A money manager-turned-whistleblower over The Church of Jesus Christ of Latter-day Saints’ handling of a multibillion-dollar fund built from members’ tithing donations has broken his silence over allegations the Utah-based faith engaged in tax fraud.
David Nielsen, a former senior portfolio manager for Ensign Peak Advisors, the faith’s investment arm, weighed in late Monday in support of a federal lawsuit filed in California by prominent ex-Utahn James Huntsman, saying in a sworn statement the fund’s top managers repeatedly referred to “every penny” — whether it came from principal or earnings — as tithing.
Nielsen made similar assertions to the IRS in late 2019 but has not commented publicly since — until this week’s backing of Huntsman’s lawsuit, which accuses church leaders and their money managers of a “calculated deception” that diverted $2 billion in tithing to two commercial ventures — $1.4 billion to develop the City Creek Center shopping mall in downtown Salt Lake City and $600 million to bail out Beneficial Life Insurance Co.
Huntsman’s lawyers filed the new legal salvo late Monday in the California businessman’s high-profile federal lawsuit accusing church leaders of fraud and seeking to recover millions in refunded tithing, interest and penalties.
They called the church’s move last week to have Huntsman’s case tossed out “its latest effort to deceive the public and distort the facts.”
Huntsman’s legal team is seeking to undermine the faith’s assertions that those payments were not drawn from billions in tithing paid by Latter-day Saints — as the faithful have been repeatedly assured by top church leaders, including then-President Gordon B. Hinckley.
Church leaders have relied on “a distinction without a difference,” Huntsman’s attorneys said, by mounting arguments that it used “earnings versus principal” for spending from church accounts on City Creek Center and Beneficial Life.
“Any use of earnings necessarily stems from a use of the underlying principal itself,” the California film distributor’s lawyers wrote in their motion filed Monday.
U.S. District Court Judge Stephen Wilson has set an Aug. 30 hearing in federal court in Los Angeles to decide if the case should proceed.
As part of the latest court filings, Nielsen said that Ensign Peak’s senior managers told him and others the fund had been seeded with tithing money in 1997. The former account manager from 2010 to 2019 at the firm said all the funds in the portfolio were repeatedly “referred to and revered” as tithing, “regardless of whether they were referring to principal or earnings on that principal.”
Donations were commingled with earnings, Nielsen said in his new declaration, and “every penny was referred to as the ‘widow’s mite’” — a biblical reference to its sacred nature. Based on his personal knowledge, he said, “it appeared the church’s public statements were intended to conceal the truth about EPA’s use of tithing funds for City Creek mall and Beneficial Life.”
In December 2019, Nielsen filed an IRS whistleblower complaint accusing the church of amassing a $100 billion reserve fund from excess tithing intended for — but never spent on — charity in potential violation of tax laws. Nielsen, who stands to gain a whistleblower reward if his assertions prove true, also alleged then that billions in tithing money went toward those commercial ventures.
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In their motions against Huntsman’s case last week, church attorneys offered confidential financial data — redacted in public court documents — that detailed how money used for the shopping mall instead came from “commercial entities owned by the church” and “earnings on invested reserve funds,” rather than actual tithing.
That money went to the City Creek project via Property Reserve Inc., a for-profit real estate arm of the church, and from accounts set aside at Ensign Peak Advisors, created to manage and build the church’s financial reserves for a possible “rainy day,” its chief lawyer in the matter, Rick Richmond, contended.
Even viewing the church’s “tortured theory in the best light possible,” Huntsman’s lead attorney, David Jonelis, wrote in Monday’s filings, “it still admittedly misrepresented how the funds donated by Mr. Huntsman and countless other members would ultimately be used.”
Lawyers for the church have called Huntsman’s claims “baseless” and his attempts to recover donations legally flawed.
The latest filings from Huntsman also sought to turn aside church assertions that his case runs afoul of First Amendment protections of religion, arguing that such insistence “flies in the face of well-settled law preventing a religious organization from committing fraud under the guise of faith.”
“Simply stated, this is a case about fraud, not faith, and implicates no religious principles or tenets of Mormonism,” Huntsman’s lawyers wrote, referring to a recent ruling in a similar case in Utah.
Judge Robert Shelby of Utah’s U.S. District Court has rejected a series of motions by church attorneys to entirely dismiss that case, which involves similar accusations of fraud in a lawsuit over tithing by former Latter-day Saint Laura Gaddy.
The North Carolina woman’s assertions, according to Shelby, are not barred by the First Amendment in that she is not arguing against “the religious principles of the church or the truth of the church’s beliefs concerning the doctrine of tithing.” Rather, the judge ruled just weeks ago, she has “challenged secular representations concerning the use of money received by the church.”
Huntsman’s court papers allege church attorneys and a top official from the faith’s Finance and Records Department are now spinning “a wildly complex narrative” in legal moves for summary judgment to obscure the fraudulent intent of statements by church leaders that tithing would be used only for religious and philanthropic ends.
Huntsman — a brother of former Utah Gov. Jon Huntsman Jr. and a son of the late Utah industrialist-philanthropist Jon Huntsman Sr. — resigned his membership in 2020 over a crisis of faith and has sued for a refund on at least $5 million in donations “by cloaking his claim in the garb of a fraud action,” church attorneys argued last week in seeking to have his March lawsuit tossed out.
They said the case is based on “an inadequate substitute for actual facts and cannot justify Huntsman’s attempt to claw back his voluntary, unrestricted contributions.”
The church’s motion for summary judgment also accuses Huntsman, a 50-year-old resident of Coronado Island, of seeking to generate publicity with the case and “embarrassing his former church in whose doctrines and practices he no longer believes.”
Huntsman countered in his own sworn statement that he sued only “as a last resort” after being rebuffed in nearly four months of repeatedly trying to “resolve my grievance confidentially.”
He had not even told close family members about his initial claim when a top church official contacted one of his brothers to inform him, Huntsman said. He sought to avert the lawsuit again in February, he said, with a call to Latter-day Saint apostle Ronald A. Rasband. “However, after the call,” Huntsman wrote, “I was again told the church had no interest in resolution.”
He stated in his declaration that a court transcript of his July deposition to church attorneys in the lawsuit, quoting him as saying, “I’m interested in publicity,” was the result of a typographical error he had neglected to correct. In reality, he said, he had stated, “I’m not interested in publicity.”
Editor’s note • James Huntsman is a brother of Paul Huntsman, chairman of the nonprofit Salt Lake Tribune’s board of directors.