‘Outright lies were told’ — A behind-the-scenes look at the tithing dispute between the LDS Church and James Huntsman

New court documents reveal how the faith’s lawyers got personal in trying to forestall the filing of a federal fraud lawsuit.

(Trent Nelson | The Salt Lake Tribune) Funding for City Creek Center in Salt Lake City, shown on Monday, Aug. 23, 2021, is at the heart of a tithing dispute between James Huntsman and The Church of Jesus Christ of Latter-day Saints.

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Before their high-profile clash in federal court, lawyers for The Church of Jesus Christ of Latter-day Saints and former Utahn James Huntsman sought for months to settle their tithing dispute privately in a series of muscle-flexing exchanges that at times turned caustic.

Huntsman, a California resident and brother of former Utah Gov. Jon Huntsman Jr., has since sued the church in U.S. District Court in Los Angeles, accusing its leaders of fraud in their handling of billions of dollars in donations from church members, including his own giving.

The closely watched case is now in the hands of Judge Stephen Wilson, who is set to rule on a summary judgment motion by the Utah-based faith to have Huntsman’s fraud claims and demand for at least $5 million in tithing, interest and penalties thrown out.

New court documents indicate the failed settlement talks involved David Jordan, a prominent Salt Lake City-based attorney for the church, and lawyers in two states representing Huntsman in a back-and-forth focused as much on parsing aspects of Latter-day Saint doctrine and history as wrangling over opposing legal arguments.

The letters also show church attorneys delving deeply into Huntsman’s personal history as a member of the faith and into details about his well-known family, leading his lawyer to decry the questioning as “a transparent attempt to emotionally intimidate and shame my client.”

Under federal court rules, claims aired in settlement talks cannot be used in subsequent litigation. But the once-confidential correspondence, appended to an Aug. 16 court filing by Huntsman’s lawyers, is illuminating as it veers from cordial to menacing in tone over a matter of a few months before his March lawsuit being filed.

Here are some highlights:

How the dispute began

James Huntsman

Huntsman first made his threat of legal action known to church officials in December, seeking through his lawyers the return of “the principal amount” of $2.6 million in tithing “paid during his lifetime of services to, and in support of, the LDS Church.”

He set a Jan. 4 ultimatum to get the money back, offering to forgo “substantial” interest on the sum — and further legal action — “if this dispute can be resolved quickly.”

A Dec. 21 letter to Jordan and top church leaders from Salt Lake City attorney James Magleby starts out “Dear Friends” and outlines Huntsman’s biography and dedication — financial and otherwise — to the church before he resigned his membership in the summer of 2020. That, Magleby says, is when Huntsman “discovered” the church’s allegedly fraudulent scheme of diverting member donations meant for charity to commercial ventures instead.

“As a matter of integrity,” he wrote, “[Huntsman] could not continue to be counted as one who supported and participated in the fraud that had been concealed from him.”

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His initial legal demand also takes after other church tenets not included in Huntsman’s ensuing lawsuit, regarding church founder Joseph Smith’s use of a “seer stone” in translating the Book of Mormon, the faith’s signature scripture, in apparent contrast with long-standing visual depictions of Smith translating the record directly from gold plates.

That led to a point-by-point Jan. 8 counter from Jordan, with the Salt Lake City firm Stoel Rives, painting him as something of a defender of church doctrine as well as an advocate of its legal views.

“As an initial matter,” Jordan wrote, “let me assure your client that the church has always and continues to believe and teach that the Book of Mormon is the word of God; that Joseph Smith received golden plates engraved with sacred writings of ancient American prophets from an angel; and that he translated them ‘by the gift and power of God.’”

Arguments over religious protections

In a kind of saber rattling detailing their strongest legal arguments, lawyers on both sides try to project confidence that the First Amendment and related case law on its protections of religion are working in their favor.

Magleby argues that rulings on the free exercise of faith and the legal autonomy of churches to govern their affairs without government interference “will not apply to Mr. Huntsman’s claims” with regard to fraud.

“Outright lies were told as to the use or intended use of tithing” on the City Creek Center mall in downtown Salt Lake City and an ailing insurance company, Beneficial Life, he said. “These facts are established and secular,” Magleby wrote, “and do not involve an adjudication of the truth of a religious belief of doctrine.”

Jordan counters repeatedly that Huntsman’s assertions about church principles, including tithing, are “ultimately a matter of religious faith,” putting them “beyond the purview of civil courts under the First Amendment of the United States.”

The lead church attorney heartily defended statements from then-church President Gordon B. Hinckley that “tithing funds have not and will not be used to acquire this property [City Creek mall]. Nor will they be used in developing it for commercial purposes.”

(The Salt Lake Tribune) Gordon B. Hinckley, president of The Church of Jesus Christ of Latter-day Saints, is shown in 2001. The faith leader assured members that no tithing funds were used to build and develop the City Creek Center mall in downtown Salt Lake City.

Quoting repeatedly from Latter-day Saint scripture, Jordan said that tithing funds not immediately used on chapels, temples, missionary work and other expenses are invested as reserve funds. Earnings on those funds, Jordan said, “were more than sufficient to cover any expenses associated with the City Creek mall, as President Hinckley indicated.”

He reiterates that, under U.S. law, legal questions regarding those moves are out of bounds for being decided by a judge.

“Tithing is itself a religious principle that members observe as a matter of faith,” Jordan wrote. “The church’s internal investment decisions, like its teachings, are exempt from judicial scrutiny under the First Amendment’s church autonomy doctrine.”

Huntsman has maintained that arguing whether money for the mall came from earnings off tithing or the members’ donations themselves amounts to a “a distinction without a difference.”

