their holdings, to keep both the SEC and members in the dark. For nearly two decades.

    Sure it’s like a traffic violation, if by that you mean repeated, conscious violations by someone doing so for nearly two decades in an attempt to deliberately deceive those following them and contributing to them. But hey, traffic violation.

  42. Securities Lawyer says:

    Nate, this particular form and the underlying regulations requiring disclosure can be readily understood with a second year associate level understanding of the ‘34 Act. If there were even a colorable defense here, the church would have made it. No attorney except a criminal attorney (ie, Saul Goodman) is going to recommend to its clients that they set up fake voicemail or require employees to sign only the signature pages of the disclosure documents. Read the Order the church agreed to be filed. This is not a foot fault.

  43. In response to Nate, I did read the post at the link you provided. It reads like church PR and it excuses the church’s SEC violation by repeatedly claiming that church leaders were just listening to their lawyers who it is implied were at fault, that SEC rules are complicated, and that big companies violate those pesky SEC rules all the time, so this is a big nothingburger as you vehemently proclaim.

    I found Sam’s blog post and some of the comments to be much more enlightening and persuasive. Just because you obviously think leaders of the church never make mistakes does not make it so. In this case, blaming it on the lawyers is lame because as noted in a previous comment, lawyers give counsel to further their client’s goals. And claiming that every multibillion dollar company runs afoul of the SEC eventually so it’s no big deal smacks of a lack of integrity as other commenters have noted.

    After reading Sam’s post and the nothing burger you linked to, my conclusion is that the church leaders unwisely chose to privilege financial secrecy over integrity and playing by the rules. That was a mistake, as they themselves have admitted. What that means to each individual member will vary, from a further erosion of trust to a shoulder shrug, to uncritical defense of the institution as you displayed. But I believe it is important for members to know about these instances so they can decide for themselves, and I am grateful to Sam for bringing this to our attention and offering some explanation.

  44. Responses to Nate’s comment write themselves. For example:

    “It isn’t surprising that the the church doesn’t fall in the top 95% of corporations that did NOT get fined.”

    But actually, I put that in scare quotes because I don’t want to attack the church. Or at least not too much. It is true that LOTS of corporations get fined. I think the OP takes a nice measured approach to the topic.

    One place I disagree with Nate’s quotes from the link is what this says about the corporations values. It’s obvious what it says. It says that the organization values its secrecy and central control both enough to draw it into pushing the limits of legal behavior. Enough to make 13 shell companies and have managers illegally sign forms. And they did it obviously because they thought it was worth it.

    And if that is attacking the church to say that, well so be it. I mean, we’re just stating the obvious here, so maybe the church membership is A-okay with a little pushing the legal envelope.

  45. Nate, I don’t see any evidence, other than a bare assertion, that the Q&A was done with securities attorneys; at the very least, it would be helpful to know who the consulted with and how much the editors understood. FWIW, they get a reasonable amount of tax stuff wrong. It’s nitpicky stuff, but it undercuts their explainer imho.

    Sure, 13F enforcement actions happen. Rarely at this scale, though, and no reputable attorney or investment advisor would think that an SEC fine was just the cost of doing business. The attorneys I know try to help their clients comply with the law while accomplishing their business goals.

    And while I’m sure you believe that you’re helping the church, this assertion that the church didn’t do anything wrong—in the face not only of evidence, but of its own admission—does nothing to burnish its reputation, image, or moral authority.

  46. Different Sam says:

    It is hard not to remember what the head of Ensign Peak said may have been the reason the church worked so hard at this anonymity. From the Wall Street Journal article in 2020, quoting Roger Clark, the head of Ensign Peak,
    “Mr. Clarke said he believed church leaders were concerned that public knowledge of the fund’s wealth might discourage tithing. ‘Paying tithing is more of a sense of commitment than it is the church needing the money,’ Mr. Clarke said. ‘So they never wanted to be in a position where people felt like, you know, they shouldn’t make a contribution.’”

  47. it's a series of tubes says:

    Nate – let me share the perspective of a TBM, raised in Utah, tithe-paying, TR-holding RM attorney (me; someone who you might stereotype as one who would defend the institution’s actions under any circumstances) – the whole “advice of counsel” excuse is garbage. Even the church audit department raised concerns.

    Bottom line: I’m not pleased when the church makes changes as a result of information made public by people who oppose the church. It shouldn’t take the efforts of our enemies for us to do the right thing.

  48. “C. Ensign Peak shall, within 10 days of the entry of this Order, pay a civil money penalty in the amount of $4,000,000 to the Securities and Exchange Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.

    D. The Church shall, within 10 days of the entry of this Order, pay a civil money penalty in the amount of $1,000,000 to the Securities and Exchange Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(3). If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.”

    Does it matter that they ordered EPA to pay $4,000,000 and the Church $1,000,000? Is that a distinction without a difference?

  49. Ah, the irony.
    “Let’s hide our money so church members don’t find out how much we have. …. D’oh! Trying to hide our money let members know how much money we have. We certainly didn’t seerer that coming!”

    Whenever someone does something like this, one has to ask, what else are you doing that hasn’t been found out yet?

    This is a major betrayal of trust. One does not regain trust by simply saying “We consider the matter closed.”

  50. “Our friends are either blind to our faults or not faithful enough to tell us of them.”

    —Samuel Adams (the patriot, not the beer).

  51. Thanks, it’s a series of tubes.

    bike_maker, I’m not sure why that was the end result. It was negotiated between the SEC, the church, and EPA. That said, I assume EPA shouldered the larger portion of the fine because it was EPA’s responsibility to file the 13Fs, not the churches. Honestly, until the Order came out, I was skeptical that the investigation had anything to do with the church. But the church actively encouraged and participated in the fracturing behavior, so in retrospect I get why the church got hit with fines, too, though it also makes sense to me that the church’s share would be smaller.

  52. The Church didn’t do anything worse than a shady hedge fund would do. If you are trying to defend the Church based on bad legal advice or difficult to understand disclosure obligations (obligations mom and pop RIAs regularly comply with) you should really ask whether you genuinely care about integrity or not. They didn’t make a mistake. They intended to deceive and did.

  53. I’m a securities lawyer, though haven’t ever dealt with Forms 13F specifically. A few points on this:

    1) As I see it, it’s difficult to know what culpability Church leaders have in this situation. As others have said, and I second, the securities laws are quite complex. If Church leaders desired to maintain privacy while also giving the disclosure that is required under law, they may have thought that they accomplished both goals by setting up the LLCs. As I understand it, those LLCs reported all the holdings that were required to be reported, but did so in a way that didn’t tie them to the Church. It’s not an illegitimate goal to maintain privacy of financial information. It is possible that they intended to comply and thought that they were complying. It’s also possible that they knew they were in a gray area or pushing over the line and yet decided to take the risk. I don’t believe enough information is available publicly to fully evaluate this question.

    2) What most people do not appreciate is that the securities laws and rules are a very complex web of statute, regulation, practice, and enforcement where interpretation in many instances is unclear or highly ambiguous. Even those who intend to comply fully with the securities laws and regulations can find themselves in trouble without meaning to.

    In addition, and I can’t emphasize this enough, the SEC’s enforcement arm is likely to take the most aggressive reading of any particular statute or regulation while others may take a significantly different view. Over the years, the SEC has been defeated in a number of enforcement actions when its interpretations have been challenged in court. The SEC’s interpretations of statutes and regulations are not law.

    However, a party under investigation may choose to settle, even believing that they have the better argument, because the consequences of fighting the SEC can be catastrophic, both in terms of time and money lost, impact to reputation (even if you win), and the fact that litigation can be a huge gamble with devastating penalties if you end up with the wrong judge or jury. I’m not saying that is the case here – I don’t know – but without having more information, I am saying it is plausible.

    I’m a securities lawyer and I think defendants in securities law trials are at an even worse disadvantage in securities law cases than they would be in other cases. The securities statutes and regulations in many cases are vague and difficult even for securities lawyers to parse and fully appreciate and understand, let alone someone who doesn’t have expertise in the subject. A defendant in a securities law matter would have very justifiable concerns that the defendant would not receive a fair trial.

    3) If full public disclosure of the Church’s securities holdings was made (and I understand that such disclosure was made), it is difficult for me to see any “victims” in this situation. Would love to hear Sam or others articulate in more detail who the victims were in this situation rather than some vague “people were harmed” standard. I’d wager that the average investor doesn’t look at Forms 13F. For institutional investors, the large data services would have picked up on the individual 13F filings that the church made and would note that X% of Apple was held by institutional investors and provide a breakdown of who held it. Yes, they wouldn’t have known that the Church held the stock, but is that material to their decision to invest in Apple or some other company? Doubt it.

    4) Yes, of course, it’s really unfortunate to see the Church get dragged through this. I certainly think it’s regrettable and wish they had chosen a different path to comply with the 13F rules. But as some grand lesson on hypocrisy and moral culpability, I’m not really buying it.

  54. For clarity’s sake, the last comment by ‘Brian’ is a different ‘Brian’ than me, Brian, the usual commenter here.

    I’ll just call it a traffic violation. We’ll see if it continues for 19 years.

  55. I think that, for a lot of people, the problem is the disconnect between things said over the pulpit and in other public situations and the specific actions of EPA and the Church leadership with regard to the investment fund. Whether in talks in General Conference about being absolutely honest and upright or the granular transparency required in financial transactions at the local level (tithing, reimbursements) and by BYU faculty with regard to their research/conference travel, this strikes me as a “do as I say, not as I do” moment.

    This is not about attacking the Church. It is about holding the Church leadership accountable and to the same standard it expects from its members.

  56. Securities Lawyer says:

    It’s very disingenuous for people to come on here claiming expertise in securities law whining about securities laws are complex and who really knows what the SEC wants anyway. There is a process to request confidential treatment that the church either refused to follow or was denied.

    Instead, the church required employees to sign only the signature pages of basic disclosure documents that had already filed.

    The church set up fake voicemails and established local offices across the country using employees with generic names to avoid detection. So stop with the oh my gosh this is just too hard. You’re embarrassing yourselves.

  57. Thanks, Securities Lawyer. Bang on. I’m the CCO for my little RIA (yes, above the disclosure threshold) and the arguments that this is esoteric or difficult to understand regulation from the SEC is hilarious and sad.

  58. Scott Porter says:

    Read the piece on publicsquare. As a practicing lawyers specializing in SEC disclosure for over 25 years, their defense is weak and full of unsupported facts. I posted a comment their pointing out two glaring issues, I suspect my comment will not be approved by the moderator.

  59. The actions taken here were not by the Q12/1FP – they were taken by paid staff.

  60. queno, as I point out in my footnote, the SEC Order says that the strategy and every new LLC formed was approved by “senior leadership of the Church,” which it defines at the First Presidency and the Presiding Bishopric. I suspect that’s a significant part of why the church, and not just EPA, faced a financial penalty—while the First Presidency didn’t sign the 13Fs, it was involved in the structuring.

  61. MoPo: in your response as to who was harmed: these legal requirements exist in an attempt to create fairness in equity markets. To the extent that the markets are not fair, we are all harmed. I think it’s reasonable to say that the markets are not fair. Institutional investors rule the markets to a large degree. As Jesus was the champion of the little guy, the church is managing holdings that make it a market mover. Other firms play by the rules. The church has an obligation to do so lawfully. One would think that remembering, you know, that Jesus guy, that the church would prioritize what He prioritized. So who was harmed? Everyone. Everyone who invests. Everyone who invests who is not an institutional investor, in that order. Did we lose money? Yeah, I bet we did. I bet you could actually calculate it.

  62. I think its healthy to have this conversation but I think @Brian says makes a good case for being more cautious before deciding to impugn the character of those involved in the decision making process.

  63. Nate: The church is supposed to represent THE moral highground. It is supposed to act in Jesus’ name. The argument that “About 5% of investment funds are fined by the SEC each year. Experts compare it to a traffic ticket.” doesn’t hold weight here. Are you saying the church shouldn’t be better than the other worldly companies/individuals who are getting fined? The church teaches it is supposed to be a standard bearer! Are you saying that Jesus is ok with His money (we do assume that tithing is His money, right?) being deliberately used such that $5 million of it is spent on a fine? He isn’t upset that that money isn’t being used to help those in need?

    The church professes to obey and comply with all laws, and it has been shown here that it knowingly did not obey the laws. The reason for doing so was, “We don’t want people to know how much money we have, and aren’t doing anything with it”. The church was deliberately obfuscating the truth, while saying they were being transparent!

    People aren’t upset that the church has the money, or that the shell corporations were used. The people are upset with the double-speak and the hypocrisy.

  64. I suppose if one were so inclined, the most charitable take is that the Church obfuscated their wealth out of concern for the souls of Church members whose faith was weak enough that they might not pay tithing, which the leaders consider requisite for eternal salvation. OK, sure.

    But “the matter is now closed,” instructing employees to sign documents but not allowing them to know what they are agreeing to (and two people quitting over it and immediately being replaced by the next no-name drone?), and designing this scheme in the first place all smack of patriarchal control and a belief that one can do no wrong if one holds the reins of the Church, not of the Jesus who preached to “take no thought of the morrow.” We take plenty of thought of the morrow. Maybe an unhealthy amount of focus on controlling the morrow.

    And it’s an unforced error. The Church could have just trusted the membership and the gospel message enough to assume that tithing was still an important enough principle to the majority. I suspect most members would have been proud of the Church’s financial success, along the lines of GOP leaders who’ve said that paying as little as possible in taxes makes them smart. Do they think members are only paying tithing because they think the Church needs it? If so, they are still mentally living in the 1970s, when the Church was not in good financial shape, when local wards had to pay into a building fund and use local donations for things that we haven’t done for decades. Most Church members don’t even remember those days. Perhaps like children raised during the depression, the habits of washing and reusing tin foil die hard.

  65. Ot – If none of the shell companies were created and all the investments were managed under EPA, how would that have made a material difference in the outcomes of the equity markets?

  66. I’m beginning to think that the ‘defenders’ of the actions taken by the Church leaders most likely haven’t actually read the SEC’s Order that Sam linked to in the OP before they commented. Otherwise, they wouldn’t be making such ridiculous defenses of it or say that we can’t know what happened. Plenty of evidence of lazy learners in these comments, ironically, from the side so willing to point fingers at others for doing so. The Church leaders have acknowledged and agreed to the facts stated in the SEC’s order. I mean, go read it.

    Thanks again, Sam, for the post. I’m sure I’m not the only one who was eager for it.

