One year after ReligionUnplugged.com broke stories about a secretive investment firm connected to the Church of Jesus Christ and Latter-Day Saints, the firm – Ensign Peak Advisors (EPA) – now operates with slightly more transparency about its financial holdings even as scrutiny from Washington may not be complete. 

The series of stories in December of 2019 revealed a whistleblower complaint filed with the Internal Revenue Service that alleged the LDS Church funneled member tithes into EPA, a non-profit supporting organization controlled by the church, and amassed more than $100 billion in owned assets under management over 23 years. The complaint alleges that EPA, a non-profit registered as a 501c3 and a 509a3 supporting organization, did not make charitable distributions but that it did send $2 billion to help two for-profit companies.

If EPA were a hedge fund, it would rank among the top five hedge funds for Assets Under Management. Its holdings dwarf those of endowments at any university such as Stanford, Harvard or Yale. The financial acumen of the LDS Church and its members, often referred to as “Mormon,” is a significant attribute of a distinctly American religious minority that celebrated its bicentennial, a 200-year history that includes persecution, resilience and ambition.

The stories in ReligionUnplugged.com and The Washington Post rocked both the investment world and the religion world, gaining hundreds of thousands of page views as readers were intrigued by the revelation of previously hidden LDS finances. More than 150 other stories followed in other media outlets. The whistleblower complaint and related YouTube videos were also hot topics by Mormon and ex-Mormon communities on social media.

For the original stories in December of 2019, Religion Unplugged received awards from Religion News Association, The Society for Advancing Business Editing and Writing and was a finalist for an EPPY Award for best business reporting from Editor & Publisher. Although the stories broke in 2019, the continued coverage and fallout was included among the top 25 religion stories of 2020 by the Religion News Association.

Response from the LDS Church

Leaders of EPA declined to comment in the original stories at ReligionUnplugged and The Post. They also did not respond to a request to comment this week for this update story. The LDS Church press office also declined to comment. After the stories broke in 2019, the LDS Church published a statement and posted three short videos to YouTube. 

“We take seriously the responsibility to care for the tithes and donations received from members,” the church statement said. “The vast majority of these funds are used immediately to meet the needs of the growing Church including more meetinghouses, temples, education, humanitarian work and missionary efforts throughout the world. Over many years, a portion is methodically safeguarded through wise financial management and the building of a prudent reserve for the future.”

The Wall Street Journal, which didn’t cover the story until February, 2020, made a unique contribution by visiting Salt Lake City and interviewing leaders of EPA and the LDS Church, which confirmed the previous reporting of ReligionUnplugged and The Post. It noted that the whistleblower report and media reporting on it “heaped pressure on the church to be more transparent about its finances, something the church has avoided for decades.”

The Journal reported that employees of the firm sign lifetime confidentiality agreements and most current employees were no longer told the assets under management figures for the firm. The Ensign Peak Advisors office is located above a food court in Salt Lake City and doesn’t appear in the list of companies at that building lobby.

The head of EPA, Roger Clarke, indicated to the Journal that EPA is a “rainy-day account to be used in difficult economic times.” Some church leaders suggested the fund could be used in the event of an economic or financial crisis. Other former employees said the firm’s war chest related to preparation for the second coming of Jesus Christ. Clarke told the Journal, “We don’t have any idea whether financial assets will have any value at all” during a second coming. 

The roughly 16 million LDS Church members worldwide are expected to give tithes every year, 10 percent of their income, to the church. And that money is the primary revenue source flowing to the church and EPA. The Journal reported that LDS officials worried members might not want to tithe as much if they knew about the massive investment portfolio at EPA. 

“This tithing almost starts to sound like common law fraud,” said Jeanne Markey, an attorney at Cohen Milstein in Philadelphia who specializes in whistleblower complaints and SEC matters, in an interview with Religion Unplugged this past summer. “These LDS members are giving their hard-earned dollars to this organization. And, all of a sudden, it’s being invested in Apple and Microsoft? Why aren’t these people being told what is really happening?”

Clarke also acknowledged to the Journal that the firm used a system of more than a dozen shell companies to make its market holdings harder to trace, which Clarke said would prevent LDS members from trying to mimic the stock positions of EPA.

ReligionUnplugged columnist Richard Ostling, a former religion reporter at TIME magazine and The Associated Press and author of a book about mormonism, wrote a column in February noting the LDS Church move to give wider access to its governing document, the General Handbook, was a major development toward transparency. A recent piece in The Atlantic by McKay Coppins, a practicing LDS Church member himself, notes that the current 95-year-old President of the LDS Church, Russell M. Nelson, has overseen a series of changes including shorter church services, changed dress codes for missionaries (neckties no longer mandatory) and a campaign to minimize the word “Mormon.”