City Creek details emerge

(Trent Nelson | The Salt Lake Tribune) City Creek Center in Salt Lake City on Monday, Aug. 23, 2021.

In trying to buttress his insistence that Hinckley was telling the truth on how City Creek was financed, Jordan reveals interesting details about how the downtown project came together.

Most of the land for the center straddling Salt Lake City’s Main Street was already owned by the church, he wrote in a Feb. 17 letter, and it either purchased, leased or acquired leasing contracts on any remaining acreage to assemble the two city blocks the mall now spans.

Church officials then entered into a long-term contract with Taubman, a high-end shopping center developer and operator based in Michigan, which made “a significant contribution,” Jordan said, toward the development and construction costs.

Taubman, a publicly traded company with nearly $4.5 billion in total assets, reported to the U.S. Securities and Exchange Commission that its investment in City Creek was $75 million and a church-owned company, called City Creek Reserve, “provided all of the construction financing.”

Jordan wrote that under its contract with the church, Taubman owns and operates the center, collects rents from mall tenants and, in turn, pays yearly rent to the landowner — which property records show is City Creek Reserve.

Under its ground lease with Taubman, the attorney wrote, City Creek Reserve retains ownership of the land and when the lease expires, City Creek Center’s buildings and other improvements will also become the property of City Creek Reserve.

Structuring the deal that way, Jordan said, let the church “accomplish its central purpose, described by President Hinckley, ‘to protect the environment of the Salt Lake Temple,’”— while also allowing the church to retain ultimate control of the land and minimizing its expenses.

In addition to Taubman’s investment, the church pumped in $1.4 billion to develop and build City Creek, according to related court documents. That was paid with “earnings from invested reserve funds and commercial entities owned by the church,” Jordan said. “No tithing funds were used.”

The whistleblower’s revelations

Huntsman’s initial offer to settle the case makes no direct mention of whistleblower David Nielsen, a former portfolio manager at Ensign Peak Advisors, the church’s Salt Lake City-based investment arm.

But it is clearly based on Nielsen’s late 2019 allegations to the IRS that church officials had amassed a $100 billion reserve fund and secretly spent up to $2 billion in tithing on City Creek and Beneficial Life, while publicly assuring church members otherwise.

In a subsequent sworn statement filed in support of Huntsman’s lawsuit, Nielsen asserts that tithing and earnings from it were commingled at Ensign Peak, while top leaders over the fund referred to “every penny” as tithing — allegations echoed in Huntsman’s initial letter.

Magleby refers to Ensign Peak as “a hedge fund which holds in excess of $128 billion and makes no charitable donations (in violation of IRS regulations for nonprofit corporations).”

Family’s faith ties

(Leah Hogsten | The Salt Lake Tribune) Harriet Uchtdorf, left, and Latter-day Saint apostle Dieter F. Uchtdorf, share a laugh with Jon M. Huntsman Sr. and wife Karen Huntsman in 2017 as the Huntsman Cancer Institute celebrated the opening of the Primary Children's and Families' Research Center.

At one point, Jordan highlights Huntsman’s “rich heritage of faith,” noting that his grandfather, David B. Haight, “was a much-loved apostle, serving more than 28 years as a prophet, seer and revelator.”

The lawyer pays similar respects to Huntsman’s late father, industrialist-philanthropist Jon M. Huntsman Sr., who served his church as an area Seventy, and to his mother, Karen Huntsman, whom Jordan calls “an unfailing model of faith and devotion to her family and the church.”

He invokes a speech by Haight, proclaiming the truth of the Book of Mormon, and urges James Huntsman to reverse course on his intent to sue the church.

“In a time of so much division and polarization, no good can come of attacking each other’s beliefs,” Jordan admonished. “The church respects Mr. Huntsman’s decision to follow his own path and asks only that he give the same consideration to those for whom their faith in the church’s teachings is sacred.”

The gloves come off

From there, the tone of negotiations turned decidedly sour.

California lawyer David Jonelis, who is now representing Huntsman, fired off a stinging Feb. 5 reply that scolds Jordan, saying he “either failed to read Mr. Huntsman’s demand in sufficient detail, or foolishly mistook” what he called his client’s “friendly and respectful tone.”

“Either way, you have clearly failed to appreciate the gravity of my client’s claims,” Jonelis states, “and the serious impact they would have on [church leaders] should litigation commence.”

He also accuses Jordan of “inappropriately invoking the church’s relationship with my client’s mother, father and grandfather.” He criticizes his opponent’s use of church teachings in settlement correspondence, with a quote of his own from early church leader Brigham Young, also used to open Huntsman’s March lawsuit.

“If we accept salvation on the terms it is offered to us,” Jonelis quotes the faith’s second prophet-president as saying, “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.’

“Unfortunately, ‘honesty’ does not appear to be in your client’s vocabulary,” Jonelis writes to Jordan, adding that church leaders “would be better served by focusing on Brigham Young’s teachings than by resorting to out-of-context and inapposite scripture quotes.”

Rather than fulfilling its promises on how tithing was used, Jonelis said, church leaders have “done just the opposite, funneling millions in charitable funds to secular, greed-driven commercial ventures.”

He called such conduct “the epitome of dishonesty,” warning that if the church’s Corporation of the Presidency “disregards this demand, it will be acting at its own peril.”

Jordan flatly rejected those assertions in his Feb. 17 letter, a little more than a month before Huntsman sued. No tithing funds were used, he reaffirmed, on City Creek and Beneficial Life.

In the end, Jordan said, the Constitution “reserves to the church the right to determine how to manage its resources, free from interference from the government, including the courts.”

And, in a kind of “bring it on” rejoinder, Jordan added that if Huntsman was still intent on suing the church, he could put him in touch with church-hired attorneys in California to accept service of his legal complaint.

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