  67. Jeremy S/Ot – not sure how you could, with any reasonable certainty, say there was a material negative impact to market conditions based on the existence of the shell companies, let alone calculate it. Bad behavior doesn’t necessarily translate into measurable changes in public volume or liquidity data. That EPA would have performed market actions differently were it not for the existence of shell companies seems a reasonable assumption but knowing the net effect of that is impossible. If you’re saying that a lack of market transparency was bad in and of itself, then that’s fair enough.

  68. Jeremy S, a couple responses to that.

    One is, if each LLC exercised management control, each would have a fraction of the market-moving potential of an EPA that exercises control over the whole amount.

    Even if that didn’t matter, though, the law has to draw a line somewhere. It’s currently set at management control and $100 million. There’s no reason this represents a Platonic ideal of regulation, but it is an understandable and administrable standard.

  69. You know how many talks I have heard at church that mocked other religions for their system of confession/pay fine or say hail mary/consider the sin closed?? The lack of congruence is shocking and sad.

    Thanks for the explanation, Sam.

  70. Another example of the “Barbara Streisand Effect” hitting us on the back of the head.

    We didn’t want “all” of our history coming out (things history is true but not useful), so we engaged in the practice of “practical obscurity” (it’s not hidden but it’s also not easy to find). The internet comes with “warts and all” revelations of Church history, and folks start losing their religion because they had never heard these historical facts before.

    We didn’t want people knowing how much money we had (for fear members would stop paying tithing), so we conceal it in artificial LLCs. Whistleblower comes, and now the world knows the Church has a “rainy day” fund of $100 billion that it has been concealing for years (I know its less, but this amount is now a social media “fact” of the Church’s wealth).

    This “settlement” will add to a growing list of reasons why people don’t like the Church; why people will not be receptive to missionary activity; why members will question their faith; why members will lose trust in leaders; and why members will feel justified in believing they need their money more than the Church. And the saddest part of all is that all of this harm could and should have been avoided.

  71. As an ancillary matter, do we know how much the Whistleblower will receive from the settlement? I think it ranges from 10% to 33%. Even 10% is a nice payday for Mr. Nielsen (as well as being ironic).

  72. Thanks Ozark and Sam for your reply. I’m trying to understand if there was actually material harm done. I get that regulations were intentionally violated. To use the speeding analogy – I’m trying to get some sense if this was like going 2 miles over the speed limit or 20.

  73. GC is on the horizon.

    Faithful Saints will be listening to what leaders have to say. And, no doubt, some of them will be trying to square it with what’s been in the news, the financial wrong doing that the church as admitted to and perhaps even their own answers when they were asked “Do you strive to be honest in all that you do?”

  74. Dear Friends

    I’m writing to apologize for doing thing that is perfectly legal and but embarrassing by hiring thirteen other people to pretend they did instead of me which actual made my actions illegal. In my defense, my friends said it might be legal and I probably wouldn’t get caught, so yes, we decided to try to hide the fact that we did this big embarrassing thing by having thirteen people pretend that they did thirteen slightly less embarrassing things.

    I pinky promise that I won’t do this again. And now that we have paid the price for the illegal thing, and everyone knows about the embarrassing thing anyway, I hope you’ll know my apology is truly sincere because I consider this matter closed and let’s not ever talk about it again. Please don’t make me talk about it more because that is just awkward and can’t you tell that I sincerely apologized?

  75. The Other Brian says:

    With apologies to the original Brian :-), I’ve come on for a few follow ups on comments here:

    1) One detail that seems lost in this discussion is that the multiple “shell companies” that the SEC highlighted weren’t even created until 2011 if I have read the SEC order correctly. In other words, the Church filed all of its holdings under a single LLC entity until 2011, so until 2011 it wasn’t a question of hiding control through multiple LLCs.

    2) @Brian (the original) asserts that “The Church leaders have acknowledged and agreed to the facts stated in the SEC’s order.” My reading of the order (and the Church’s statement) is that they have done no such thing. The order clearly states: the Church entered into the settlement “without admitting or denying the findings herein, except as to the Commission’s jurisdiction over them and the subject matter of these proceedings, which are admitted”.

    3) I read the SEC order. As I emphasized in my earlier post, the SEC is likely to take an aggressive reading of the law and view the facts in a light that is disfavorable to the defendants. It’s clearly written in a biased way (the SEC is no impartial arbiter), and while I have no inside knowledge with respect to this matter, I would imagine the Church might dispute some of the “factual” findings in the SEC’s order.

  76. The “Brian” who commented at 2:27 pm (as opposed to a different “Brian” commentator on this thread) said: “The Church leaders have acknowledged and agreed to the facts stated in the SEC’s order. I mean, go read it.” To the contrary, the Order makes clear that the Church has consented to the entry of the Order “without admitting or denying the findings herein” (Paragraph II).

  77. The Other Brian, EPA formed the first LLC in 2001 (it’s paragraph 9 in the Order). The second was in 2005. In 2011, it started expanding the number.

    Jeremy S, in securities actions it can be hard to find a harmed victim (beyond the system or everyone). In my BizOrg class, I start insider trading day with the students trying to figure out who is hurt by insider trading. And even though intuitively we know there must be a victim, and that insider trading is bad, in practice it is really hard to find a harmed victim.

  78. The repeated comment that “securities laws are complex,” while certainly true, avoids any description of how THIS PARTICULAR law is in any way highly complex or confusing. It is fairly straightforward to describe and understand. The church and EPA appear to have understood it, but chose not to comply with it and to cover up or obscure the fact that the smaller shell companies were not actually separately controlled.

    Also pretty absurd to compare this with a speeding ticket, which can often be unintentional. I’ve yet to meet anyone that drives a vehicle that hasn’t got a speeding ticket. If 95% of drivers never got a speeding ticket, it might be a good analogy. We only lose credibility when we try to minimize. If we have to find an every day analogy, isn’t this more like telling the restaurant my kid is under 5 to get a free meal when he’s actually 7? And doing it for 20 years?

  79. Other Brian says:

    @sam – I could be wrong, but I read paragraphs 11-13 of the SEC order to mean that the Church formed a second LLC in 2005 and that it switched its reporting entirely to that second LLC until 2011 so as to avoid an association with the first LLC.

  80. Jeremy S – In and of itself, I think failing to properly file a 13F is like a going 5-10 mph over the speed limit, though your ignorance about the speed limit signs doesn’t protect you from culpability. It happens, even with big and established companies. And that’s why when the WSJ released their scoop, I thought this was a bit of a nothingburger because I assumed it was just dumb ignorance. This is more like shady hedge fund behavior about the Church’s/EPA’s obfuscation around compliance and disclosure by establishing they knew the requirements and tried to circumvent them, routinely, for years through dishonest means. Again, to press the analogy, there is no vehicular manslaughter here (no obvious harm to market participants or clear market manipulation). It’s just shady financial behavior. If I saw it from certain shops, I wouldn’t bat an eye because I might expect that they were playing fast and loose with the law.

    Just my 2 cents from the cheap seats in the investment industry. happy for someone with more insider knowledge to correct me.

  81. My apologies, I had not intended to misinform. I had taken their “regret mistakes made” statement combined with their acceptance of the Order as an admission. But of course they didn’t admit anything. Momentary oversight of me, hoping that somehow the Church exercised transparency and forthrightness. Don’t know why I made that connection. A hopeful desire towards progress perhaps. I’m let down even more.

  82. Elder Hamilton’s inner voice: “The SEC fined Jesus for deliberately deceiving Jesus’ followers to hide Jesus’ enormous wealth, so that Jesus’ followers won’t stop giving money to Jesus.”

  83. Regardless of whether this type of violation is a mere technicality or something worse from a legal perspective, isn’t the biggest problem WHY the church did what it did? As was mentioned in the comments above (Different Sam), the dude in charge of the investment fund for the majority of this time explicitly stated that he thought they did it to conceal the truth about its largess from the membership of the church because they were afraid the members would stop donating. Few people would be in a better position to know the correct reasons than him, so by circumstance alone the credibility of his answer is strong. I’m sure there are lots of other reasons we can think up ourselves and that the church might now put forward, but when asked, that is the first thing that came to the mind of the person who was in charge of the whole scheme.

    What does it mean for members that their own church attempted to deliberately deceive them so that they would keep giving the church money? If you’re a member, that’s the question you should be asking instead of splitting hairs on “how bad” the violation was.

  84. When principles come in conflict a choice needs to be made because either way you go there are undesirable consequences.

    The choice here was to keep the money made in stocks as confidential as possible at the expense of violating an SEC rule. They paid the fine and hopefully it is done.

    Sometimes the truth isn’t very helpful. See Genesis 20:1-18, Abraham 2:21-25

  85. Securities Lawyer says:

    Nice try, SK. That’s boilerplate. The church would not consent to the filing of the Order and pay the $5 million fine if the SEC recited materially incorrect facts in the Order. These are highly negotiated and orchestrated public filings. The church directly and indirectly caused its employees to engage in all of the evasive actions recited in the Order.

  86. You can drive 50 miles per hour over the limit and avoid hurting anyone. That doesn’t make the speeding any less dangerous. Whether provable damage was done is a separate question from how reckless the driver was.

    With securities law violations, provable damages are not usually the thing that determines how serious a violation is. When a violation is the result of a deliberate scheme to conceal that continues for a period of many years, that’s a lot different than clumsily mishandling a required filing for a quarter or two.

  87. JFK, what conflicting principles do you see that caused the church to make such a calculation?

  88. Chris, granted every analogy has its flaws. I don’t think it is uncommon for people to intentionally go over the speed limit. I might be projecting though. I think your analogy is also problematic considering there has yet to be any credible evidence that material harm resulted from the violation unlike your analogy where the restaurant lost revenue.

  89. Loursat, “Whether provable damage was done is a separate question from how reckless the driver was.” I agree. I think determining how reckless it was, in terms of the potential harm it exposed others is an important consideration. Exceeding the speed limit by 50 mph is a whole different kind of reckless than 5-10 mph.

  90. If the rubric for financial malfeasance is limited to whether there has been measurable harm to market participants, then I think you’ve got a poor standard. The history of markets is full of people claiming their behavior wasn’t all that bad because it was a victimless crime, or worse, that everyone involved made money so what’s the problem? In industry parlance, the Church knowingly and repeatedly compromised the integrity of capital markets. FINRA/CFA should go after some of the people involved who let it happen and they shouldn’t be allowed to operate in the industry.

  91. The SEC document says that two Business Managers resigned in 2018 due to their disagreement with the Church’s 13F filing practices. I hope these Business Managers became whistleblowers and tipped off the SEC. If they did, they could be entitled to a SEC whistleblower award of 10-30 percent of the monetary sanctions.

    Regardless, I feel sorry for these two Business Managers. It was likely a shock to their faith to see upper priesthood leadership do something so clearly unethical (and illegal) and then ignore their concerns. And now to have their concerns validated publicly by the SEC, and priesthood leadership to admit to a “mistake.”

    This would make a good Liahona article — an employee sees his company is doing something unethical/illegal; he speaks up; is ignored/slighted by top leadership; chooses the right by resigning and refuses to do the unethical/illegal act; and finally is blessed after the facts come to light. His former bosses kind of apologize.

  92. Saint of Circumstance says:

    WHO WAS HURT: I was. I paid my tithing thinking it would be used to “build the kingdom of God on Earth, and for the establishment of Zion.” Instead my tithing went into a stock portfolio and, now, apparently some if it was used to pay a $5m fine. See Luke 12:16-21. Seems pretty clear to me. Maybe this is overstated a little…. but that’s how it feels.

  93. My sentiments reflect Loursat’s.

    Count me in the camp that understanding the requirements and purpose of a Form 13F filing to be not complex. Especially for people that see around corners and talk to God.

    Form a purely financial standpoint, it would seem the church made the right decision. The tithing accumulated by keeping members in the dark for 20 years most likely outweighs a $5 million fine. But the cover up is often worse than the crime.

    It’s really interesting to watch members defend the church’s every action, from protecting child abusers to hoarding wealth. But as I told my coworkers yesterday who shared this new story with me, this situation is no longer my circus.

    Like Andrew, I also can’t get Elder Hamilton out of my head that “Jesus agreed to pay a $5 million fine for inappropriate wealth disclosures.”

  94. Saint of Circumstance says:

    Also…. should have said this too. I can’t speak to the value of the Public Square piece on this issue (others have); but I’m not sure calling the entire website (and all it’s contributors) “homophobic ne’er do wells” is fair. As someone who is a little more liberally minded (religiously and socially) I don’t agree with all of what they post, but I have also found some good stuff there too. Broad brush strokes are rarely useful. Not trying to be “that guy”… just sayin…

  95. Ozark, I agree that there can be malfeasance without any harm being done. However, I still think it’s an important factor in determining the severity of the breach. If the nature of this violation did not present a risk to others, then I think its relevant to the conversation.

  96. What I’ve become increasingly curious about this week is whether the church will actually make a comment in its next General Conference Saturday morning financial audit report. For years this has been a meaningless throwaway that I don’t think was ever intended to be used for anything except for when the church could say, “100% good y’all.” But now we have several incidents popping up with Canada + Australia + SEC. It feels like an appropriate time to share some perspective with church membership. And assuming they don’t and we get the standard ‘everything is a-ok’, there is going to be some really disappointed people who are faithful believers and followers and who want some help addressing what feels dirty.

  97. @ Rockwell. Yep, nailed it. Especially “please don’t make me talk more about this because it’s awkward and I sincerely apologized.” Sigh.

  98. Also for those looking for real harm, think on this. Just as the church feared, some members would have stopped paying tithing with this information. Those members are not necessarily harmed. But many of those members would have diverted their funds from the Church’s trust fund to actual charities with actual needs. The recipients of these actual charities are real people, and they were harmed, even if we cannot quantify it.

  99. Pontius Python says:

    The comparison to a traffic ticket reminds me of this quote from the “Teachings of Presidents of the Church: Howard W Hunter” manual (

    Chapter 18: We Believe in Being Honest
    Section 1: The Lord admonishes us to be honest.
    “Some of the more common examples of dishonesty are these:

    4. Violation of traffic ordinances. One cannot be basically honest and violate laws formulated by society and government for the welfare of other persons. [“Basic Concepts of Honesty,” New Era, Feb. 1978, 4–5.]”

    Sooo … about that … it’s just a traffic ticket in securities law, is it? President Hunter might not think you’re an honest person if you get one little traffic ticket. From later in the chapter:

    “[Many] years ago there were posters in the foyers and entries of our chapels that were entitled “Be Honest with Yourself.” Most of them pertained to the little, ordinary things of life. This is where the principle of honesty is cultivated.