Coppins and ReligionUnplugged managing editor Meagan Clark also chronicled the church’s adjusted thinking on LGBTQ issues and its reversed policy on baptisms for children of same-sex couples. And while Coppins’ piece points to 700 new converts per day for the LDS Church, a piece by Emma Penrod for ReligionUnplugged shows a more complicated growth for the LDS Church as membership appears to be slowing in places it was once strong.

EPA Adds A Financial Disclosure

EPA started filing a quarterly 13F form on Feb. 14, 2010, with the Securities and Exchange Commission, which regulates publicly traded companies and other financial firms. Its initial filing revealed EPA had $38 billion in stocks and mutual funds at the end of 2019, including $1.5 billion in Apple and Microsoft. The firm had nearly $1 billion worth of shares in Amazon and Google’s parent company, Alphabet, as well. The firm reported $39.6 billion in its equity holdings in its most recent quarter, according to its Nov. 12 filing.

The filings do not include all the church’s financial holdings such as bonds and the church isn’t required to disclose its holdings in property or private companies. The SEC requires any institutional investor with more than $100 million in assets to file a 13F. “Studies have found that 13F filings also have serious flaws and can't be taken at face value,” Investopedia notes. “The SEC itself has acknowledged that 13F filings are not necessarily reliable because no one at the SEC analyzes the content for accuracy and completeness. After all, the infamous fraudster Bernard Madoff dutifully filed 13F forms every quarter.”

“It could well be that the reporting of the IRS whistleblower caused the SEC to contact them (EPA),” said Markey. “When you don’t have that transparency you are inviting a situation that is so dependent on someone’s good faith and fair dealing you can end up with situations like this… You end up with something looking like the Vanguard fund rather than a religious entity.” 

A spokeswoman for the Securities and Exchange Commission in Washington D.C. declined to comment when asked if EPA was fined or forced to file quarterly reports with the SEC after the reporting on the whistleblower complaint emerged in the business press and religion press last year. Lars Nielsen, a former LDS Church member who released the whistleblower document that he helped his twin brother write said he suspects EPA changed its behavior and started filing a 13F “preemptively before a fine could be put in place, which still may happen.”

“It wouldn’t completely shock me if the reporting kickstarted the disclosure,” said Sam Brunson, a law professor specializing in tax law at Loyola University of Chicago and, himself, a practicing member of the LDS Church.  

Along with the quarterly SEC filings, EPA appears to be more recognizable as an institutional investor in public companies now. It shows up increasingly in reports and press releases from those publicly traded companies. Some companies like to show when large and established institutional investors taking positions in their company, considering that a vote of confidence in the company. And those companies might consider it an honor when a morally and financially scrutinizing investor such as EPA buys shares. 

Penske Automotive Group, for example, released its quarterly earnings on Nov. 21, 2020 and noted in its press release that, among institutional and hedge fund investors, Ensign Peak Advisors increased its stake in Penske by 2,651 percent and now owns 181,578 shares of Penske’s stock valued at $7 million. 

Similarly, CapitalOne Financial Co., said on Dec. 9, 2020, that EPA had boosted its stake by 144 percent during the second quarter, bringing its holdings of CapitalOne to 892,979 shares valued at $55.9 million. 

Further Punishment from Regulators? 

David Nielsen, a former employee of EPA, filed the whistleblower complaint with the IRS in Ogden, Utah. He prepared the 74-page complaint with his twin brother, Lars Nielsen, who sent the complaint to ReligionUnplugged and other media outlets and posted YouTube videos about the complaint. 

A whistleblower such as David Nielsen could receive up to 30 percent of the proceeds collected by the IRS in a successful claim. But experts say the IRS does not pursue all whistleblower claims and is hesitant to take action against religious organizations such as churches, which enjoy more freedom under the tax code. 

The IRS is “already overworked and underfunded and a constant scapegoat for Congress,” said Brunson. “Going after a large religious organization? It’s not going to happen, especially since there’s no actual allegation of wrongdoing by the church – the most charitable read of the whistleblower document alleges a violation of the tax law by EPA.” 

In the complaint, the Nielsens argue that EPA used tax-exempt donations to rescue two Utah-based entities that were struggling during the 2008 financial crisis: a life insurance company owned by the church and a mall called City Creek Center in downtown Salt Lake near the church’s office. They also argue that EPA did not use its proceeds for charitable purposes and that the Church misled members about uses of the money. 

Markey notes that the investment firm inside of the unusual 509a3 structure seems “far attenuated from what was contemplated” by the lawmakers who established such legal structures. “It is normal to wonder if other religious groups are going to take advantage of this and create their own investment entities.” 

