INTRODUCTION

The First Amendment empowers every citizen to petition Congress. To address systematic accounting fraud, false statements, and abuse of tax-exempt status by a $100 billion securities investment business, David A. Nielsen respectfully submits this Memorandum and supporting materials to the U.S. Senate Finance Committee and its Subcommittee on Taxation and IRS Oversight.

Oversight is needed to rectify a glaring double standard in tax enforcement: tolerating influential, politically connected organizations that use fraud and false statements to unlawfully claim tax-exempt status. Since most taxpaying citizens are held accountable if they violate our tax laws, the result is that law-abiding Americans not only bear a greater share of the tax burden, but also lose confidence in the fairness of our tax system.

For 22 years, the corporation known as Ensign Peak Advisors, Inc. (“EPA”) has employed corrupt practices—falsified books and records, false statements, and deception—to masquerade as tax-exempt, even though EPA failed to engage in any charitable activities for 22 years. Moreover, for many years EPA management have operated corruptly, without basic controls and with fraudulent accounting, and have conspired to hide EPA’s behavior and assets from the IRS and other government entities. EPA’s managers have also regularly permitted large assets to be “deleted” from EPA’s books, which is strong evidence of “private inurement.” With such evidence of private inurement and with no charitable activities over the period, it is clear that EPA has never been tax-exempt.

EPA’s ongoing deception to masquerade as tax-exempt also has allowed it to compete illegally—and unfairly—with other securities investment firms. As a result, EPA improperly has reaped billions in untaxed income that should have been taxed. EPA is thus liable to the Treasury for billions in unpaid tax and penalties, as shown by the evidence discussed here.

This Memorandum summarizes the evidence and analysis that Mr. Nielsen, through counsel, has already provided to the IRS and DOJ in November 2020, with an update in March 2022. The IRS and DOJ deserve credit for their many successes despite budgetary constraints, but currently may face other demands that make it challenging to deal with powerful, well-connected organizations. Oversight will ensure that these agencies do not shrink from the responsibility of correcting this double standard by enforcing existing laws violated by EPA, and by holding EPA and its management accountable. Other taxpayers should no longer be forced to bear the tax burden of wealthy organizations that fraudulently claim tax-exempt status.

Finally, experience with compliance shows that every responsible organization has law-abiding people who want the organization to operate lawfully and ethically. Principled oversight and a commitment to compliance will empower those voices to identify law-breaking, to take corrective action, and to create a better organization in which they can take pride.