    There are some who will admit it is morally wrong to be dishonest in big things yet believe it is excusable if those things are of lesser importance. …

    I recall a young man who was in our stake when I served as a stake president. He traveled around with a crowd that thought it was smart to do things that were not right. On a few occasions he was caught in some minor violations. One day I got a call from the police station and was told he was being held because of a traffic violation. He had been caught speeding, as he had on a few other occasions prior to this time. Knowing the things he was doing might prevent him from going on a mission, he straightened up, and when he was 19 years of age, he received his call.

    I shall never forget the talk we had when he returned. He told me that while he was in the mission field he had often thought of the trouble he had caused by the mistaken belief that the violation of little things was not important. But a great change had come into his life. He had come to the realization that there is no happiness or pleasure in violation of the law, whether it be God’s law or the laws that society imposes upon us. [“Basic Concepts of Honesty,” 5.]”

  100. At all the BYUs, students are constantly lectured to obey dress and grooming standards because “obedience in the small things leads to obedience in the big things.” This of course has always been nonsense; Christ constantly called out the Pharisees for being scrupulous in the small things all while they “omitted the weightier matters of the law, judgment, mercy, and faith.” For in reality, obedience in the small things, more often than not, merely gives one psychological permission to *neglect* the big things.

    For years, my go-to example of the same was the pest-control and security-system sales reps that were heavily recruited from the Church schools. These kids carefully kept the BYU dress and grooming standards even during the Summer–clean shaven, short haircuts, only one pair of earrings on women, etc.–and never smoked or drank, and paid their tithing. Nevertheless, they were by far the most dishonest sales reps I’ve ever had the mis-pleasure of dealing with in my life. They regularly ripped-off and defrauded the poor and the elderly, telling flagrant lies to do so. Their obedience in the small things didn’t have the slightest impact at making them obedient in the important things. Quite the contrary.

    And now we have the Church itself being fined millions (money that could’ve gone towards feeding the hungry and helping the poor) for security fraud–because once again, their insistence on obedience in the small things never resulted in them becoming honest in the big things. This whole fiasco is as dispiriting as it is unsurprising.

    You want to talk about who was hurt: Through this neglect, the Church has just given psychological permission for every self-described “faithful” LDS businessperson to try and get away with breaking as many laws as they can now too (they will only have been following the example of the Church, after all), just so long as they remain clean-shaven and in white shirts. Indeed, as we’ve seen with summer sales, they’ve already been doing so all along. What a disgrace.

    As ever, the Savior was wiser.

  101. I’m so sad. All I could hear in ‘the matter closed’ was the shut down of Heavenly Mother (“I wish I knew more”- so therefore everyone should stop seeking Her) and all women in the church asking questions. I’m also sad that this absolute lack of transparency lurks everywhere in the church operations (not the gospel of Jesus Christ). I am grateful for the consistent efforts I have made to differentiate the gospel from the Church; I can grieve for the continued adulteration of the latter while still managing to glory in, and find joy from, the former.

  102. Aussie Mormon says:

    CE: “Canada + Australia”

    I can’t speak for Canada, but the Australia situation has nothing to do with this. For one thing, the benefit in Australia is to church members (allowing them to claim tithing as a deduction on their income for tax purposes). The situation provides no tax benefit to the church at all. The church would have tax free status regardless. Secondly it’s following the charity law as written. No fuzzy edges. No let’s try this and hope. As the law is written, the church is fine.

  103. Thanks Aussie Mormon. I’ve been clear other places (and even here) that there are no tax shenanigans going on. The tax planning the church has done in the US and other jurisdictions is substantively different than this–the church doesn’t break tax law, and frankly doesn’t stretch it. (And like you said, in Australia, the tax planning doesn’t even benefit the church directly—it benefits the members.)

    That’s in stark contrast to its disclosure planning here.

  104. It appears that the church doesn’t trust its members to make correct decisions when provided complete and accurate information. This reality is unchanged regardless of the legality of the church’s actions. The church may now disclose its individual stock holdings but you can be sure it wont reveal the value of all its other investments. That sort of transparency would simply be too much for God’s chosen generation to handle.

  105. Aussie Mormon,
    Both cases involve deception for purpose of maximizing tithing. In this case the church was claiming that an entity was in control of investments that it in fact had zero control over. The church did this because they feared that the members would pay less tithing if they knew how much stock the church held.
    In the Australian case the church was/is claiming that an Australian entity controls the use of funds that in reality it has no control over. This is done so that the tithing paid by Australians can qualify as tax exempt donations. I imagine the church correctly thinks that Australians will pay more tithing if they don’t have to pay tax on those donations. The Aussies may benefit but so does the church.

  106. In matters of finance, business, and real estate, the Church’s reputation in my eyes is as a sharp dealer that occasionally crosses the line. If I saw the Church somewhere on the other side of a transaction, I would be careful, and skeptical, and factor in the cost of enforcement action to achieve the letter of the contract rather than the “spirit” of the contract as the Church sees it. These are long-standing opinions. As a result, I am not in the least surprised by machinations to avoid reporting.

    I do think the machinations were unwise, and demonstrated poor judgment. I do think the disclosures and settlement are terrible PR. Most of all, I am surprised by the references to “senior leadership of the Church” and to the First Presidency. I would expect the Church to take every possible avenue to avoid those references and to lay responsibility at a lower level. I assume the wording was known before the matter was agreed, and I consider those references a significant concession, far greater than the dollars paid.

  107. Chris, I think that’s spot-on.

    Miles, I’ve explained upthread (and all over Twitter and in the news and probably in previous posts here) how Australia and Canada are substantively different. I won’t bore everybody too much by repeating “money is fungible,” but it is and the church did precisely what Australian and Canadian law said to do.

    It is certainly worth calling out wrongdoing. But I think that calling out non-wrongdoing weakens one’s moral high ground when one moves to calling out actual wrongdoing.

  108. Charlie Skinner says:

    Any thoughts on this op-ed by two LDS Big Law partners? Do they make a solid case in your opinion?

  109. Sam,
    When a Australian catholic donates money to his church he doesn’t get a tax break. When an Australian mormon donates ‘tithing’ to LDS Charities Australia he does. That donation doesn’t result it more needy people being helped as intended. However, since money is fungible it does let the church say “this charitable giving came from here (Australia) instead there (US)”.

    The Australian law in question was clearly written to incentivize charitable giving and NOT religions giving. The church is using a technical loophole so that tax benefits can be claimed which were clearly not intended. Something doesn’t need to be illegal to be wrong and I feel pretty confident that a strong majority of Australians would agree that what the church is doing is wrong.

    Furthermore, Australia requires tax deductible donations go to organizations directed and managed from Australia. LDS Charities Australia has no more autonomy than one of EPA’s shell companies. Herein lies the similarity. There certainly appears to be a technical violation of the law regardless of whether the church has or will ever be held accountable for that. The Church’s EPA shell companies were revealed way back in 2019. I’d give the Australia government a bit of time to look things over before so confidently claiming that there has been no wrongdoing.

  110. Things like this would definitely be more easier to swallow if the church had some doctrine/precedent/theology/practice of institutional repentance that mirrored what they teach individuals should do. It would increase credibility in the institution significantly if it were to simply admit that since it is made up of imperfect mortals sometimes bad decisions are made, have unqualified contrition for the bad decision, apologize or otherwise rectify the situation to the extent possible, and then make changes to safeguard against it happening again. Instead we get minimization of the wrongs, refusal to forthrightly admit the allegations, deflection of fault to attorneys, rationalizations arising from “complexity,” and a stilted, unilateral ending of engagement on the substance of the issue the same day the wrong is made public – “we consider this matter closed.”

    If we are actually experiencing an “ongoing restoration,” then we already have the conceptual framework to serve as a premise for institutional repentance – all it would take is something like this: “The church, much like individuals, learns and grows through a combination of revelation, experience, good decisions and bad ones. Learning as we go is inherent to becoming more like Christ as individuals, and for the church it is inherent in the nature of a continuing restoration of all things. In this instance it was wrong for the church to [insert bad decision]. We are sorry for the decisions that resulted in this situation, and for how it negatively affected our members, and [insert others harmed]. As difficult as this experience is, we are grateful we can learn from it and become a better church and more effectively accomplish God’s purposes. In the future we will [insert changes that will be made] so that it does not happen again.”

    Perhaps that would be too… humble?

    I should not be surprised at this point since the church has refused to outright admit wrongdoing, like, ever, on any subject. It is just baffling to me that leadership continues to insist that it always reflects the mind and will of God when it clearly just consists of a conglomerate of imperfect people. Why is that so hard/dangerous/scary to admit? Just because the church is imperfect and makes bad decisions sometimes doesn’t mean Jesus isn’t leading or at the head of the church; those two realities are not mutually exclusive – I’m imperfect and make bad decisions all the time, but I’m still led and directed by Jesus’ to the extent I can be given my failings.

    By directly and indirectly reiterating and perpetuating nonsense like that BYU address Elder Hamilton recently gave, they’ve conceptually painted themselves into a corner in which they can admit no substantive flaws. It is frankly a failure in leadership to do what is right (admit when you’re wrong) and let the consequence follow (take a dip in tithing, or change the nature of the relationship church leadership has with the members, or whatever they are so afraid of). Sorry Elder Hamilton, I just simply do not believe Jesus is telling the first presidency to deceive the membership of the church so that the members will not stop paying tithing. And even if the lawyers told them it was legal, and even if the first presidency truly believed it was legal, and even if it actually had been legal (it wasn’t), it was still a deliberate deception of the membership approved by the first presidency.

  111. To demand apologies from an organization that does everything in its power to get us on the high road to eternal life seems a bit ungrateful (to me). Rather than grumble over the church’s imperfections we should be eternally grateful that it graciously endows its members with all that is necessary to return to the Father and inherit all that he has. We should be the ones apologizing for not doing more to edify and sustain the church in its efforts to bless all of God’s children.

  112. Another other Brian says:

    What harm did this do?

    My faith crisis and that of many others to come. I will not pay tithing again. The church doesn’t need my money and I don’t support how they used it in the past.

    The minimum standard I expected from the church was transparency and honesty and for it to use its resources for good.

  113. I’m more than disappointed in Church leaders’ actions and words surrounding EPA and the SEC. Their statement that they “regret mistakes made” is as disingenuous as it is passive. When one deliberate directs another to hide funds in fake companies, assigns as generically named members as possible to “head” said companies, and causes portfolio managers to intentionally skip required legal filings in order to prevent members and others from knowing how much money is being held, one cannot refer to such actions as a mistake. It is a deliberate, intentional wrongdoing and an unlawful act. It is not without harm to others.
    For years, Church leaders have been asking members to “Give Brother Joseph a break,” and assuring us that from the beginning of time “There has been no attempt on the part of the Church leaders to try to hide anything from anybody.”

    If I am to be able to forgive all the warts in Church history, forget the wrongdoings of past leaders, and follow along faithfully and with exactness, then the First Presidency needs to repent of these wrongdoings in the same ways we’ve been taught repentance must take place. Along with the commitment to follow the law, there should be a true and full confession to the members and restitution to the members as well. $1M to the SEC is not restitution. We’ve all paid the tithing that made these investments possible. Use the investments to benefit and bless Church members who are struggling, seminary teachers and youth leaders who are buying supplies out of their own pockets, Full-time missionaries who are paying their way to serve, but still don’t have enough food to eat or access to adequate medical care, etc. We want to see our sacred contributions used to bless lives.
    Restitution must also include a restitution of the trust we have long placed on our leaders. This can be brought about, in part, by a move to full & complete transparency of all inner workings of the Church. Tell us exactly how many active and living members there are. Tell us what is being done with every dollar taken in. Give us the knowledge to trust that funds we pay as fast offerings are truly helping those around us, and do so without inflicting shame and guilt on those who hit hard times. No more hiding. No more worry about keeping Church actions “private” from church members. No more secret funds, secret ceremonies, or secret committees. No more harming the bulk of the members to avoid offending the “grandmother’s in Sanpete county.” Become Christ’s church; one that is charitable, living to all, full of grace and forgiveness. Let us see that if you want us to stay, because right now, you have a major credibility problem and no social media fast is going to fix that.

  114. This is a genuine question that may or may not be relevant. How often are fines like this levied against churches or university endowments or similar entities?

  115. Miles, you’re ascribing an intent to the Australian law that isn’t there. Yes, it was meant to incentivize giving to organizations that provide or fund certain types of humanitarian aid. And that’s what the church’s Australian entity did (which is where my “money is fungible” comment comes in). Could the Catholic church do this? Sure, if they wanted to structure themselves in this kind of way. If Australia wanted to exclude churches, it could have (within the strictures of its constitutional system, which I don’t know) written the law to exclude churches. Could it have excluded international entities that pay administrative expenses out of a foreign affiliate? Sure. But it didn’t. If this truly isn’t what the Australian government wanted, though, they can also absolutely change the law.

    Charlie Skinner, I suspect that, as a technical matter, that DN op-ed is accurate. But also, irrelevant. Like, I have know idea what a “technical violation” means, but almost any violation of law will technically violate the law. And absolutely, investment managers hate the rule. (FWIW, a lot of people hate paying taxes, too, but that doesn’t excuse tax evasion.) And sure, the SEC doesn’t use the filings. But the rule is still in place. In fact, in 2020, the SEC contemplated raising the reporting threshold from $100m to $3.5b. It got pushback and kept the reporting threshold in place. Which is to say, even if it doesn’t use the information, it still requires reporting.

    Is this a quote-unquote traffic infraction? I can see that in a lot of failure-to-file situations. Most of them deal with significantly less time than 22 years, significantly less money than $30-ish billion, and significantly less work to avoid the rule than fracturing the reporting entity into 13 or 14 pieces and not devolving control to the others.

    Which is to say, while everything they say is, I suspect, accurate, it’s also fairly irrelevant in this case. Both attorneys work for very good law firms, and I can guarantee that neither would advise their clients to do this.

    AM, I suspect these kinds of fines are rarely levied against universities or religions. Because I suspect that most don’t have this level of assets and those that do and are subject to the filing requirement file their 13Fs.

  116. bagofsand: Your comment suggests one of the problems here. It is not *the Church* that allows members to return to live with the Father, it is Christ. Deifying the institution is at the root of this (and other) problems facing the LDS community. The institution is not perfect and should be called out when errors (particularly obvious ones like this that clearly go against what is said over the pulpit and elsewhere) are made. Separating the gospel taught by the Savior and the actions of the institutional Church is critical to appreciating the consternation that has been expressed here and in other forums regarding the EPA situation.

  117. The dealings in the dark, the sly moves, this is the new Church of Gadianton. There is no authority in the Brethren. They are lost.

