Here’s why James Huntsman may have filed his LDS tithing lawsuit in California

Golden State is seen as a friendlier venue with more “liberal” juries and judges to hear the fraud case against the Utah-based faith.

(The Church of Jesus Christ of Latter-day Saints) A view of the Salt Lake Temple from the tunnel underneath North Temple street that will eventually connect the Conference Center parking lot to the temple, Salt Lake City, June 2021. A tithing lawsuit from James Huntsman against the Utah-based faith is set for its first court hearing Monday.

The first live action in a high-profile lawsuit against The Church of Jesus Christ of Latter-day Saints over millions of dollars in tithing is set for Monday — and the opening hearing could be over in a flash.

On the order of a federal judge in California, lawyers for the global faith and for James Huntsman, brother of former Utah Gov. Jon Huntsman Jr., are expected to appear in a Los Angeles courtroom with their latest ideas on where the headline-grabbing case is headed.

Judge Stephen V. Wilson recently turned aside an attempt to delay this first hearing in the suit, filed in the Central District of California’s U.S. District Court — signaling that Monday’s status conference would proceed.

Huntsman, a 50-year-old California resident, is accusing Latter-day Saint leaders of fraud, alleging they “repeatedly and publicly lied” about billions of dollars in member donations, including at least $5 million of his own tithing, money that was meant for missionary work, temple building and charitable projects.

Records show Huntsman has maintained residences in Beverly Hills and the resort community of Coronado in Southern California, making federal courts in the Golden State a logical legal venue for filing a claim involving parties in several states. But there may be additional reasons Huntsman filed there.

“Juries in California’s Central District are liberal in my experience,” said Salt Lake City attorney Kay Burningham, who is pursuing a lawsuit in Utah against the LDS Church on behalf of a North Carolina woman and former member.

The district is also part of the 9th U.S. Circuit Court of Appeals, viewed by some as more liberal and dominated by nominees from Democratic presidents. The 9th Circuit may be shifting, however, with more than a third of its active judges having been appointed by then-President Donald Trump.

Charity vs. commerce

(Courtesy photo) James Huntsman

Huntsman, the founder and owner of Blue Fox Entertainment, a Los Angeles-based film distributor, is demanding a jury trial. He asserts in his March lawsuit that the church tapped tithing funds for several commercial ventures, including City Creek Center, a high-end shopping mall in downtown Salt Lake City.

He alleges the church “dishonestly and fraudulently placed its own commercial financial interests above the loyalty and well-being of the church’s most devout members, including plaintiff James Huntsman.”

In response, church officials have called the assertions “baseless” and sought to portray the member of one of Utah’s most prominent families as a disgruntled former Latter-day Saint who resigned his membership in 2020 and is now demanding that his charitable contributions be returned. They’ve also specifically denied spending tithing money on City Creek, an allegation also made in a separate 2019 whistleblower complaint to U.S. tax authorities.

Church lawyers reject claims that Huntsman paid a tenth of his income in tithing between 1993 and 2017 and dispute that his donations during that time “amounted to millions of dollars,” as Huntsman asserts.

Saying his lawsuit is “without merit,” church lawyers have asked Wilson to dismiss Huntsman’s case and award reimbursement for any costs and attorney fees they incur.

No legal ‘skirmishes’ yet

(Francisco Kjolseth | Salt Lake Tribune photo illustration)

Monday’s hearing is meant to begin mapping how both sides will press their arguments, including setting out rules and deadlines governing the sensitive phase of discovery during which both sides are empowered to seek evidence from the other to support their claims.

The judge has told attorneys to work out as many of those details and timetables as they can ahead of the status conference. And depending on what lawyers have hammered out, the initial hearing could be a brief step before litigation gets underway in earnest.

Wilson, nominated to the federal bench in 1985 by then-President Ronald Reagan, has also said he wants lawyers to cooperate, not clash, at this early stage in the case and has even warned of possible sanctions if attorneys get too contentious.

The court, Wilson told them, “does not view the pretrial process as an arena or a series of hostile skirmishes, but rather as a structure through which legal and factual positions are openly and candidly exchanged.”