Some sources suggested at least one congressional committee led by Sen. Chuck Grassley, R-Iowa, had received notice of the whistleblower complaint and would be looking into the matter. But little follow-up in Congress seems to have happened so far, whether that is because of the Coronavirus pandemic or a lack of appetite by lawmakers to tackle the topic. 

Staff members on the Senate Finance Committee and the Joint Committee on Taxation did not return requests for comment ReligionUnplugged made by phone and email. 

“There’s not a ton of upside to Congress in investigating a church where the alleged wrongdoing isn’t defrauding members but rather not being transparent about finances in a manner that Congress has explicitly blessed through the tax law,” Brunson said. Others believe Grassley or other lawmakers could pick up the matter in a new year and under a new administration.

The Whistleblowers Wait

Lars Nielsen, who has a PhD and an MBA from Harvard University, has taken a full-time job in the health-care field, an industry he has worked in before. His large Mormon family is still fractured by the public whistleblower complaint and the various defections by some of the 10 siblings from the Church, including Lars. 

Lars says he and his twin brother, David, were extremely close growing up and into their adult lives but have not spoken in more than a year, when the whistleblower complaint was filed by David and released to ReligionUnplugged and other outlets by Lars. 

Religion Unplugged received a statement from David Nielsen by email in December, 2019, that said, “No one has been authorized to speak for me, including my brother, Lars Nielsen. Any public disclosure of information that has been in my possession was unauthorized by me. Repeated attempts to dissuade my brother, Lars Nielsen, from making public disclosures have been ignored. I will have no further comment on this matter.”

Lars Nielsen told Religion Unplugged that he and David took their faith seriously as well as science seriously growing up in an LDS family. They competed together in science bowls and sports like water polo, David playing goalie and Lars playing fielder. 

The brothers took classes together as undergraduates at Brigham Young University in Provo, Utah, often studying as lab partners. They went to separate places for their terms as missionaries for the LDS Church. They both went to elite graduate schools with David obtaining a Master’s in Business Administration (MBA) at University of California, Los Angeles and Lars obtaining an MBA and a PhD in Organic Chemistry at Harvard University. The brothers often visited each other by train or Chinatown bus lines between Boston and New York, when Lars was in graduate school and David was working at financial firms in New York such as Goldman Sachs and D.E. Shaw & Co. “It was a great time,” Lars told ReligionUnplugged. “We bonded over a lot of things.” 

Lars said he became disillusioned with the LDS Church and left it nine years ago. His departure from the church affected his own marriage and family life as his ex-wife and her extended family are still members of the LDS Church. The Minneapolis Star-Tribune, The Washington Post and others reported on the contentious divorce and legal filings between the former couple.

The Star-Tribune reported that Nielsen’s divorce filing in 2012 “cited irreconcilable differences with his then wife, Rebecca, rooted in religious beliefs. He said she adheres to a religion that considers him “apostate,” “lost,” “unworthy” and “not qualified for living eternally in a family.” And he said her religious practices were damaging his relationship with their young children.”

The Star-Tribune noted that Rebecca Nielsen, in a sworn statement in 2012, said her husband “has adopted a secular worldview and rejected the theology of Mormonism. He now wants to put Mormonism on trial.” The Washington Post reported that Rebecca’s father and cousin were high-ranking members of the LDS Church. The couple now share custody of their children.

David’s LinkedIn profile shows that he worked at Ensign Peak Advisors Inc. in Salt Lake City between 2010 and 2019, where he was a senior portfolio manager. Sources confirm that David’s job at EPA became complicated as his wife and children left the LDS Church. The whistleblower complaint noted that David had concerns about some practices at EPA since 2013 and voiced some of those concerns internally. David and Lars worked on a narrative about those issues at EPA. Lars said he wanted to make those allegations public, while David ultimately decided to file the evidence to the IRS as a whistleblower complaint. 

Lars says he is optimistic that a new U.S. Senate, U.S. Presidential administration and the congressional committees in Washington “will have bandwidth to deal with the issue. It’s not closed. There is a lot more that can happen.”

The stories haven’t escaped the attention of media and entertainment from Hollywood either. At least two filmmakers are looking into the story and whistleblower complaint as a subject for documentary films according to sources one of the filmmakers who spoke with ReligionUnplugged. 

Paul Glader is executive editor of ReligionUnplugged and a professor at The King’s College in NYC, where he chairs the program in Journalism, Culture and Society. He has worked for The Wall Street Journal, The Washington Post and the Associated Press and written for numerous other publications. He is on Twitter @PaulGlader

A Whistleblower in the Mormon Church

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