  118. So Tithing Declaration, formerly known as Tithing Settlement… That’s going to disappear now, yeah? Because expecting members to be willing to honestly disclose their financials while the church lied/deceived is a double standard.

  119. Charlie – I know this question was for Sam, but here’s my two cents. I appreciate how they forthrightly acknowledge the impropriety. I think they do a better job putting it in context than what I’ve read from others. It reinforces what I consider to be a truism – the more knowledge and understanding you get, the more cautious you become in making definitive judgements. I think that kind of approach leads toward wisdom. It’s certainly an act of grace and how I would want to be treated if I were in their shoes.

  120. Honesty, integrity, exactness… words that seem blurred now.

  121. A,

    I agree that our adoration should be reserved for Deity. Even so, I think it’s only proper that the saints should be loyal to the organization that he has established. And besides, where else can we go to find the knowledge, rites, and powers, that will get us on the high road to eternal life? Where?

    Of course, we can divide the gospel and the church into separate categories–much like we do the spirit and the body. But even so, whenever the fulness of the gospel has been dispensed upon the earth so have the appropriated powers to establish the Kingdom in some form or other. The two go together–and to denigrate one is to denigrate the other.

  122. I simply don’t buy the argument that it’s a victimless crime. You have a market system based on whim, rumor, data, and rumors of data…”buy on the rumor, sell on the news”, and you’re trying the find the victim in this system? Well, let’s talk then… There are abstract victims and real victims, IMO. Abstractly, the victim is trust in the markets. If market participants feel that there are classes of investors who can do things that everyday participants can’t, and that by doing so, they can get better pricing advantage, then that ruins faith and to some extent may curtail participation. This is the intent behind a lot of regs and laws regarding trading rules, transparency, and participation. I’ve had huge arguments about what is front-running in this regard. Having knowledge that other people don’t have is in effect a form a front running. You can compute a pricing advantage.
    As an individual investor you may not be looking up 13F filings to see who are market makers in a particular stock, but if you are holding mutual funds or index funds, as most individual investors do, or are advised to, it is a good bet that your fund manager is, in fact, aware of who are the major holders of a particular position, and in particular, who is/isn’t liquidating or accumulating positions over time. The same is true of large retirement holdings like CALPERS. You may either be someone who has assets in CALPERS or someone whose investments are affected by what the managers in that fund do. The SEC is right to require that major participants in the markets must disclose their holdings. This improves the likelihood of fair pricing. I suspect you could run an experiment and show over time that with accurate 13F info and without it, someone running a smaller fund or an individual investor would be getting worse pricing over time and run a differentially worse outcome. Knowing who holds an asset offers clues as to why they are acquiring more or less of it. Or you could also argue that trust is eroded and could show that such a market would have less participants overall, or that there’s a threshold were individuals stop investing. The point is that Adam Smith himself argued that markets have to be well ordered, otherwise it’s just little more than an organized crime syndicate, which benefits only the biggest fish at the cost of everyone else. That’s why these rules exist. I don’t care why the church didn’t want to follow them. If, in fact, they did not want to have their assets disclosed, they had options, including, not investing them in public markets at all.

  123. A,

    I agree that our adoration should be reserved for Deity. Even so, I think it’s only proper that the saints should be loyal to the organization that he has established. And besides, where else can we go to find the knowledge, rites, and powers, that will get us on the high road to eternal life? Where?

    Of course, we can divide the gospel and the church into separate categories–much like we do the spirit and the body. But even so, whenever the fulness of the gospel has been dispensed upon the earth so have the appropriated powers to establish the Kingdom in some form or other. The two go together–and to denigrate one is to denigrate the other.

  124. You spoke my heart. I feel so betrayed by the hypocrisy. The highest authorities chose to be dishonest out of fear of criticism. I learned and retained the value of honesty in Primary. I also learned that we sought anything lovely and of good report. How has the church modeled these values? They haven’t and I’m devastated

    PS my inactive kids feel so validated. 2 are return missionaries. For the first time I can’t defend the church. The damage snowballs

  125. swimlikeabrown says:

    I just cant stop thinking about those checks I handed over every week when my kids were young, when we had one average job/or were in grad school with a stay at home mom. I needed every single penny we earned to take care of my family, but I gave my small tithing checks because I believed it was my share of the church expenses and their “charity”. If I had known it was going to a fund hoarding billions of dollars I could have kept that money for winter boots, or healthier groceries, or music lessons, or timely car repairs. It was insignificant to the church, and hugely significant to me. Shame on the church. Shame, shame, shame.

  126. I don’t think what the church did was any worse than Disney using shell companies to buy up land in Florida. IMO, he had good reasons for doing it. In fact, some folks would say that it was a brilliant move–and it was, IMO.

    And yet, I’ve no doubt that some folks would consider that sort of thing playing a bit fast and loose with the rules–or even unethical. Even so, it was the right thing to do under those circumstances.

  127. Bagofsand/Jack, comments like yours (The Church breaking the law was brilliant) drive people away from the Church, not invite them in. It’s devoid of moral framework. “The Church is ‘true’ so everything they do is without fault” is completely ahistorical and goes counter to the atonement. I get it, you get a thrill out of being so devote to the Church that you comment both here and an W&T and say nothing other than that, even using multiple handles on the same thread to do it. Like the Church in this instance, you might feel that you’re being brilliant in your deception. You’re not. You’re being deceptive. And, like most of what you say, it hurts your cause. In the face of questions, sometimes Jesus said nothing.

  128. bagsofsand, for two reasons, no. The first is, there’s no law that requires Disney to disclose when it’s buying land. The securities law, by contrast, imposes an affirmative duty on investment advisors to disclose when they manage a portfolio of $100 million or more. So there’s no relationship between Disney’s use of LLCs and EPA’s. (Also, there’s nothing inherently illegal about using LLCs as an investment advisor; if EPA had given the LLCs management authority, it would have done everything right, even if it felt, as kids say, sus.)

    Second, I don’t know about you, but I don’t view Disney as a moral exemplar. It makes movies that range from mediocre to good. It operates overpriced (but fun!) theme parks. It owns ESPN. But it doesn’t purport to help me become an ethically and spiritually better person. It doesn’t show me a path toward the Divine. So I have different standards and expectations. (That said, I’d think poorly of Disney, too, if it violated securities law, and especially if it worked hard to violate securities law.)

  129. Not a Church Apologist says:

    Who was harmed? Was anyone harmed?
    Any member who paid tithing when they didn’t have enough to keep the lights on or feed their family. That’s who got hurt. Because they sincerely believed that the church needed their few coins or because they feared the stigma of being seen as “unworthy” or “not obedient.”
    For every General Conference talk or Liahona article “pay your tithing first” story where a miraculous gift shows up in time to save a family from going hungry for the Lord and His leaders, thousands never see a “miracle.”
    When it comes to the blessings resulting from tithe paying, church leaders claim material blessings when a fortunate coincidence occurs and fall back on “spiritual blessings” when such doesn’t happen. Convenient, but spiritual blessings don’t feed the children.

    Being forced to go to one’s bishop to explain why one needs assistance isn’t a great feeling either, and is nowadays often refused. And the church doesn’t operate a welfare program/bishop’s Storehouse in Africa where American church leaders have no shame telling the African members that tithe paying to the super wealthy American church will grow their countries’ economy.

    To the person who pointed out—wrongly—that this was done by Hinckley but corrected by Nelson. As previously mentioned it was the whistleblower’s actions that caused the correction. To that person who seemed to portray Nelson as the savior and hero, I would just ask, “Was Gordon B. Hinckley, therefore a bad prophet? A dishonest one?”
    Praising the current church president while throwing the previous ones under the bus? A very Mormon thing to do.

  130. bagofsand/Jack: Just because I do everything in my power to get my kids, for example, on the high road to eternal life does not mean I’m absolved from being held accountable to them when I have deliberately sought to deceive them. For them to approach me saying they expect more and that an apology is in order is not unreasonable, nor does it make them ungrateful for everything I have done for them. Their request is especially warranted when I have already evinced an attitude of deflection and resistance to the idea that I am at all responsible for my “regretted mistake” and then attempted to unilaterally close down any sort of discourse at the exact same time my kids are made aware of the situation.

    Since you apparently don’t even think the church did anything wrong, I doubt we are going to agree on this.

  131. Brian,

    What about the Lord’s little ones? They need to be nourished rather than having seeds of doubt planted in their tender hearts and minds.


    Well, analogies have their limitations. I don’t know much about the world of finance–but I think it’s fair to say that some folks probably felt that they we’re deceived by Disney–and that they lost some golden opportunities because of his machinations. I realize that it’s not exactly the same thing that the church did–but still, there’s room to quibble over the ethics involved vis-a-vis people getting hurt and so forth.

    Even so, here we have a situation where the church is fined by the SEC for what really seems to be a minor infraction (comparatively speaking). Can we honestly say that it was much more grievous than plucking corn on the Sabbath? Even if whoever made the decision to create the shell companies knew that they were bending the rules?

  132. A Turtle Named Mack says:

    Let’s just get something straight. This was not a MINOR infraction. The filling out and submitting of a form might seem like a small thing and, for those who do it regularly, it might seem routine, even annoying. Missing one of those submissions may be an oversight, and the harm in not doing so might be difficult to assess (even if it ends up being insignificant). But this wasn’t an oversight, and the Church also didn’t think of these submissions as insignificant. The Church judged these submissions to be significant, and ordered their advisors to spend significant time and go to significant lengths to avoid doing so, – deliberately, repeatedly, over nearly 2 decades. There’s nothing minor about that.

  133. Turtle,

    There are differing opinions on the part of experts. I’m giving the church the benefit of the doubt. How often has this sort of thing happened with the church’s finances?

  134. Jack/Bagofsand: telling people lies and misinformation is a terrible way to build faith. But clearly, you will do you. All of the people that have left the Church that I know of (which is no small number) have left because of exactly what you are proposing. Again, though, you apparently find comfort in the actions of the Church in this matter (which, to be honest, you don’t even seem to understand) because, in your mind, it mimics your own unethical and problematic view of how to build lasting communities and faith. If you actually paid attention to the comments here, you would realize that such actions clearly negatively effect people in regards to their testimonies.

  135. I’ve found some of the comments more enlightening than the original post (which is quite good, Thank you, Sam.). Discussions around what the Church was caught doing tends to circle around the legality and compliance of the Church’s actions. However, I detest this approach when it comes to the Church. Although legality and compliance with the law is important for the Church as a community actor, it should not be the primary lens through which it is judged, particularly by its own membership. In contemporary America there is an immediate impulse to conflate legality with morality. This has come up with abuse reporting laws, tax compliance, etc. The principal discussion we should be having is surrounding the morality of the Church’s shenanigans and legal devices, and what specific ends and values they were serving. I believe it is a critique of their own determined aims that we should be debating. How they get there is a much less interesting discussion to me. Having read the press releases from the SEC and the Church, the SEC order, and the original Washington Post expose, I am fairly convinced that in the late 90s the Church had a fairly large amount of excess investment funds. I would argue they had two primary desires: (1) to grow that investment as much as possible–in pursuit of a desire for greater wealth accumulation, and (2) to keep that venture, along with its failure or success, a complete secret from its own membership. Whatever has happened since 1997, has been in pursuit of those two ends; and they have had lawyers, advisors, and shell corporations strewn across the country, to assist them in accomplishing those goals. What is the explanation for a Church–our Church–to engage in such a project? Jacob tells us, “many of you have begun to search for gold, and for silver, and for all manner of precious ores . . . and the hand of providence hath smiled upon you most pleasingly, that you have obtained many riches; . . . do ye suppose that God justifieth you in this thing? Behold, I say unto you, Nay. . . . but before ye seek for riches, seek ye for the kingdom of God. And after ye have obtained a hope in Christ ye shall obtain riches, IF YE SEEK them; and ye will seek them FOR THE INTENT TO DO GOOD–to clothe the naked, and to feed the hungry, and to liberate the captive, and administer relief to the sick and the afflicted.” My problem isn’t that the Brethren don’t comply with uninspired legal requirements, it is that they appear to give little concern to comply with the inspired scripture they profess to revere. Wealth accumulation, obfuscation, tax avoidance, secrecy, and hoarding of wealth is a scourge on the Church. And the Brethren think this is a simply a SEC filing compliance issue. This isn’t a speeding ticket, this isn’t an arguable difference of opinion in what is permissible, this is a wrestle for the soul of the Church.

  136. Brian,

    It’s not the actions per se–not in this particular case at any rate. But it’s the way that that those actions are framed and spoken of by critics that do so much damage. There are some folks who will take every opportunity to present the church in the worst possible light. And if that’s who we’re getting most of our information from then it’s only natural that our opinion of the church will be sullied by such negativity.

  137. Mormon 5:8 . . . and that all things which are hid must be revealed upon the house-tops.

  138. I don’t really care what the church did or didn’t do in this case. They save a boatload of money, they invest it wisely and they make a boatload more. They spend a portion on the things I would expect and would want them to spend it on. I wish my government acted like this. They won’t ever. We’re 31 trillion in debt and that’s what everyone should be worried about, but no, let’s instead critique the financial actions of an organization that’s fiscally responsible and does a lot of good. I tell you what, I’m gonna get a rocking chair and sit out on the front porch and watch it all come crashing down. Gonna be a sad day. Motes and beams my friends, motes and beams.

  139. Trying my best says:

    It makes sense to me why the leaders did what they did. The leaders were wrong thinking that ALL members would want to stop paying tithing just because they found out that the church had excess funds. There are some that would and will, but not all. I pay tithing because I know that is what I need to do. I don’t mind that they have a rainy-day fund. Noah built the arc before the rain started. So yes, for some, it might be hard and shocking finding out that the church holds so much money but once the rain comes, they will be glad they did. I am shocked that the amount wasn’t higher (probably is).

    Was it dishonest of them to hide this information? Of course, it was. I do hope they address this more in General Conference. But being one that has served in callings of leadership, I know that mistakes can be made even when you try and follow the guidance that is given. It’s hard when the mistakes are made by people with “higher” callings, but it happens. We are imperfect beings, and they are imperfect beings. These are times that one has to determine for themselves what this does to their beliefs. I for one am not a member of this church because of who is the Prophet and so forth. I am a member because I have felt for myself that this is right.

  140. Church: “We regret mistakes made.”

    Some Commenters: My church made mistakes and got caught breaking the law. I love that they did this. They’re brilliant!

  141. We donate money to charities that provide public information as to how the money is used. Charity Navigator provides such information. My spouse’s employer will match our donations to the charities we choose up to $10,000.

