Minnetonka man wrote exposé about Mormon church investment fund

Lars Nielsen has been challenging the tenets of the Church of Jesus Christ of Latter-day Saints for nearly a decade.

The 41-year-old Minnetonka health care consultant's criticisms of his former church and its hierarchy have exacerbated a particularly messy divorce with his devout Mormon ex-wife, filling hundreds of pages of legal filings in Hennepin County District Court.

Last week his concerns spilled into the spotlight when he publicized a whistleblower complaint that his twin brother David had quietly filed with the IRS, alleging that the Mormon church has misled its members, the public and the government about a $100 billion tax-exempt investment fund since it was created 22 years ago.

The church responded with a terse statement defending its practices and stating that reserving funds is both prudent and comports with scripture.

"All Church funds exist for no other reason than to support the Church's divinely appointed mission," it said. "Claims being currently circulated are based on a narrow perspective and limited information. The Church complies with all applicable law governing our donations, investments, taxes and reserves."

Lars Nielsen told the Star Tribune last week that he stepped away from his job for several months to prepare an hourlong YouTube video, a seven-minute summary version and a 74-page "Letter to the IRS" documenting and explaining his brother's concerns about the investment fund, which had employed David Nielsen for nearly a decade as an investment manager.

Lars Nielsen said he met with lawyers and financial experts to prepare the "exposé" before giving it to the IRS and to reporters for the Washington Post and an internet publication called Religion Unplugged. He said he released the information publicly to pressure the church to admit its errors, pay any back taxes, fines and penalties that it owes, and make reforms in how it is financed.

"I feel that it is right for the American taxpayer and the Mormon tithe giver to know what their money is going towards and what it is not going towards," he said.

While the church spends much of its members' contributions on typical church activities, he said, it takes in far more than it uses and the surplus has gone to a rapidly growing investment fund called Ensign Peak Advisors Inc. (EPA).

"The leaders of the Mormon church have told the investment managers and advisers that the purpose of the money is to be used after the second coming of Christ, or to be used in the battle of Armageddon," Nielsen said.

If EPA was created to hide or hoard cash without intending to use it for a religious, educational or charitable purpose, "then it was created for a fraudulent purpose and therefore its tax-exempt status is revoked retroactively," he added.

Nielsen said he makes no claim to any financial reward if the IRS were to sanction the church. But he figures his whistleblower brother could be in line to get $1.5 billion to $3 billion.

Reese Petersen, a doctoral student in physics at the University of Minnesota and a member of its Latter-day Saints Student Association, said he doubts the allegations will be substantiated.

"I have served as a financial clerk for the church and I can testify that the church is very honest, thorough, pragmatic and conservative with respect to finances," he said. "I know that the church saves for a time of need and can operate and insure its own operations for a time in the face of disaster."

Peter J. Reilly, a certified public accountant, wrote a column for Forbes arguing the Nielsens raised some interesting issues but it was "pointless" to report the fund to the IRS. Nothing in tax law prevents churches from accumulating wealth, he said.

The Nielsen brothers are the oldest sons in a family of 10 children. They grew up as practicing Mormons in Modesto, Calif., a farming community in the state's Central Valley, and completed their undergraduate studies at Brigham Young University in Utah.

Lars Nielsen enrolled at Harvard University, where he completed his doctorate in organic chemistry and his master's of business administration (MBA). He married Rebecca Edwards, another Harvard MBA, in 2005 in Salt Lake City. They agreed to raise a family in the Mormon church.

Both landed high-paying jobs at UnitedHealth Group in Minnetonka, though Rebecca gave up her job when their twin girls were born in 2007. Another daughter followed in 2009. Soon after, Lars Nielsen said he became "a little bit fixated in understanding the truth about Mormonism, its history."

Meantime, he said, David Nielsen had finished his MBA at the University of California-Los Angeles and landed a job with EPA, a tax-exempt supporting organization to the church.

"He loved it, having spent five years on Wall Street" working at a hedge fund, Lars Nielsen said. But he said his brother grew concerned over how the fund's investments were being set aside and payments for two projects that he contends didn't qualify as educational, religious or charitable activities.

David Nielsen resigned in August, saying his position had become unworkable because his wife and children had left the church and asked him to follow, according to the Washington Post. He could not be reached for comment and has not responded to interview requests.

Lars Nielsen said his brother did not want to publicize the complaint yet, and remains a "card-carrying" Mormon.

"He always has held on to the idea that the Mormon church is a great, wonderful institution and that there's got to be a reason why EPA is sitting on all this money," Lars Nielsen said. "He does not want people to attack his family. He's already received some threats."

Lars Nielsen decided to go public anyway, saying "there is no better time for bad news than today. … We can begin the healing process."

Lars Nielsen's schism from the church didn't begin with EPA. In a September 2012 divorce petition, he cited irreconcilable differences with his wife 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.

Rebecca Nielsen declined to comment for this article. In court papers, she responded to the divorce petition noting that she had a temporary order for protection against her husband, alleging a "documented pattern of intense and violent emotional abuse" and "mental instability (including making suicidal threats)." She said he has falsely characterized her religious practices as extreme.

In a sworn statement in 2012, she said her husband had been pulling away from the life that they had envisioned together for about 18 months.

"He has adopted a secular worldview and rejected the theology of Mormonism. He now wants to put Mormonism on trial,'' she said.

The protection order ultimately expired and the couple divorced in January 2014. They share custody of their children, and Rebecca Nielsen was given the authority to make religious choices for them. But their disputes continue.

Rebecca Nielsen filed a motion in late October asking the court to appoint a special master to enforce prior court orders. She alleged that Lars Nielsen has denigrated the church and sought to equate it with a cult. She seeks fines and other sanctions against him if he tries to influence his children to shun the church.

Lars Nielsen responded in November, saying his ex-wife is right that he feels that he "left the Mormon church for very good reasons."

In an interview, he said he just wants the church to be transparent and honest.

"I personally have a hard time with the fact that when I was a branch president in Mexico as a Mormon missionary, 20 years old, telling old women who didn't have floors other than dirt in their homes that the Lord would bless them if they didn't have tortillas for the week and continued tithing to the Mormon church. That's what I was told to say.

"I cannot stand the idea of those people finding out seven years from now when they could find out today that all of the money they gave and all of the money they would give between now and then would go to a mountain of gold called Ensign Peak Advisors that would never get used on anything religious, educational or charitable.

"The right side of history is to get information to the public and to the legislators and to give the Mormon church a chance to respond, a chance to acknowledge what they've done, and to improve."

Dan Browning • 612-673-4493