Utah: Mormons have to pay millions in fines to the US Securities and Exchange Commission

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Mormon Temple in Salt Lake City, Utah

Photo: Mike Blake / REUTERS

The Church of Jesus Christ of Latter-day Saints (LDS) and its investment company were fined $5 million.

They have used shell companies to disguise the size of the church-controlled portfolio, the US Securities and Exchange Commission said.

Also known as the Mormon Church, the denomination sustains billions of dollars in investments in stocks, bonds, real estate and agriculture.

Much of their portfolio is controlled by Ensign Peak Advisers, a non-profit investment management company overseen by church leaders.

“We allege that the LDS Church Investment Manager, with the knowledge of the Church, has gone to great lengths to avoid disclosing the Church's investments, thereby depriving the Commission and the investing public of accurate market information,” said Gurbir S. Grewal, Director at the US Securities and Exchange Commission.

The church has agreed to pay $1 million and Ensign Peak will pay $4 million in penalties for the violation.

Shell companies and »managers«

Federal investigators said the company had failed to file required documentation to disclose the value of some assets for 22 years, in violation of the Securities Exchange Act and agency regulations.

Instead, Ensign Peak, with the knowledge of the Church, submitted the forms through 13 shell companies they founded.

They had "business managers," most of whom were employed by the Church, sign the required shell company applications.

"The church was concerned that the disclosure of its portfolio, which had grown to approximately $32 billion in 2018, could have adverse consequences," the agency said in a statement announcing the indictment.

Mormons pay 10 percent of their income to the church

In 2019, a whistleblower claimed the church had hoarded nearly $100 billion in funds instead of using them for charity.

Ever since, Ensign Peak has been a source of intrigue and mystery for the nearly 17 million-member, Utah-based denomination, which encourages its members worldwide to give 10 percent of their income as so-called "tithes."

The Church and its investment arm have been increasingly confronted with the fact that tax laws in the United States largely exempt religious groups from paying taxes.

Ensign Peak is registered as a supporting organization and integrated service organization of the Church.

In a statement, church officials said, "We reaffirm our commitment to comply with the law, regret the mistakes made and consider this matter closed."

czl/dpa/Reuters