    The Prop 8 campaign ended our paying tithes to the church.

  142. mrichard,
    ha! the government is deeply in debt for many reasons, but one of them is precisely because they cut taxes for the rich, then subsidize…the rich, and failed to fund basic programs that everyone wants and needs and now find that no one wants those cut. There is government waste, to be sure, but often the government is the most efficient in surprising ways. Read The Fifth Risk by Micheal Lewis. And the government is in many instances the solution of last resort: they handle all of the impossible problems that no one else will take. The church has excess funds because, well, I don’t know. There certainly is a lot of need in the world that the church could donate to, so that’s what puzzles me. I’m all in for them having a rainy day (apocolypse?) fund, but $32B+ is a substantial fund for an institution where a large percentage of individuals donating to it can qualify as being quite poor.

  143. Thank you for the truth, even when it’s lacking in all organizations.
    Two wrongs don’t make it right.

  144. Two quick observations, nearly 150 comments in:

    (1) Thank you everybody for staying on topic and being generally civil and informed, even in disagreement. I’m usually quick to moderate, and I’ve only had to delete one comment on this thread.

    (2) It has been fascinating to see the number of people who seem to believe that the law is elective when it comes to the church (and to organizations pursuing the church’s ends). I can’t entirely understand this idea that the church should be able to opt out of the law where the law runs contrary to its goals and preferences.

    And honestly, that’s not usually how the church operates, either. The idea would seem to run counter to our scripture, including the Articles of Faith. But it also runs counter to the church’s actions, even recently. The church is (in most circumstances) more likely to lobby for a change in law rather than just flout the law as written (see, e.g., its going to bat for religious exemptions in the Respect for Marriage Act) or to use the courts to vindicate what it sees as its rights (see the London temple property tax case). Where it loses in court, it generally complies with the court’s determination of the law.

    This disregard for law strikes me as fundamentally opposed not only to the church’s espoused values, but to its practiced values. Which makes defending it on the grounds that the law went against the church’s stated preferences feel odd to me.

  145. I wish I could have been advised to invest my tithing money and only pay the church out of my investments. Instead the church took my tithing and invested it and made themselves insanely rich. Told me to be honest in paying it, but turned around and lied to me about making my hard earned money into their profits. I’m out .

  146. This situation is not helped by M Russell Ballard being the Acting President of the Quorum of the Twelve.

    Ballard has a history of personally being prosecuted for fraud by the SEC. He lost his SEC broker-dealer registration due to that.

    Why would an individual with such a background continue to be advanced within the ranks of the hierarchy?

    For an organization that teaches so much about avoiding even the appearance of evil or wrongdoing, this is unacceptable behavior.

    In many not-for-profit organizations, the entire leadership would be replaced over such behavior. In Mormonism, that is not even an option. The church preaches about the importance of democracy while maintaining a theocracy of nepotism.

  147. I think that the the SEC’s rule only make sense for open funds, where investors need to know the composition of the portfolio where they are putting their money. For closed “funds” like the Ensign Peaks the rule doesn’t make any sense besides the fact to expose to everybody where some rich private fund is putting its money. The church searched legal counsel at the time and expertees adviced to do that way. This could be a pour choice of counsel or only a dilemma between privacy and transparency. The modern world demands more and more transparency. The Church didn’t chose to be disonesty in my opinion, only try to find a way to be have more more privacy over its money. Of course some decision could result in opposite effects over the years, times change.

  148. Michael Peterson says:

    The Church did nothing dishonest or underhanded or misleading. I appreciate “Brian” explaining some of the complexity of how the SEC and the Federal Courts work regarding this area of “the law.” The reality is that the interpretation of “the law” – statutory law – as applied to a given circumstance is often not finally clear until a party is in Federal Court in a dispute, where an “order” has been issued, and then challenged by the respondent. This because there are thousands of regulations, and the interpretation of these often change over time, and from presidential administration to administration. In many cases their interpretation is highly subjective. Some believe that unconstitutional executive, legislative, and judicial power reside inside the SEC – as with other large federal agencies. But they are often not the final arbiter anyway. When they make a “determination” against an entity and give an “order,” often that company or nonprofit disagrees with aspects of it and will challenge the SEC’s interpretation in a court of law. But here the the sides settled, otherwise the SEC’s order could have been followed by a further court challenge. Then it would have been up to a federal judge to determine if the SEC’s interpretation of the rule in the statute in this case is fair and valid. That judges’ decision can then be challenged, and the case could go all the way to the Supreme Court. And the order yesterday listed what it called “Facts” – but such lists are often misleading, one-sided – only the SEC’s view of the information and data – like a prosecutor being allowed to state his case in writing, and the defendant not allowed to respond in the same document. The Church chose to not publicly respond to several details in this order, preferring instead to make peace and settle. And in my view the phrase in the SEC’s public statement that Ensign Peak (and the Church) “went to great lengths” (to not disclose information) is no different than a prosecutor standing on the steps of the courthouse in front of microphones prejudicing the public against the defendant and his motives and poisoning the well of the case by trying to negatively influence people’s perception’s toward it.

  149. The haters will now hate on you…you are able to articulate what we simple, layfolk, know but don’t know how to say.

  150. Michael, while I appreciate the complexity of (some) federal law, it’s not all complex. And it doesn’t all require judicial determination. In this case, it’s almost the opposite of complex: if you are an investment advisor and you exercise management control over $100m+ of assets, you file a Form 13F. Here, Ensign Peak Advisors did not do that. Rather, it had the wrong entities file the Form, at the church’s direction.

    I know it’s fun to say, But we don’t know! Courts have to weigh in! But they don’t. In nearly every instance, the law is clear or relatively clear and the administrative agency in charge of administering the law has the ability to, you know, administer the law.

    If the church thought this outcome was unfair, it could have gone to court. It choose not to (for whatever reason). So making up a complexity and making up some world in which courts would overturn a 40ish-year-old rule—a rule that has not been overturned up until now, and a rule that both Congress and the SEC have looked at recently—strikes me as avoiding the point.

  151. anonforthis says:

    Two comments:

    1. I shouldn’t be, but I am amazed at how polarized this thread became. The wild swings between “nothing to see here” and “I’m going to leave the church over this” has been almost vertiginous. It’s not a nothing-burger; it’s an entirely unforced error and I wish the Church had been less aggressive, if for no other reason than to avoid this type of negative PR. But this is not Moutain Meadows or the Kirtland Savings Society. This is a mistake regarding a somewhat debatable regulatory interpretation of the term “control,” and a resulting set of missed filings–not of amounts, but of responsibility. If this is what is shaking your faith, perhaps some perspective is in order.

    2. I’m not a SEC or tax lawyer, but I am an in-house lawyer who works with regulations a fair amount. I think a lot of non-lawyers are of the erroneous belief that regulations are black and white and interpretation is ministerial–you just do what they say, easy-peasy, job done. That is rarely true .

    Drafting clear laws and regulations is hard, and I live in a constant cycle where: (1) I spend a week trying to parse a regulation out, not sure if I’m getting what the regulator meant to convey; (2) then feeling angry at the regulator for not providing more guidance and examples; (3) then wishing that someone else had made a mistake so I could see how courts are looking at it; (4) then thinking that the regulation wasn’t meant for my situation in the first place; (5) then usually taking the most conservative approach so as to avoid the situation in the first place, but thinking in the back of my head that this cannot be what Agency X meant; (6) then hearing from the c-levels I work with that my overly conservative approach is going to cost us money and answering whether the regulation really reads as I’m interpreting it; and (7) me confidently answering “Yes, it does” but thinking, “I’m not 100% certain.”

    Wash, rinse, repeat. I should also mention I’ve lost cases against regulators I think I should have won, and I’ve clawed back several millions from other regulators in court cases where I thought the regulator had the better case. Keep that process in your mind as you read above from laypeople about how easy complying with regulations is. It isn’t. There’s a lot more guess-and-check than you’re thinking.

  152. your food allergy says:

    What is so complex about “file the form without creating LLC’s with fake managers and fake phone numbers in order to avoid filing the form?”

    This is the kind of behavior you expect from Roman Abramovich to hide his yachts, not from the church that bears the name of Jesus Christ.

  153. I am reminded that when the EPA issue broke initially (was it back in 2018?), we were informed that apparently only the First Presidency and the Presiding Bishopric were aware of the existence of the fund(s). I think that adds an interesting dimension – and certainly weakens the proposed defense that “it was just the little guys doing the bad stuff.” Be they lawyers, or whoever.

    It’s hard to not think that these decisions were made right at the top.

  154. We live in the 21st century. The internet is amazing. The 13F forms that are so extremely difficult to understand and comply with are readily available on the website. It’s not difficult to find and there’s nothing opaque or hidden from ‘laypeople’ (is that supposed to mean we’re stupid?)

    Also, I’d argue that if finance and investment are your thing (and, say, you’re a professional in the field), the requirements are fairly straightforward in this case. Unless of course, you’re looking to do something shady. And, surprise, it has a lot of information detailing information about the germaine point in this case: what constitutes discretion of investment. Go check it out.

  155. anonforthis says:

    “The 13F forms that are so extremely difficult to understand and comply with are readily available on the website. It’s not difficult to find and there’s nothing opaque or hidden from ‘laypeople’”

    Help me out, Brian. Who has to file one of these? I think it’s the entity in control, right? But what if more than one entity has some modicum control of a subsidiary? Which has to file the 13F? What does control even mean under these circumstances? How much control? How passive can I be and still exercise the regulatory definition of control? What if the entity or people with the control only control it for a couple of months out of the year? What if I technically have control as an entity, but my overall existence is subservient to another entities’ decisions? Does that make the ownership entity technically in control? What have courts said on that issue? What has the SEC said on that issue? Is the SEC’s position consistent with the the language of the regulation? Is the SEC’s position consistent with its enabling statute? Even if we apply Chevron deference to the SEC’s interpretative statement, is it reasonable? Is Chevron deference even going to be a thing by the end of the next Supreme Court term? What even is Chevron deference?

    I’d suggest if you don’t know the answer to these questions, or even what these questions are, saying that “there’s nothing opaque” about the regulation might be slightly naive.

    I am not suggesting any level of intelligence for you or anyone here. I am suggesting that I could not walk into, say, the library my wife runs and immediately run the place myself just because I’d read a couple of blog posts and watched a fictional television show about it.

  156. Just to clarify, my previous comment was a little snarky and I referred to myself as a simple layperson. I completely agree with Michael Peterson’s comment.

  157. The answers are there anonforthis, like I said. Check out the forms for many of your many situations. Also, I nderstand your questions just fine. I’ve been audited twice. I’m a swing trader on the side. I’m not naive. I understand that it can, theoretically get complicated. But let’s not pretend that professionals can’t find the answers. I’m suggesting that it’s much more complicated the more people want to attempt to complicate and subvert the process, which the Church clearly has done in the past.

  158. Look, according to the SEC order, EPA maintained full discretion over the investments. The 13 LLC the Church and EPA created had zero discretion.

    And yet, Church leaders went to great lengths to have those LLCs claim that they had full discretion.

    This is not a terribly complicated situation to parse. People claimed they had full discretion when they didn’t know what investments had been made.

  159. Nice, anon, nice.

  160. Brian,

    I don’t think we can be certain on all of the details. As Michael pointed out (as well as the DN article) the church chose to settle without addressing all of the allegations by the SEC. Rather than fight this thing all the way to the top — and I think the church could have proven some of those allegations to be false — it chose to pay the fine and be done with it.

    Again I ask: how often has this sort of thing happened vis-a-vis the church’s finances?

    It just seems to me — as an uninformed blue collar type — that if what the church did was as underhanded as some folks fear–there would be a pattern of sorts that cries out for further investigation. But it isn’t there. In fact, some experts have gone so far as to suggest that what’s most revelatory about this situation is that EPA — with such a huge portfolio — hasn’t been dinged more often by the SEC than just this one time. In their view it demonstrates a high degree of integrity rather than the opposite.

  161. Michael Peterson says:

    Sam, with respect I disagree. Saying “we don’t know” is not for enjoyment but because there is so much we actually do not know. Given this, I believe it is best to hold one’s fire and give the Church the benefit of the doubt. The commenter who indicated the Church had to stipulate to the “Fact” list in order to settle is mistaken. In a final order? The Church likely had no such choice. It’s not a traditional settlement document as you see in civil suits. As I mentioned it may well be that the only way to challenge the SEC’s version of the “facts” was to take them to court: ‘Here’s our order, you’ve offered to settle, now settle (order ‘as is’) or take us to court.’ It’s one-sided. We should remember that as a federal agency they are rule-maker and changer (legislator), interpreter of the rules (judge), finder of fact (investigator and determiner of “facts”), and, from their perspective, court and final judge as well. Saying that ‘Ensign Peak Advisors did or did not do this or that’ – we don’t actually know that. That judgement is based on reliance on what the SEC is laying out and saying. And we have no way of knowing how the agency over the years interpreted that rule in every specific case, or how such things may have changed.

  162. A dear friend has run multiple funds worth well over $100 million. He is the person who initially sent me the SEC ruling. He is not LDS. I would consider him very neutral on religion in general. I sent him the church public response and FAQ.

    After reading all the details, he sees this as an unethical and fraudulent action by all involved. He is the one who pointed out that the church did not change their financial advisor team after these fraudulent actions were discovered. That says a lot about what the leadership knew.

    Too many people are giving the LDS church a full pass due to their personal belief in the religion. They do not ask for or expect accountability, transparency or disclosure. Those same people then wonder why many call the LDS church a cult.

    If church leadership expects the LDS church to be taken as an ethical, honest and moral entity, then the church and its leadership need to act ethically, honestly and morally.

  163. Damascene, your very informed and neutral friend described this violation as a fraudulent action?

  164. Over and over again, we are supposed to give these dragons, sitting on their hoarded gold, “the benefit of the doubt.”

  165. True North says:

    I just read the SEC Cease and Desist Order. The calculated and systematic deception makes me SICK.

  166. True North,

    Remember, those are allegations made by the SEC that the church chose not to challenge. My sense is that the church chose to pay the fine and be done with the whole thing rather than slog its way through a long protracted court battle to prove those allegations wrong.

  167. Yes. He considered against all basic ethics, integrity and honesty. He considered it fraudulent.

    Think about it. A not-for-profit entity knows that very specific financial holdings are required to be disclosed. The entity does not want donors to know how much the organization is worth — because donors might stop donating if they realize just how large the foundation has grown. Rather than comply with the SEC rules, that entity forms 13 shell corporations, set them up with with 13 lackeys who just happen to have very boring names and no social media presence. Each shell corporation is set up with an out of state address. Each lackey was required to sign off on paperwork without ever knowing what the paperwork states. Each shell corporation is presented to authorities as being independent— while the reality is that each is fully controlled by the larger entity.