The judge has urged the sides to settle or streamline their dispute, if possible, before any jury trial. California-based attorneys in the case for Huntsman and for the church did not respond to The Salt Lake Tribune’s requests for comment.

Huntsman is represented by a Los Angeles law firm, Lavely & Singer, which has an advertised specialty in entertainment litigation. Church officials have also hired L.A. lawyers, from the international firm Jenner & Block, as opposed to handling the matter through the church’s usual law firm, Salt Lake City-based Kirton McConkie.

In addition to keeping a tight rein on lawyers, the judge has already moved once to keep the Huntsman case on track.

Wilson rejected a motion last week from a Salt Lake City man, the Rev. Albert C. Jones, seeking a delay so he could get involved as a party. In that June 3 “friend of the court” filing, Jones asked the judge to wait at least until mid-August to give him time to bring forward “29 or 30 exhibits” and present arguments in hopes of “reaching conciliation” among the parties.

Jones filed his one-page motion without the help of a lawyer, he acknowledged in court documents, after “12 reputable law firms” refused to represent him for free. Without comment, Wilson denied Jones’ motion.

Jones is a self-described publisher and screenwriter and proprietor of a state-registered firm called “America, The Diversity Place,” which operates a website publishing stories under his byline. He did not respond to inquiries from The Tribune about his motion.

Whistleblower ‘lifted the veil’

(Trent Nelson | The Salt Lake Tribune) Holiday decorations at City Creek Center in Salt Lake City on Tuesday, Nov. 24, 2020. Funding the the upscale shopping mall is surfacing in a lawsuit against The Church of Jesus Christ of Latter-day Saints.

Huntsman is the son of the late Utah industrialist-philanthropist Jon Huntsman Sr., who had served as an area Seventy in the church and died in 2018. In his lawsuit, the younger Huntsman said he “has the utmost respect for the members of the church, and likewise respects their beliefs and customs.” He noted his devotion in leadership roles as a faithful Latter-day Saint “almost his entire life.”

But, starting in 2003, “the LDS Corporation,” as Huntsman calls the church in his suit, “brazenly misappropriated Mr. Huntsman’s funds to — of all things — build a commercial shopping mall and bail out a private insurance company.”

Those allegations are drawn from a December 2019 whistleblower complaint to the IRS, filed by David Nielsen, a former portfolio manager with Ensign Peak Advisors, which oversees portions of the church’s vast investment interests.

Huntsman said in his lawsuit that he “discovered” the church’s alleged fraud via Nielsen’s complaint, saying the whistleblower has “bravely lifted the veil” on the faith’s financial activities.

Nielsen, along with his twin brother, Lars, alleged the church had nearly $100 billion in a reserve account meant for charity work but not spent that way, with up to $2 billion allegedly used on City Creek and Beneficial Life Insurance.

Quoting early church leader Brigham Young, Huntsman’s suit cites five occasions when top Latter-day Saints, including then-President Gordon B. Hinckley, have denied that charitable gifts from members were spent on the retail mall. Huntsman said he “has regrettably been forced to seek recourse in the court system” when the church proved “unwilling to take accountability for its false promises and fraudulent misrepresentations.”

Several tax attorneys have questioned the suit’s merits and likelihood of prevailing, given that Huntsman initially agreed to make his charitable gifts without preconditions. One has called the legal action “performative,” meant more to garner media attention than pressing a legal case.

Church officials have also stood by claims they used tithing appropriately. The Utah-based faith has called the reserves a “rainy day” fund to help pay for, among other things, operations in poorer parts of the world — such as Africa, where the church is booming — where member donations can’t keep up.

The money, they say, 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.

And they’ve repeated portions of Hinckley’s statement at April 2003 General Conference that “tithing funds have not and will not be used to acquire this property. Nor will they be used in developing it for commercial purposes.”

Money used for City Creek had come from “commercial entities owned by the church,” according to the denomination, and the “earnings of invested reserve funds.”

There have been no public indications that federal authorities are actively pursuing the whistleblower complaint.

Editor’s noteJames Huntsman is a brother of Paul Huntsman, chairman of the nonprofit Salt Lake Tribune’s board of directors.