A proposed class action alleges the Corporation of the President of the Church of Jesus Christ of Latter-day Saints (COP)—the legal entity behind what’s informally known as the LDS or Mormon Church—secretly funnels an “enormous portion” of donations intended for charitable causes into its investment portfolio.
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The 38-page lawsuit says the Salt Lake City, Utah-based church promises members that their expected tithing contributions—which traditionally amount to 10 percent of their income—are “always used” for charitable purposes. Likewise, COP represents to anyone looking to give to its philanthropic arm or humanitarian services that “100 percent of every dollar donated is used to help those in need,” the case relays.
Despite these representations, billions of dollars in tithing funds and philanthropic donations have been diverted to the church’s investment management company, co-defendant Ensign Peak Advisors, where the money is continually reinvested and never used to fund church organizations or efforts, the complaint claims.
According to the case, the defendants’ alleged scheme remained deliberately hidden from the public for decades until a former senior portfolio manager at Ensign filed a whistleblower complaint with the IRS in 2019.
The whistleblower report revealed that Ensign, a “$100+ billion” non-profit entity created in 1997, “exclusively for religious, educational and charitable purposes,” made zero distributions in the first 12 years of its existence and zero distributions in the five years prior to the filing of the complaint, the suit relays.
The lawsuit, citing the whistleblower report, also claims that Ensign’s only two outflows in 22 years—$600 million in 2009 and a series of payments made between 2010 and 2014 totaling $1.4 billion—were respectively used to bail out a failing for-profit life insurance company owned by COP and construct the City Creek Mall in Salt Lake City.
Even after the whistleblower came forward in 2019, the church continued to misrepresent its use of donated funds, assuring the public in a statement issued later that year that it “complies with all applicable law governing our donations, investments, taxes and reserves,” the case says.
In reality, the defendants have severely understated the extent of Ensign’s assets in sworn financial reports to the IRS in an effort to conceal its “large-scale hoarding” of donated funds, the complaint alleges.
For example, “[o]n Ensign’s [Form] 990 for 2010, its President signed under penalty of perjury that the ‘Book value of all assets at end of year’ was ‘over 1,000,000’ dollars,” the suit reads. “In actuality, the book value of Ensign’s assets at the time was approximately $40,000,000,000[.]”
In the same vein, the defendants agreed in 2023 to pay $5 million to settle charges from the U.S. Securities and Exchange Commission (SEC) alleging that they were evading public reporting requirements, the suit relays. Per the complaint, the SEC claimed that COP and Ensign were hiding their assets using 13 out-of-state shell corporations “to avoid negative consequences in light of the size of The Church’s portfolio,” which the suit says has “yielded more capital than some nations.”
The plaintiffs, three individuals who donated tens or hundreds of thousands of dollars to the church over the past decade, claim they believed, based on the church’s representations, that their money would be used only for charitable purposes. Had the plaintiffs known how the church actually used their contributions, they would not have donated their funds or they would have donated smaller amounts, the filing contends.
“[The plaintiffs] did not believe and had no reason to ever suspect that COP would take any portion of their donations and invest it into Ensign, where it would sit and accumulate interest in perpetuity and otherwise be used in manners antithetical to the purported mission of COP and Ensign,” the complaint states.
The lawsuit looks to represent anyone in the United States who donated money to the Church of Jesus Christ of Latter-day Saints or Ensign Peak Advisors since January 1, 1998.
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