    All of this is done to hide assets from the donors and make sure the gravy-train of money does not stop.

  168. Some of the replies in here over the last few days provide some insight as to why affinity fraud is so rampant in Utah. The defenses of systematic dishonesty range from not deception (requirements were too hard to understand so let’s add layers of complexity and “business managers” with generic names to simplify the process), or somehow in the service of good (because?), or actually a demonstration of canniness on the part of the Church/EPA. I begin to understand why the short seller John Hempton looks for public cos with members of the Church in the C-suite.

  169. Damascene, fair enough. From his perspective I can see why he would come to this conclusion. However, there is a legal standard for fraud and I’ve yet to see that charge be made. Donations are voluntary and the premise of tithing is based on the belief that the money belongs to the Lord and is to be paid to his Church which inevitably be presided over by imperfect men.

  170. Normally I disagree with the content on this website, but this was spot on. I would add a couple of other things they bothered me, and I say this as a former criminal investigator who specifically investigated fraud. The lengths the church went to in order to avoid public disclosure is astounding, concerning, and shows deliberate, intentional, and repeated behavior that breaks the law. Just as a few examples from the report, the church sought out employees to act as managers of these LLCs to sing their names, but they looked for employees who had very common names and low social media presence to avoid the possibility of the public connecting the LLCs to the church. They deliberately withheld information to these church employees about what they were involved in and what they were signing. These church employees were used. When two employees discovered what they were involved in, they expressed concern and asked to resign for those specific responsibilities. Instead of the church realizing they shouldn’t be doing that, they just found two other employees to use. Additionally, these LLCs were given local phone numbers of the cities they were supposedly located in (the lines went straight to voice mail) and these church employees were told to check the voicemail and only forward calls they came from govt regulators and delete the rest. In other words, if we get call indicating the government is snooping, we want to know about it. But wait, there’s more…the first presidency was briefed on these LLCs at least once a year and the church’s own internal auditing department filled reports in 2014 and 2017 stating the SEC wouldn’t like these practices, but the church continued on. Oh, and not to mention part of these funds were from “excess tithing.” To be clear, I love the gospel and I believe the church houses the gospel in order for it to function…but this is beyond disappointing. The lengths the church went to in order to lie and break the law, and just so the public wouldn’t find out how much money they have (which is a deceitful intention in itself). I don’t consider this matter closed in the slightest. Im not leaving the church, but I want a better explanation. This is just disgusting, especially how our own church members were used in this scheme while hiding details from them. I’d hate to be in the shoes of those involved come judgement day.

  171. Damascene, No, I don’t think it meets the legal standard for being fraud because there was no material injury. I get how your understanding of tithing and voluntary donations lead you to that conclusion, but your view does not meet the well-established standard as I understand it. I think if our objective is to help improve the status quo than it is very important not to overstate things. Tithing is not a new concept that was invented by our modern-day leaders. Can social pressure be a powerful force in influencing someone’s decision to pay tithing? Absolutely. That’s an inescapable reality of participating in community. For good and bad, social pressure is ubiquitous in everything we do. That doesn’t invalidate the law of tithing as practiced by the Church. Christ taught that we each have a personal responsibility to become people that are motivated by love rather than how we are perceived by others. I think it’s probably the hardest thing to do, but no one can do it for us.

  172. “I think if our objective is to help improve the status quo then it is very important not to overstate things.”

    This statement that you wrote is a problem and very representative of deep issues within Mormonism.

    Truth. Transparency. Ethics. Honor. Morality. Those are all ideals to strive for. Status quo does not make the cut.

    So many forget that Jesus of Nazareth was a Social Activist. In this current church culture, I think Jesus would be flipping tables.

  173. Damascene, I don’t think you understood me correctly. I’m sure partly because I didn’t explain it very well, but you also seem very quick to condemn so I don’t think it matters.

  174. Jeremy S:
    My problem with your comments, and so many others, is that so many, as devout members of the church, are holding the LDS church to a much lower standard of accountability. Excuses are given for really bad behavior.

    Reminds me of families who cannot believe their favorite son could ever do something criminal. Then they see security footage of that same son doing horrible things. Instead of condemning the actions, they double-down, circle the family wagons and attempt to explain why the victims deserved to be victimized.

  175. I suppose the issue here is:
    1. The church and most of it’s members trust (covenanted even!) that the church itself is acting ethically even if it tries to avoid disclosing information that it people who are less ethical and wish harm or negative news on the church.

    2a. Those (the majority of the world) who have not given the church the benefit of that trust, have no reason to believe the best of the church. Indeed in a system of checks and balances, you almost have to assume fraud as a it starting point of suspicious behavior otherwise you let the fox in with the hens.

    2b. Except we do, or used to, have the take off innocent until proven guilty, not guilty until proven innocent. The latter, sadly, seems the default starting point. But still you can’t override 2a, and just ignore what might be smoke.

    In reading through some of these posts, I think the right way for a regulator to look at things is not to trust that an organization is the kingdom of God on the earth, even if it’s members think so.

    If the regulator is charged with making sure charities with a 100m portfolio disclose that information, any attempts to hide that reality have to be viewed as if there was fire beneath the smoke.

    But, it still seems likely the actions were driven by wanting to take the church down a peg. Not that it didn’t violate the rules, but that regulators at the SEC have all kinds of smoke they can look into for fires and the decisions to pursue this one seems to be because it’s a high profile religion.

    In any case, I do appreciate many of the “negative” comments, because they’ve fleshed out thinking on how it’s perceived by most people, particularly non members.

  176. “But, it still seems likely the actions were driven by wanting to take the church down a peg”

    This is definitely the viewpoint of the average devout member. So many members believe random people are trying to cause harm to the LDS church. Because the LDS church represents such a tiny percentage of the US and world populations, I do not think most non-LDS people care about what goes on with the LDS church. It is not even on their radar.

    But, when the church raises a big red flag and starts waving it about, people do notice and comment on that flag. Bluntly, I find it odd when devout members respond to red flags by staring off towards the horizon and replying: “What red flag?” That continued “we will not acknowledge any issues” response from membership has become what the church membership is known for in some non-LDS circles.

    For me, I do not believe the LDS church is any more virtuous or ethical that any other large organization and I feel that the LDS church needs the same checks and balances as any other entity. While I am not trying to actively harm the LDS church, I am also not trying to actively protect the church

    If God is truly all knowing and all powerful, he does not protection from me. If the LDS church is truly Christ’s church and is following a Christ-like path, they do not need protection either.

  177. Anon again, naturally says:

    The entire situation could have been avoided if they had just spent the money to make the LLC shells real — probably would have cost four million dollars a year.

    As other analysis shows (Sam Brunson did an excellent job), Ensign Peak mirrors the DOW and uses a buy and hold approach that does not require much administration —at least for stocks.

    Someone gave into the temptation to switch “minimal” for “none” and “compliant” for “facial violation”.

    On the other hand, given no market manipulation occurred, the fine was less than what two years of compliance would have cost.

    Wise? No. Proper? No. Ethical? No. Stupid? Well. Pretty much.

    Whatever legal opinion they got for the first entity and its administrative approach was long gone when the program expanded.

    But the “buy and hold” approach did pay off in avoiding market manipulation or other fraud that would have resulted in larger fines.

  178. Damascene, just so. Any sane reading of Section 121 would see us working very, very hard to build systems that actively resist mortal hubris. Instead we’ve built a system that decreases the number of checks on any given individual as their authority increases, with precisely the results that scripture predicts.

  179. Jeff Bezos, in one of his famous letters to Amazon shareholders talked about how when organizations become large there is a temptation to act and think through proxy. His example was using a system to determine success rather than actual customer experience.

    Anyway, all this is to say that this whole incident feels like a “proxy crime”. The SEC and the church together are so massive in scope, so complex in organization that there is no longer a human interaction that anyone can detect where honesty, betrayal, trust or loyalty even factor in.

    You cannot lie to a piece of paper, you can’t betray a form. The agency using these forms does so as a proxy to true human interaction. The fact that none of this would be a big deal if each of the 13 LLCs had just a bit of direct control over the assets is a perfect example of bureaucratic stupidity.

  180. 1. From long experience, Mormons (co-religionists by whatever label) do not enjoy any benefit of the doubt or presumption of honesty or integrity, in my day-to-day business dealings. I cut the cards, dot the i-s, measure twice. The many comments justifying or rationalizing the Church’s actions have only reinforced my opinion and careful practice.

    2. When I was in practice as a tax lawyer, I had many experiences advising taxpayers that a plan would work IF AND ONLY IF there was substance and business purpose. But some of them wanted (what I called) the tinker-toy solution. Connect this form with that filing, sign this piece of paper, and all will be well. I would fire that kind of client. I did not want to be connected with their tax planning or tax returns.

  181. People are not perfect. I am a member and I won’t lose sleep over this. I will keep paying my tithes because I believe I’ll be blessed for it.

    I’ll spend my time worrying about things that actually matter.

  182. The Church values secrecy and the accumulation of wealth more than it values transparency and using its resources to further its mission.

    I don’t think that Church leaders are evil, but I do think they are wildly incompetent and ineffective stewards of the resources at their disposal–resources that came at great sacrifice by many of their members. The leaders are incompetent both in how to manage it from a legal perspective (or to listen to expert advice on how to do so), but more importantly, in how to manage it in a way that actually benefits the Church and its four-fold mission to spread the gospel, perfect the saints, redeem the dead, and care for the poor and the needy.

    Some people will say that actually this level of wealth is proof that they are excellent stewards. But the accumulation of wealth is not an end, it’s a means. Organizations–be they for-profit corporations or non-profit charitable entities or even families–acquire resources to further their objectives. Business can reinvest resources to grow the business, or pay dividends to investors. Charities can spend their money on the objectives that fit their purpose. Families can use their resources to shape the kind of life they want to lead.

    But unless the objective is “let resources sit in financial accounts” (not one of the Church’s four stated missions), then amassing such obscene amounts of cash and letting it sit there is poor judgment and poor management. Yes, having a nest egg and letting it grow in the market is a good idea. But to what end? What is the strategy? When is the nest egg big enough? When it’s big enough what will you do with the excess? Leadership seems not to have answered these questions. That’s a dereliction of duty, full-stop.


    That @Kip doesn’t lose sleep over this and will keep paying tithing because they are “blessed for it” speaks volumes. Personally, I’ve come to the conclusion that we should be wise stewards of our resources to bless others. Apparently many Church members think that we should use our resources to bless ourselves. Weird.

  183. Alleged reasons for the church to avoid disclosing assets:

    Members potential unwillingness to pay tithing. I don’t think this was a main driver.

    Wanting to avoid members cloning their portfolio and lose out in the process. Not a main driver but more than the previous one above.

    Wanting to avoid giving a hard number to it’s more liquid assets that can be exploited/targeted in legal cases. Seems like a pretty strong driver. A judge ruling against a church that has a massive pile of easily accessible cash can more quickly assign damages than looking at a bunch of revenue draining assets.

    Wanting to avoid criticism. Also a strong driver. Every time an article is written about the church even for it’s positive actions, the aside can be noted that the church has 40 billions available, it could do more.

    I think wanting to avoid criticism and fear of legal liability are bigger concerns of the church. Legal liability is something every big organization has an inordinate fear of, so they protect themselves behind multiple ramparts of bureaucratic, legal systems. These shells were just one dimension of that.

    The church doesn’t like bad PR. And it doesn’t like legal liability. Self fulfilling prophecy that it got both.

    I asked the Chatgpt to write us a biblical story want this issue with a few details. My question to the AI did not involve forgiveness, so I’m happy to see the AI got the ending right. Q: Use King James language to write a story in biblical verses about a prophet who received tithes and offerings, and invested the surplus so wisely that the investment grew so large that he was worried people would criticize him or seek to steal it or even stop paying tithes altogether, so the prophet took secret actions to hide the wealth and eventually his secrets were uncovered and the wealth was revealed to much criticism and costly fines were paid was a result.

    A: “And lo, in the land of Judah, there lived a prophet, whose name was not known among the people. He was a wise man, and he received tithes and offerings from the people, for it was his duty to do so.

    And it came to pass that the prophet invested the surplus wisely, and the investment grew so large that he feared that people would criticize him, or worse, steal from him, or even stop paying tithes altogether.

    And the prophet spoke to his advisors, saying, “Behold, I have amassed great wealth, and I fear that the people will take it from me, or that they will cease to give tithes and offerings altogether. What shall I do?”

    And his advisors said to him, “Take the wealth and hide it in a secret place, so that no man shall find it. And if any should ask, say that it has been lost or stolen.”

    And so the prophet took the wealth and hid it in a secret place, and none knew of its whereabouts. And the people continued to give their tithes and offerings, for they knew not of the prophet’s great wealth.

    But it came to pass that one day, a man who knew of the prophet’s wealth accused him before the king, saying, “This man has amassed great wealth from the tithes and offerings of the people, and has hidden it away.”

    And the king was angry, for he knew that the prophet had a duty to be faithful with the people’s tithes and offerings. And so he sent his servants to find the wealth.

    And the servants searched high and low, but they could not find the prophet’s wealth, for it was hidden away in a secret place.

    And the king was furious, for he knew that the prophet had been dishonest. And he commanded that the prophet pay a great fine, so that he might learn to be faithful with the tithes and offerings of the people.

    And so the prophet paid the fine, and he was ashamed, for he knew that he had not been faithful with the people’s tithes and offerings. And he prayed to the Lord, asking for forgiveness.

    And the Lord heard the prophet’s prayer, and he forgave him. And the prophet went on to be faithful with the people’s tithes and offerings, knowing that he was accountable to the Lord, who sees all things”

  184. Daniel Peck says:

    who is “The Church?” The institution and its leaders (all men As an aside) or the members?

    Don’t the members (the church in my view) deserve to know and have transparency about their institution?

    What is disturbing to me about this is the hiding from the members and the lack of accountability to the members as was so eloquently expressed at the end of the piece.

    Back to honesty.

    While church lessons taught me about honesty. I was also taught how to twist the truth for the kingdom. Ultimately how to lie and be dishonest for the building up of the kingdom of God on earth.

    It has taken me some years to first recognize this and to learn how to stop doing it. It is hard when church members are taught to make judgments about the truth based on emotion because it is so easy to manipulate emotion. Both your own and those who trust you.

  185. The bigger issue remains: Who does the money belong to and who is owed some sort of fiduciary duty.

    The members of the church donated the funds yet the church tithing paperwork bluntly states that all donations can be used in any way that the corporate church chooses. Accountability is gone.

