James Huntsman appeals tithing case against LDS Church, says jury needs to decide who’s telling the truth

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Attorneys for James Huntsman say a California federal judge erred when he tossed out the wealthy former Utahn’s fraud case against The Church of Jesus Christ of Latter-day Saints over millions their client paid in tithing.

In an appeal filed late Friday with the 9th U.S. Circuit Court of Appeals, the brother of former Utah Gov. Jon Huntsman Jr., asserts the lower court was legally incorrect in concluding no reasonable jury would believe his accusations that top Latter-day Saint leaders lied about how church donations were spent.

Los Angeles-based lawyers for James Huntsman are arguing that U.S. District Court Judge Stephen V. Wilson inappropriately ignored “critical” testimony from an IRS whistleblower in striking down Huntsman’s suit, as part of a pattern, they say, of the judge weighing evidence he shouldn’t have.

The court filing calls Huntsman’s assertions and contrary arguments from the church that it didn’t misrepresent spending of tithing funds “a clear ‘light was red/light was green’ scenario,” asserting that those “diametrically opposed” views by law should be decided by a jury — not the judge.

David Nielsen, a former employee of Ensign Peak Advisors, an investment arm of the Utah-based faith, offered inside knowledge of church finances and its handling of tithing, the brief states. Yet Wilson dismissed that evidence while giving credence to opposing testimony from a church official who “was not as intimately involved in the church’s financial affairs.”

“There is an undeniable triable issue of fact concerning Mr. Huntsman’s fraud claim,” his attorneys say in their 55-page filing, “and thus this case cannot be resolved on summary judgment and must proceed forward to trial.”

Huntsman’s appeal also says Wilson misapplied legal definitions of fraud and that “evidence” submitted by the church to back its assertions “does not actually support its position.” Huntsman urged the 9th Circuit to reverse Wilson’s summary judgment and remand the case back to U.S. district court.

Lawyers for the church have until March 7 to respond, court documents say. A church spokesperson reached Friday did not have a comment on the appeal.

Reached in California, Huntsman declined to comment, as did his lead attorney, David Jonelis, with the L.A. firm Lavely & Singer, who cited his firm’s policy of not commenting on pending litigation.

Paying for a mall

The high-profile case sprang up in March, when Huntsman, son of the late Utah industrialist-philanthropist Jon Huntsman Sr., sued his former faith in federal court, alleging that then-church President Gordon B. Hinckley and other senior Latter-day Saint authorities had misrepresented how regular donations from members were spent.

While leaders said over the pulpit and in other public statements that tithing funds went only toward aspects of the church’s religious endeavors, Huntsman insisted leaders instead fraudulently diverted up to $2 billion to two commercial operations: a church-owned insurance company, Beneficial Life, and City Creek Center, its luxury retail mall in downtown Salt Lake City.

Huntsman, a former Utahn who now lives near San Diego and resigned from the church in 2020, alleges he essentially was misled over his tithing, the practice in which faithful Latter-day Saints pay a tenth of their yearly income to the global church of 16.6 million.

Citing five separate instances when Huntsman said Latter-day Saint leaders made misleading statements regarding tithing, his fraud lawsuit sought to recover at least $5 million in his own tithing, interest and penalties.

Church lawyers acknowledged the spending on church-owned commercial ventures but countered repeatedly that the cash was drawn from interest earned on tithing, not tithing itself, and that leaders never deceived members.

Hinckley was clear in his 2003 statement at the faith’s General Conference, attorneys say, in referring to the money going to City Creek as coming from church-owned “commercial entities” and “earnings of invested reserve funds” — an assertion Huntsman’s lawyers denounced as a “distinction without a difference.”

The church’s legal briefs detailed how Latter-day Saint officials moved the money in question through various accounts to keep it separate from actual tithing funds, with many of the documents heavily redacted to keep the financial information for the judge’s eyes only.

Huntsman’s appeal refers to the church’s “long-winded and hard to follow factual narrative” of how it handled the money as “an attempt to confuse the issues here and obfuscate the truth.”

The redactions, it says, “were ironically premised on the notion that the church’s own members and the public at large should be kept in the dark as to how the church has used its tax-exempt funds (despite the fact that such secrecy is what gave rise to the fraud here in the first place).”

Wilson struck down Huntsman’s lawsuit in a short Sept. 14 summary judgment ruling, saying that “no reasonable juror could ignore the distinction within [Hinckley’s] statement.”

Huntsman’s suit, Wilson wrote, did “not properly consider the full statement made by Hinckley.”

Billions in ‘rainy day fund’

Huntsman’s case drew heavily on separate allegations made by the whistleblower, Nielsen, a former top portfolio manager at Ensign Peak.

In December 2019, Nielsen filed a complaint with the IRS accusing church officials of amassing a $100 billion reserve fund meant for — but never spent on — charity in potential violation of tax laws. Nielsen also provided a sworn statement in support of Huntsman’s case, citing personal knowledge that funds in the Ensign account were all referred to as tithing.

Nielsen’s whistleblower case also first aired claims the church had secretly diverted $1.4 billion to City Creek Center and another $600 million to Beneficial Life while telling church members otherwise.

His affidavit in Huntsman’s case said that principal tithing money from church members was commingled with Ensign Peak’s earnings and that “no distinction was drawn between those two sources of funds.”

While working at Ensign Peak, the appeal notes, Nielsen learned that its tithing funds were administered by a committee known as “the Council on the Disposition of the Tithes.”

The brief also says the church “offered no evidence to refute Mr. Huntsman’s contention … that tithing money was used to bail out Beneficial Life,” and instead focused solely on the City Creek allegations.

With that omission, the appeal says, the church was “implicitly conceding that tithing funds were in fact used for that improper purpose.”

Subsequent public filings with the U.S. Securities and Exchange Commission beginning in early 2020 have revealed the Ensign Peak account holds between $40 billion and $50 billion in an expansive investment portfolio heavy on well-known technology and blue chip stocks.

Church leaders have called the account a “rainy day” fund to help pay for, among other items, its operations in poorer parts of the world — such as Africa, where the faith is surging — and where member donations can’t keep up.

They have said the money is less about stashing cash for the Second Coming, as was widely reported when the whistleblower’s action came to light, and more about providing the worldwide church with financial protection against events such as economic crises and recessions.

The IRS has taken no public action against the church in the wake of Nielsen’s complaint.

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