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Quoting Brigham Young, James Huntsman sues LDS Church, seeks to recover millions in tithing

Federal fraud case — which quotes Brigham Young — claims Utah-based faith misled members to solicit money for charitable work but instead used it for commercial purposes, points to $100 billion reserve fund.

(Trent Nelson | The Salt Lake Tribune) People at City Creek in Salt Lake City on Monday, June 22, 2020. The basis of a lawsuit filed by James Huntsman to The Church of Jesus Christ of Latter-day Saints involved the church's financing of the construction of the City Creek mall and surrounding development near Temple Square.

James Huntsman, a brother of former Utah Gov. Jon Huntsman, is accusing The Church of Jesus Christ of Latter-day Saints of fraud and has sued to recover millions of dollars in tithing.

In a federal lawsuit made public Tuesday, the California resident alleges the global church has “repeatedly and publicly lied” about the use of billions of dollars in member donations solicited to pay for missionary work, building temples and other educational and charitable work.

“Behind the scenes, however, rather than using tithing funds for the promised purposes, the LDS Corporation secretly lined its own pockets by using the funds to develop a multibillion-dollar commercial real estate and insurance empire that had nothing to do with charity,” alleges the suit filed in U.S District Court in California.

“[T]his is not a case about faith,” the lawsuit states, “it is a case about fraud and corporate greed.”

The suit, first reported by The Washington Post, asserts that “the LDS Corporation,” as it refers to the church, defrauded Huntsman out of millions in tithing with misleading statements and seeks the return of those donations, totaling at least $5 million, instead “to benefit organizations and communities whose members have been marginalized by the church’s teachings and doctrines, including by donating to charities supporting LGBTQ, African American, and women’s rights.”

James Huntsman

The lawsuit takes specific aim at allegations that a reported $100 billion Latter-day Saint investment fund built on member donations had paid out up to $2 billion at one point to back financially troubled church businesses, including City Creek Center, the upscale shopping mall in downtown Salt Lake City.

Church officials swiftly discounted the allegations Tuesday as “baseless.” They disclosed Tuesday in a written statement that Huntsman had resigned his church membership last year and was now “demanding through his lawyers that tithing he paid to the church as charitable contributions be returned to him.”

Spokesperson Eric Hawkins also repeated assurances from past church President Gordon B. Hinckley, made in 2003, that “tithing was not used on the City Creek project.”

Does the lawsuit stand a chance?

(Photo courtesy of The Church of Jesus Christ of Latter-day Saints) Brigham Young

The 50-year-old Huntsman is the founder and owner of Blue Fox Entertainment, a film distribution company in Southern California. He is the son of the late Utah industrialist-philanthropist Jon Huntsman Sr., who also served for a time as an area authority in the church.

The suit states that James Huntsman “has the utmost respect for the members of the church, and likewise respects their beliefs and customs,” noting his devotion to leadership roles as a faithful Latter-day Saint “almost his entire life.”

“Clearly, however,” the suit adds, “the LDS Corporation failed to treat Mr. Huntsman with the same respect.”

[Read James Huntsman’s lawsuit.]

Neither Huntsman nor his Los Angeles attorney, David Jonelis, responded to requests for comment.

One legal expert, Sam Brunson, a Latter-day Saint and a tax law professor at Loyola University in Chicago, said the lawsuit lacked specifics and “isn’t going to answer anything.”

Unless Huntsman’s tithing donations were made as a gift with explicit restrictions, Brunson said, he’s unlikely to have legal grounds to recover the funds.

The general rule is when you make an unrestricted donation to a charity, it’s the charity’s money,” he said. “And if you later discover that they’re doing stuff with the money that you don’t like, you’re out of luck.”

The 13-page lawsuit read more like a statement than a legal action likely to succeed, the law professor said, calling it “procedurally and factually deficient.”

And, noting some of the suit’s quirky language and presentation, Brunson added, “When you start your judicial complaint with a quotation from [early church leader] Brigham Young ... and you bold-italicize stuff in your complaint, you’re not filing a serious complaint.”

The lawsuit quotes the Mormon pioneer-prophet as saying: “If we accept salvation on the terms it is offered to us, we have got to be honest in every thought, in our reflections, in our meditations, in our private circles, in our deals, in our declarations, and in every act of our lives.”

The $100 billion complaint

(Illustration by Christopher Cherrington | The Salt Lake Tribune)

In its details, Huntsman’s legal action draws on claims revealed in late 2019, when a former investment manager for the church filed a whistleblower complaint with the IRS, alleging the Utah-based faith had nearly $100 billion in accounts meant for charity work but not spent that way, with some of it instead used to pull church-backed businesses out of financial trouble.