    That change in tithing paperwork happened within the last 10-15 years.

    In 1959, the church quit publishing their financial information. They moved to public drama. During General Conference, in a moment that mimicked an Oscar Award, an independent auditor would stride purposely to the podium of the tabernacle, open an envelope and announce that the finances of the LDS church had been reviewed and found to be following acceptable accounting and financial practices. No numbers were mentioned.

    The church eventually quit even that bit of financial showmanship and simply became very quiet about the finances. The church did continue to require tithing while also asking for extra donations over and above tithing. Humanitarian Fund. Missionary Fund. Building Fund. Fast Offerings.

    During this same timeframe, the definition of The Church had changed. The Church used to mean The Membership. The people were the church. Briefly, the LDS church was called the bride of Christ. In the last 30 years, the LDS Church has become defined by the leadership as being Christ. This puts the upper leadership into the authoritarian position of being literal representatives of Christ. I find that change problematic. Christ is considered perfect. People are imperfect. This new definition leave no room for discussion. The theocracy has tightened.

    The corporate church has decided that the money is theirs. They have forgotten their roots. They have forgotten the members.

    As the money has increased, the efforts to offer pastoral care and social enrichment to the members has decreased.

    My thought is that the money hoard has grown large enough that the membership is now seen as a very secondary part of the organization. The membership is now the part-time side hustle.

  186. I saw quite a few news reports about this, so when Sam posted a most excellent explanation in the OP, I read it to clarify what the news was and wasn’t telling me, and I followed through the first couple of days’ comments, which added further to my understanding. I meant to comment my gratitude for an impressively informative post, but had a couple of busy days, and I have only skimmed the rest of the comments. I don’t think I would be helped any further by a close reading of the comments after my first read-through. My only comments are that I don’t think we’ve begun to see the full scope of the fallout from this. The notion that “the matter is closed” is a joke.

    I also get the sense that we’re only beginning to see the damage. Members who are known (as members)in the working world are finding their credibility damaged because of their association with the church. I worry about my loved ones serving missions trying to work in an arena poisoned by this latest poor show. And truly honest members who try to observe strict integrity in their financial dealings may correctly feel that they have no solid support from the church, and members whose financial practices are more squirrelly will feel justified and right at home.

    But thank you for saving me a lot of time and effort to understand the facts, and not be unduly influenced by either the overdone attacks or the gaslighting apologetics. So very helpful.

  187. I have a question that I haven’t seen asked: Ensign Peak is a non-profit organization, right? they don’t pay taxes on their capital gains because of their non-profit status. Were they trying to hide the full amount at Ensign Peak in order to make them appear more charitable than they are? was this a scheme to maintain the non-profit status of Ensign Peak?

  188. Pundit, Ensign Peak Advisors is tax-exempt, as what the tax code calls an “integrated auxiliary.” The short version is, with that status, it wasn’t required to make any particular level of distributions or keep its assets under a ceiling amount. So taxes shouldn’t have played any part in its decision to not comply with the securities law.

  189. Two thoughts. Hoarding money and being very frugal spending is what the oldest generation learned from the Great Depression. This may be also why the church stopped hiring janitors , etc. The mindset is one can never feel secure enough with any amount of money as it’s here today and gone tomorrow. Secondly, the brethren may feel tithing is such an important part of one’s salvation , God has made it clear in scripture that one tenth of everything is His and not to rob him, that they thought if many members knew the church had billions, a good portion would stop paying tithing and perhaps risk their eternal blessings. That’s the only reason good enough that I can think of to explain why they knowingly would break a law or deceive–for a greater good that people would not be in eternal jeopardy.
    It would be better to risk a fine rather than risk people eternally. I’m just trying to think of what they may have been thinking. That’s all.

  190. Anon again, naturally says:

    Hmm. The Scriptures put the Church as the Bride of God. The Old Testament is filled with such references. Now we are being told that the Church is Christ. We are also told that Christ and God are both male.

    Currently we have leaders preaching that our religion exemplifies a gay marriage.

    BTW the Ensign Peak managers are very competent. And while a buy and hold, mirror the DOW quasi index fund obviously doesn’t have any strategic secrets to hide, the particular violation is what is referred to as a “bright line” violation.

    Like running a red light at fifty miles per hour vs confusing section of the law.

  191. Seniorhalf says:

    If the Church sold its 100 billion assets, 16 million people could be given a check for $5882.00. (Unless my calculation is way off and i left off one 0)To some of us that would not be a big deal, but to some it would be life changing.

  192. Happy Poller says:

    Voldemort split his soul into seven pieces. Didn’t work out so well for him.

    Church splits its investments into 13.


  193. Perhaps the most damning aspects of this whole situation is the church leadership’s characterizations. The SEC order shows clearly that the 1st Presidency & Presiding Bishopric directed the non-compliant (illegal) actions in order to deceive those outside church senior leadership. That’s independently supported by the behavior of the 1st Presidency, Presiding Bishopric, and Quorum of the 12 in the 2014, 2017, and 2019 General Conferences.

    Despite the Canon requirements for Saints to provide financial oversight of church leaders we are only provided an attestation in General Conference of Curch Audit Department (CAD) results. The SEC order notes CAD reports called attention to the non-compliance in 2014 and 2017. The church press release on the matter points out SEC 1st raised the issue in 2019 before taking years to negotiate the settlement. As a result, there were multiple years in which all the male priesthood leaders on the stand in General Conference who had access to Audit Reports knew those attestations were inaccurate. They were also continued attesting inaccurately for multiple years as they negotiated a settlement with Federal regulators.

    Finally, the church press release directly contradicts the SEC order. In light of the misalignment Saints are left to wonder if a body of disinterested regulators, who gave a gentle tap on the wrist in response to 20+ years of financial crimes and potential market manipulation (Church Senior leaders explicitly sought to deceive Wall Street), or those directly responsible for over two decades of deception.

    Given the scarcity of the finance understanding required to grasp all the details and severity of all this it’s likely to go unpublished by most Saints. However for those who can understand it’s hard to imagine continuing to give them 10% of one’s annual earnings. As ever, rank and file Saints are left to pretend something morally bankrupt isn’t being done, or break the hearts of their loved one’s unable to see it.

  194. Bookish: “The SEC order shows clearly that the 1st Presidency & Presiding Bishopric directed the non-compliant (illegal) actions in order to deceive those outside church senior leadership.”

    I see it more as church leaders approving of the strategy of their legal counsel to protect the church’s assets–which, so far as I can tell, is a common practice in the world of big finance.

  195. Hey Jack, I can’t remember if I said it earlier on this thread or just on Twitter, but the attorneys may or may not have acted badly here. We don’t know what they were asked or what advice they gave. I can at least imagine a world where they gave good advice (something like, There’s a 33% chance that courts would uphold this structure); I can also imagine a world in which they gave bad advice.

    We do know, though, that top church leaders asked how to avoid reporting and approved the strategies that were implemented. Honestly, as a practicing member, I think we do more harm to the church institutionally by trying to excuse their behavior than by acknowledging that they broke the law and wrestling with how that fits into our faith and membership. (And hint: it doesn’t mean the church is a fallen and evil institution not worthy of our membership and participation. It does, however, demand that we carefully evaluate what it is we expect of the church and how we interact with it, a practice that would actually be valuable even without an SEC fine.)

  196. Jack: What exactly were church leaders trying to protect the church’s assets from that required a systematic violation of law and deception for more than two decades? Please identify the threat.

  197. Jack, I agree the SEC order isn’t as damning as the actions of the 1st Presidency and Presiding Bishopric in General Conference.

    Saints rely on the General Conference attestations of Church Audit Department results entirely to be provided assurance that tithes are not misused or mismanaged in any material sense. In 2014, 2017, 2019, and after those attestations lied. First they lied about a material potential for non-compliance on the church’s largest trading portfolio (worth billions), and then they lied about known material non-compliance.

    Saints may not hold the 1st Presidency and Presiding Bishopric accountable for their actions related to investments, but we are left with their actions related to us. They’ve been lying to us for years about our internal Audit results, which are the last shadow of canon-required financial accountable to Saints remaining. If Saints can’t trust our Prophets and Apostles to be truthful in those attestations, then we cannot be effective in our responsibility to oversee. It also should unavoidably erode trust in the Executive leaders of our faith.

    Christ’s repentance process has several steps with confession and sincere remorse being central. As Saints we’re not being approached by a 1st Presidency and Presiding Bishopric holding themselves accountable for breaking the law in managing church finances. We’re not being shown remorse that acknowledges the severity of deception that has occurred.

    As a result, we’re forced to be negligent overseers of our church’s Executive leaders, or to break the hearts of friends and family by doing the few things we can to highlight these grave sins of our leaders.

  198. Sam & others,

    I’d agree the financial crimes of the 1st Presidency and Presiding Bishopric, as well as the deceptive financial attestations made in General Conference for multiple years are not conclusive evidence our church is fallen or evil.

    There at least three ways to think about our church broadly: (1) Christ’s restored gospel, (2) our body of Saints, and (3) our Executive leadership. The criminal and deceptive behavior of our Executive leadership has no impact on the validity of the restoration or the worthiness of innocent Saints.

    However, once we’re all aware of the financial crimes and deception of our Executive leaders we have a Canon responsibility to act. It’s unlikely any of those potential actions will be prevalent enough to drive results.

    For example, if all the finance and legal Saints aware of how severe this all is vote against sustaining all involved in the criminal activity, then it’s unlikely to out number those who feel the crimes are just a misunderstanding. Our faith no longer follows our Canon requirements for sustainings either, so Stake leaders would independently interpret the consequences of our dissenting votes. The measure most likely to drive results, withholding tithes, would also need to be prevalent to bring consequences to the criminals rather than just those Saints acting in-good-faith. That’s unlikely.

    In my opinion Saints with an accurate understanding of what has occurred are left to just swallow this, so we can keep practicing in the restored church among the body of Saints or make ourselves 2nd class members by seeking to address the issue and facing retaliation from local leaders.

  199. Sam,

    I agree that we don’t know enough to hold the church’s legal counsel responsible–sorry if I sounded as if I was blaming them. But I would also say that the leaders asking them if there was a way to keep a low profile wasn’t a bad thing in and of itself either.

    Old Man,

    No one really knows the answer to that question–and yet a lot of folks are assuming that the church’s reasons for doing so must be sinister. I’m of a mind to give the church the benefit of the doubt–at least until we know more than we do now. I will say this–protecting its land purchases or discouraging folks from seeking huge settlements with the church (and everything in between) might be some good reasons for keeping a low profile.


    I think we’d have to prove that the leaders were acting in bad faith before we could charge them with being dishonest toward the church. Remember, right there in the second paragraph of the SEC’s order it says that the church does not admit (or deny) any of the SEC’s allegations against it.

  200. Jack,

    Did the 1st Presidency and Presiding Bishopric know they had potentially broken the law for SEC filings in 2014 and 2017? In 2019, and after, were they aware they had broken the law? In each of those years did they, or the Church Audit Department who reports to them, disclose those material issues to members in General Conference?

    Doctrine & Covenants holds Saints responsible to oversee how church leadership manages our institutional finances. While it is true the Executive leaders of the church have refused to share our internal Audit Reports in general and relevant deliberative communications about the crimes regarding EPA in particular we’re still accountable. We can’t fully assess how guilty (or negligent) they are collectively or individually without direct access to our organization’s evidence.

    What we can assess right now is how honest and forthcoming they’ve been in previous attestations as material potential crimes were identified internally, and then confirmed and settled with regulators. In all associated GC attestations they oversaw Audit claiming “in all material respects” there were no known issues.

    Although our church press release on the matter acknowledges “[criminal] ‘mistakes’ made” it is also true one benefit of settling is negotiating refuselal to acknowledge guilt in consideration for the money offered as part of the settlement. You can do anything in this world with money.

  201. Grizzrbear55 says:

    Personally, as a lifetime member of the Church, I’m becoming increasingly disgusted by a presumed “Church of Christ” managing an investment and real estate portfolio of over $100 billion dollars. This, plus the behavior and choices of leadership over following the law – have pretty much destroyed any trust I had remaining that “our” resources are being used as Christ would. This is not good.

  202. Grizzrbear55 says:

    I hope that “our leaders” will never again, attempt to give a talk from the pulpit on the topic of Honesty, Integrity…..and “The Widows Mite”. To do so now, would be monumental hypocrisy.

  203. So, apparently one motivation church leaders had was they worried members might miss out on the blessings of paying tithing to the church if they knew the truth of how much money they had accumulated?

    I appreciate Elisa’s observation that how the church is handling the money does not answer to any of its stated 4-fold missions. I’ll add that much of the accumulation occurred *after* the 4th mission was added, “Dec 10, 2009 — The LDS Church is adding, “to care for the poor and needy—KSL”

    Heartbreakingly ironic.

    Maybe LDS Church leaders could give members the benefit of the doubt. I’ve observed that since the Church’s vast accumulations have become known, many members choose to follow Christ’s words, “Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.” (Matt 25:40. They have chosen to follow Christ, and now donate monies where it is needed and used wisely. Many donate where it helps people.

    This is another example of the LDS Church infantilizing its members.

    It is also notable that the church’s supposed interest in members’ receiving blessings from paying tithing serves the institutional church better than it serves the institutional church’s purported mission. By obscuring information, members were not allowed the right of making an informed donation.

  204. Charlie Young says:

    I wonder how members, non-members, and ex-members would have reacted if the church had avoided this obscuring of holdings and simply had full disclosure.

    A successful portfolio would be diversified….

    What would/will be the reaction IF we see that the church’s portfolio consists of pharmaceutical companies, foreign companies, technology companies, etc.

  205. The 5 million SEC fine was a slap on the wrist. The real fine to the Church will unfold over the next several years as members leave in disgust and others will curtail what they pay in tithing to the Church. This will forever be a credibility stain on the Church as it will be referenced many times in the future. If the church can’t be transparent with its members, why should members be transparent with the Church about their true income that translates into what tithing they pay.

  206. A Disciple says:

    The 13th Article of Faith begins “We believe in being honest, true, ….”

    What the First Presidency did was not honest. They purposely executed a deception. Any talk the Church leadership gave or now gives on honesty will be stained by the reality that for over 20 years the First Presidency chose not to be honest and not to be true.

    Elder Paul H Dunn was “retired” after his problems with the truth we’re disclosed. Why should it be any different for the senior church leadership?

    Second point: why is the church hoarding money all the while so many people are desperate and could have their suffering eased? These words from the Book of Mormon are piercing: “ye do love money, and your substance, and your fine apparel, and the adorning of your churches, more than ye love the poor and the needy, the sick and the afflicted.”