The allegations by David Nielsen, a former portfolio manager with Ensign Peak Advisors, revealed the investment arm of the church held one the biggest investment funds in the U.S. at the time.

In March 2020, fund managers quietly filed their first report ever to federal regulators detailing investments of some $37.8 billion in excess tithing paid by its nearly 16 million members, spread across a portfolio of more than 1,650 stocks and mutual funds, including Wall Street icons like Amazon and Walmart.

A subsequent filing with the U.S. Securities and Exchange Commission showed the fund gaining more than $6 billion in 2020, according to a FOX 13 investigation, a 16% jump during the pandemic.

Nielsen, who initially disclosed Ensign Peak’s $100 billion reserves in the IRS complaint with twin brother Lars, did not respond Tuesday to a request for comment.

A church spokesperson confirmed Tuesday that Latter-day Saint officials were not in talks with the IRS regarding the whistleblower complaint.

Huntsman’s lawsuit points to details in Nielsen’s allegations, specifically that $2 billion from the fund was used to help private church ventures, including an insurance firm called Beneficial Financial Group and City Creek Center, which debuted in 2012 after construction during the Great Recession.

The suit states that Huntsman “discovered” the church’s alleged “misappropriating” of tithing funds from the December 2019 complaint after Nielsen “bravely lifted the veil on the LDS Corporation’s fraudulent financial activity.”

Huntsman, according to the suit, “repeatedly approached the corporation and demanded the return of his donations” but, it said, the church refused, “effectively taking the position that it could do whatever it wanted with tithing funds.”

The lawsuit states that financial damages from the church’s actions “are not yet fully ascertained” but that they are “in excess of” $5 million.

“Faced with a corporation unwilling to take accountability for its false promises and fraudulent misrepresentations, Mr. Huntsman has regrettably been forced to seek recourse in the court system,” the lawsuit states.

“Hopefully,” it continues, “this lawsuit will put an end to the LDS Corporation’s lies and deceit once and for all so that the church can refocus its attention and efforts on following the path of righteousness and honesty paved by its former leaders.”

Hawkins, the church spokesman, noted that tithing funds are voluntary contributions by members “as an expression of their faith in God” and that the funds were “used for a broad array of religious purposes, including missionary work, education, humanitarian causes and the construction of meetinghouses, temples and other buildings important to the work of the church, as reflected in scripture and determined by church leaders.”

He repeated portions of Hinckley’s statement at April 2003 General Conference that funds for City Creek had come from “commercial entities owned by the church” and the “earnings of invested reserve funds.”

Church’s ‘rainy day’ fund

(Rick Egan | Salt Lake Tribune file photo) Presiding Bishop Gérald Caussé of The Church of Jesus Christ of Latter-day Saints speaks at a news conference in 2019. He oversees the denomination’s vast financial, real estate, investment and charitable operations.

As for the $100 billion reserve, the church has called it a “rainy day” fund to help pay for, among other things, operations in poorer parts of the world — such as Africa, where the faith is booming — where member donations can’t keep up.

Church officials said the money is less about stashing cash for the Second Coming, as was initially widely reported, and more about providing safeguards against more earthly events — like credit crunches, stock slides and recessions.

Presiding Bishop Gérald Caussé, the ecclesiastical leader who oversees the denomination’s vast financial, real estate, investment and charitable operations, noted a year ago that humanitarian expenditures have doubled in the past five years and that the church now provides nearly $1 billion annually in humanitarian and welfare aid. Latter-day Saint leaders say the church has provided record amounts of relief during the COVID-19 pandemic.

From the start, many tax experts doubted Nielsen’s whistleblower complaint would succeed.

“I don’t think David Nielsen will be able to retire on the reward from this case,” Forbes contributor Peter J. Reilly wrote days after the complaint surfaced. “That’s because there is not much of a case. … Ensign is not a private foundation. It is an integrated auxiliary of a church. And there is nothing in the tax law that prevents churches from accumulating wealth.”

The governing First Presidency has maintained that the church “complies with all applicable law governing our donations, investments, taxes and reserves.”

Still, the sheer size of the rainy day account and the lack of transparency about it continue to spur questions inside and outside the church — and now a lawsuit from a member of a prominent Utah family.

News editor David Noyce contributed to this story.

Editor’s note James Huntsman is a brother of Paul Huntsman, chairman of the nonprofit Salt Lake Tribune’s board of directors. The Tribune also is a content-sharing partner with FOX 13.

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