    The Church leadership surely loves its money. It collects it and collects more and hides the extent of what is collected from the church and the world.

  207. A Disciple,

    From the book of Mormon:

    “And it came to pass that I saw and bear record, that the great and spacious building was the pride of the world; and it fell, and the fall thereof was exceedingly great. And the angel of the Lord spake unto me again, saying: Thus shall be the destruction of all nations, kindreds, tongues, and people, that shall fight against the twelve apostles of the Lamb.”

  208. At this point (after 200+ comments) I strongly suspect nobody’s reading to the end of the comments anymore. But if anybody is, and is interested, I just wrote up a piece that goes into much more detail about the legal regime:

  209. I’m reading every single response. After working in the field of nonprofit governance for 40+ years, I’m simply devastated. Until this point I had always been proud of how the church operated with honor, integrity and transparency (an operating imperative required by IRS to hold a 501 (c)3). Now, ugh, choke, sigh, cry, puke.

  210. Bro. B. says:

    Is it possible that the advisors the FP relied on were ignorant of the rule that the 13 filing companies had to have control? Or that if they knew, they didn’t advise the FP? If not, how do we know that?

  211. Damascene says:

    Bro B,

    It would be so wonderful if this was all simply a case of poor advice. Unfortunately, the SEC documents are available to the public and the details are horrible.

    The FP was absolutely involved in all of it.

  212. Damascene,

    That’s the SEC’s take on it–not necessarily church’s. The order (IMO) is kind of like a settlement that both parties agree on — with fair amount compromise I assume — in lieu of going to court.

    Also, I think it’s important to remember that the church does not admit or deny any of the SEC’s allegations–which can be found in the second paragraph of the order.

    The church hasn’t released a whole lot of information vis-a-vis their side of the story. Even so a few tidbits can be found here in the Q&A section of the article:

  213. Damascene says:

    Jack, in this situation, I see the SEC as the neutral party. They have zero reason to make the LDS church look better or worse. They simply stated the facts.

    The Deseret News is owned by the LDS church. They are not neutral.

  214. You may be right in principle about the SEC’s neutrality. Even so, if the church had chosen to fight the SEC’s allegations in court–then being neutral (or not) would have been a moot point. And so what we’re really dealing with here (IMO) is the question of how far the church was willing to go in compromising with the SEC before making a decision to clear its name in court.

  215. Jack, apparently the Church was willing to go far enough in their discussions and negotiations with the SEC to settle on the current SEC Order, which is entirely damning to the Church. And yet they accepted it. For a ‘slap on the wrist’ fine, as you call it. So, yeah, either the Church knows that the facts of the SEC Order hold up or, somehow, the Church didn’t have either the resources (impossible) or the wherewithal to clear its name (which, given the how terrible it is, any reasonable organization would have done if the facts were not true). Your understanding of a settlement process is basic and misleading. And it’s the only thing you have going for you.

  216. Damascene says:


    “Clear their name in court”. Unfortunately, you are making the assumption that the church was somehow innocent, a little gullible and was simply led astray.

    Please go read the details.

    While I do not work within the world of finance, a dear friend runs billion dollar funds. He sent the SEC case to me and was just appalled at the actions of the church. The highest leadership of the church was completely and fully involved in this.

    Why is the church paying the fine? Why did they post “We consider this matter ended?” Because they are completely in the wrong, got caught and do not want to discuss their wrongdoing.

  217. Brian, you’re absolutely right that my knowledge of these things is quite limited. Even so, let me suggest — as a non specialist in these matters — that we need to be careful not too allow our presuppositions to crowd out our ability to forecast real future possibilities.

    When you suggest that the church’s name is terrible–for whom are you speaking? Because it isn’t terrible to the vast majority of active members–nor do I think is it terrible to the financial community in general. Of course there are some who do believe the church is terrible because of the way it handles its finances. But even so my guess is that most folks who have a negative view of the church don’t like it for reasons other than what we’re talking about here.

    And so, if we’re talking solely about what the church should do to protect its reputation — and I grant that there’s a lot more to this than that particular question — what’s the best course of action? Should the church let the SEC’s order stand as it is? Or should it risk further negative publicity by challenging the SEC’s allegations in a long drawn out legal process?

    I don’t think the church caved because it new that the allegations were correct. Rather (IMO) it made a tactical decision vis-a-vis which course of action would cause less harm to the organization in the long run.

  218. Damascene,

    I don’t know much about the world of finance either–so we’re in good company. :D

    “Unfortunately, you are making the assumption that the church was somehow innocent, a little gullible and was simply led astray.”

    I believe that the church made some mistakes vis-a-vis procedures–but, yes, I’m giving it the benefit of the doubt with regard to the morality involved.

    “Why is the church paying the fine?”

    My response to Brian answers that question–at least the way that I see it.

  219. Jack, I said nothing about the Chhrch’s name.

  220. OK–so that parenthetical must be referring to the SEC’s order rather than the church’s name. I misunderstood what you were saying–but will you meet me half way? That is a rather long sentence.

    Even so, I think the final two paragraphs of my last comment are still applicable. And I apologize for misjudging you (in the first two paragraphs).

  221. Lots of comments! I for one can’t get worked up about the church not filing the forms in the way the SEC wants them to. There was no crime, no embezzlement, no misuse of funds, no tax avoided illegally, no one was harmed financially, morally, ethically, or any other -ly. All the money was there in the paper trail. That the SEC’s forms were not respected… well, I really am not sure why I should care, whether I was a believing Latter-day Saint or just some guy who had never heard of the church.

  222. Damascene says:

    Mark, imagine that your work full-time and your wife is a SAHM who does a little public speaking and volunteer work on the side. Imagine that while you earn all the money, your wife handles the finances. You trust her and just assume that she is doing the right thing with the finances.

    Now, imagine that your wife took the financial joint assets and put them into 13 different stock accounts without your knowledge. Imagine your wife asked 13 of her relatives to each put one of the accounts under their name as the primary account holder with the verbal understanding that the assets were really hers. Imagine that for 20 years, your wife managed all of those accounts and made a huge profit and never told you. The two of you file a joint tax return every year for 20 years and your wife leaves all of those accounts off of the paperwork.

    In year 20, you two go through an IRS audit and during a deep search, those accounts all pop up and the IRS asks about them. You are stunned. You never knew she was hiding assets from you. The IRS fines both of you. The IRS requires that all assets get moved into accounts that have both of your names on them and the assets are required to be disclosed on tax forms.

    Do you lose some trust and faith in your wife? Do you wonder why she was hiding assets from you?

    All the community assets still exist. You were not financially harmed.

    Because you are okay with what the church did, I assume you would be okay with your spouse doing the same.

  223. Damascene,

    I’d add a few components to the analogy:

    Imagine that your wife was responsible for growing your savings from tens of thousands into millions because of her wise investments.

    Imagine that she was a prophetess.

  224. Damascene says:

    Fiscal growth is great. Hiding assets is not.
    Whether or not the wife is a prophetess, I think most spouses would feel a breach of trust for being left out of the communication. So much of a marriage is about trust. All significant relationships involve a high level of trust. For me, I cannot no longer blindly trust the LDS church. Once a person or an organization loses trust, it is hard for them to gain it back. The LDS church is not even trying. They would rather lose members than have hard conversations.

    BTW, Miriam was Mose’s sister. She was second in command — ahead of Aaron who was their other sibling. She was absolutely a prophetess in the Old Testament. In LDS Sunday School lessons, she is never represented as a prophetess. She is represented as “being inspired.”

    The only prophetess I can think of as being acknowledged in the LDS lesson manuals in Deborah.

  225. For my part, if I were to learn that my wife, whom I trust implicitly (and who, in fact, does take care of our finances) had grown our rather modest savings into millions, I’d be overjoyed. So much so that whatever feelings of betrayal I might harbor because of the secrecy involved would be swallowed up in the thrill of learning that our little nest egg had increased one hundredfold.

    Now that’s not to say that I wouldn’t have questions about her moving the funds into secret accounts and whatnot. And who knows but what her motive for so doing may have been rooted in a fear that certain characters among our extended family and close friends would have tried all too hard to get a piece of the pie had they become aware of the miraculous growth of her investments.

    And on top of that, if she were to tell me of her scrape with whatever bank or government agency that imposed a fine of .005% of the total investment package for knowingly — though she might insist “naively” — breaking certain protocols vis-a-vis the mechanics of money management–I would assume that it was a minor infraction because of the minimal amount of the fine.

    And so tying this analogy to the real events at hand–I have to say that I am indeed thrilled by the miraculous growth of the church’s surplus. And I’m exited to see how the church will use its abundance to further the purposes of the Kingdom.

  226. Jack, yours is a terrible analogy. It’s not remotely about the money. It’s about the devious lengths the Church took to perpetuate deception by NOT disclosing its fiscal status with full transparency in accordance to nonprofit law. As a condition of maintaining their nonprofit status, the church had to agree to disclosure the full entirety of its money and its vast operations in their annual 99O tax returns. Legally, the church’s annual tax returns must show every red cent of assets and revenues of all kinds – including land, investments, interest in savings, all holdings, revenue, and charitable gifts, etc. By splitting up money and assigning money to LLCs (which are by definition- NOT nonprofits) is to deliberately act contrary to federal law. It’s utterly astonishing that this has been going on for years, and was authorized by the highest level of church leadership.

    In your scenario, your wife is a good steward acting in good faith. In this real life situation, the church deliberately and knowingly violated nonprofit law in an effort to hide its wealth. I’ve seen nonprofits lose their tax exempt status for far less.

    You should also know that as an active member of the Church, I’m utterly devastated and struggle to reconcile the Church’s actions with the most basic ARTICLES of FAITH I learned in primary. I’ve spent my entire career specializing in nonprofit governance and I know and thoroughly understand nonprofit law. Finding out about this ruling against the Church is a literal punch to the gut. I’m flabbergasted and saddened beyond words. Now I am wondering….
    🎶🎵Where can I turn for peace? 🎶🎵

  227. Damascene, I know it’s just an analogy but it is one that falls apart quickly because in the case of my family’s income and assets, there would be considerable tax implications, taxes due etc. Tax fraud on that scale might mean jail time. But what the church/advisors/lawyers did is something else altogether: a questionable way to shuffle the paperwork around which didn’t cheat anyone out of anything but allowed the church to achieve its own desired ends. It got caught, the SEC said no, the form can’t be used in that way. And now, you want me to be mad about that?

    But overall I’m with Jack. I’d be confused at what exactly my wife did and why, but if she grew our savings into millions and all the IRS said was “use the right forms next time, here’s a small fine”, I’m not sure why I’d be mad at her. We’d retire!

  228. Rebecca,

    My analogy is an attempt to convey what I personally believe to be the real narrative–or at least something close to it. You may disagree with the analogy because you see the facts of the situation differently than I do. Even so, I think there are a lot of people with whom the analogy — though not perfect — would resonate.

    I’m sorry for the angst that you’re experiencing over this. My sense is: give it time. I’m confident that with some hindsight there’ll be greater clarity as to the mechanics and the morality involved with the whole thing.

    What we don’t want to do is act too hastily without having a good sense of the big picture–as many of the saints did over the failure of the Kirtland Safety Society. Because the sad irony is: years later it would become apparent that the KSS debacle was really part of a larger national crisis–and not due (primarily) to any mismanagement on the part of Joseph Smith.

  229. Honestly (yep, ironic to use that word) while I don’t like the law breaking and illegal activities, I take the biggest issue with being directly LIED TO by my spiritual leaderss and told from the General Conference pulpit over and over that the finances were all in order when they (both the FP and audit dept) knew that statement was a lie.

    Over and over it has been discussed how pointless that statement was given no numbers or contex. That piece of conference could easily have been dropped when they first started breaking the law and no one would have cared bc it was a pointless statement.

    But instead they chose to keep it and repeatedly, knowingly lie to all of us as members. Truly no excuse can be made for that, it was just lying for the sake of lying and it is 100% not OK.

  230. I don’t think the GC audit statement was a lie because of this form issue. I think it’s obvious the church is a good steward of funds and tries to spend them responsibly and isn’t cheating anyone out of what is due to them. And that the church does what is possible and prudent to prevent someone from misusing or stealing funds at any level of the church.

  231. Damascene says:


    You come to this conclusion due to what hard evidence? The church has not shared financial information in over 60 years.

    You have very warm feelings about the organization. Many people do. There is little evidence to substantiate your position.

  232. Damascene,
    No hard evidence?? oh no! lol All we have are our feelings. And until such time that I am proven wrong, I’ll choose my feelings to be good.

  233. About 20 years ago, my bishop told me to apologize to a Catholic boy that I led astray by going to 2nd base with before I got to school. I was at BYU and had to call the guy at his college. The experience was so humiliating and humbling, but I couldn’t take the sacrament until I apologized. Too bad I didn’t know then that I could have just said the matter was closed!

  234. Kate,

    You paid your respective fine–and as far as we’re concerned the matter is closed.

  235. Anon this time says:

    The real transformative decisions on this issue were made during the Gordon B. Hinckley administration. I recall that President Hinckley, like some other leaders, had a penchant for obfuscation. He would rather dodge or hide problems than deal with them head on. Remember how he wanted to hide at least one of the Hoffman forgeries? I believe it was a defensive response to information he did not understand or could cope with. He was not a scholar or historian. Nor did he trust average members to see this material. They saw it anyway! Do you remember his interview with Mike Wallace in which he obfuscated on several theological/historical points? Even some church members thought he had lost his mind until he walked back his talking points from that interview at the next General Conference.

    What I see is that the church is an institution which professes that its leaders are prophets and they are seen as much more than mortal men. It seems that this works fine for slowly developing theology, but is impractical when making financial decisions in the real world. Hinckley’s (and others) penchant for obfuscation got hardwired into church financial practices and resulted in some real pain for observant members and a hefty fine.

    Obfuscation is a convenient practice in the short term, but can have devastating long-term consequences with a loss of personal and institutional trust. IMO, transparency is best.

  236. From GC 2005: Based upon audits performed, the Church Auditing Department is of the opinion that, in all material respects, contributions received, expenditures made, and assets of the Church for the year 2004 have been administered and recorded in accordance with appropriate accounting practices, approved budgets, and Church policies and procedures.

    Each year I looked up included the “assets of the church” which would include investment fund(s) are “administered and recorded in accordance with appropriate accounting practices” which would include not breaking the law.

    I don’t understand how that can be understood as anything other than a flat out lie from the pulpit.

  237. Great article!!

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