Is James Huntsman a ‘religious dissident’ or a victim of fraud by the LDS Church?

Court dispute over millions of dollars in tithing is headed to oral arguments before the 9th U.S. Circuit Court of Appeals.

(Francisco Kjolseth |Tribune file photo) The Church of Jesus Christ of Latter-day Saints office building on Wednesday, March 30, 2022.

Is former Utahn James Huntsman a disgruntled ex-member of The Church of Jesus Christ of Latter-day Saints who wants his tithing back because he no longer believes?

Or was the wealthy California resident and brother of former Utah Gov. Jon Huntsman Jr. genuinely deceived by statements from top church leaders into giving millions to the faith, as he asserts in a federal lawsuit alleging fraud and demanding the money back?

Those opposing visions and supporting legal arguments are before the 9th U.S. Circuit Court of Appeals nearly a year after U.S. District Court Judge Stephen V. Wilson ruled against Huntsman, saying no reasonable jury would believe ecclesiastical leaders had misrepresented how tithing funds were to be used.

Huntsman appealed in February. Attorneys are now preparing for possible oral arguments in the case, tentatively set for Nov. 15 before a panel of judges in Pasadena.

Here’s the latest on the case:

What’s the underlying dispute?

James Huntsman

Huntsman, the owner of a Los Angeles film distribution company, is seeking to recover at least $5 million in his own tithing, interest and penalties in a highly publicized challenge over tithing and church finances.

He has alleged that while Latter-day Saint leaders, including then-President Gordon B. Hinckley, told members otherwise, they spent up to $2 billion in tithing funds on two private church-owned businesses, City Creek Center, an upscale mall in downtown Salt Lake City, and Beneficial Life Insurance Co.

Church lawyers don’t deny the spending but counter that the cash used was not tithing but instead earnings from invested reserves managed by its investment arm, Salt Lake City-based Ensign Peak Advisors — and that church officials never said otherwise from the pulpit.

New arguments are surfacing in appeals briefs in the case as lawyers ready for a potential face-to-face hearing.

What’s the church’s legal stance?

(Francisco Kjolseth | The Salt Lake Tribune) City Creek Center is visible from the new terrace of the 95 State meetinghouse of The Church of Jesus Christ of Latter-day Saints in April. The shopping center is at the center of James Huntsman's fraud lawsuit against the church.

As far as the church’s Los Angeles-based attorneys are concerned, “there has never been a ‘fraud’ case like this one.” Huntsman isn’t alleging the church did anything illegal with its donations, and he also doesn’t state he was damaged.

Even if his claims are true, they argue, “it would mean only that some small portion of his ‘tithing’ was invested for future religious purposes rather than being immediately used for missionary work, religious education, or some other aspect of the church’s mission.”

Charities invest their financial reserves all the time to bolster their long-term missions, they write. “There is nothing wrong with a church investing its savings to increase the value of its assets for future religious or charitable works” — as it says it did with City Creek. But that is “very different,” according to the church’s legal arguments, from what Huntsman has alleged.

“This case is not really about how the church uses its money,” they write. “It’s about a loss of personal faith.”

Huntsman, they contend, “is a religious dissident.” Because the U.S. Constitution prevents him from legal action pleading that church doctrine is false, he has sought to create a secular dispute “by latching on to statements about how the church invested in the City Creek project.”

What’s Huntsman saying?

The 51-year-old resident of Coronado Island has declined to comment throughout the case. But attorneys for Huntsman, who resigned his church membership in 2020, say the Utah-based faith “repeatedly represented to Mr. Huntsman, in unequivocal terms, that tithing funds would absolutely not be used to develop the City Creek mall.”

And when a whistleblower who once worked for Ensign Peak Advisors, David Nielsen, came forward under oath to insist that tithing funds had been used on City Creek and Beneficial Life, Huntsman’s legal team writes, that created a fact dispute that should have gone to trial.

“Facts matter,” they write. And because Nielsen’s firsthand testimony raised questions about whether the church misrepresented its use of tithing, the district judge was wrong to side against Huntsman in summary judgment.

Rather than rebut those facts, the church “attempts to mischaracterize and/or confuse the record so as to divert attention from the core issues and unfairly make it appear as if Mr. Huntsman’s claim is ill-conceived and unsupported.”

His lawyers state that financial documents submitted by the church for Wilson’s review do not prove that only earnings on invested tithing funds were used on City Creek.

Many of those documents are heavily redacted for the public, and the two sides also are locked in a separate dispute over Huntsman’s attempt to make some of them public. The church considers them “extremely sensitive” and accuses Huntsman of wanting to “promote public scandal” by seeking to have them unsealed.

What are some of the legal issues?

(The Salt Lake Tribune) Church President Gordon B. Hinckley speaks at General Conference in 2003. He stated that money for City Creek Center had come from “commercial entities owned by the church” and the “earnings of invested reserve funds.”

One centers on Beneficial Life, the church-owned insurance company in Salt Lake City.

Church lawyers focused heavily on City Creek in arguments before the lower court. Huntsman’s legal team asserts that by not offering evidence to counter whistleblower Nielsen’s additional testimony that tithing was spent on Beneficial Life, the church conceded that argument — and as a result, the summary judgment should be overturned.

The church argues that Huntsman never referred to specific alleged misrepresentations by church leaders about the use of tithing for Beneficial Life, the way he did regarding the shopping center. So the judge was correct, the church states, to reject that claim.

The two sides are also clashing over whether Huntsman has proved the basic elements of fraud, including the notion he relied on false statements from the church when he made his contributions.

Statements about City Creek funding, including a 2003 General Conference speech by Hinckley — in which the faith’s top leader said money for City Creek had come from “commercial entities owned by the church” and the “earnings of invested reserve funds” — “did not cause Huntsman to give or stop giving tithes,” church attorneys write. Huntsman began paying tithing in 1993 when he returned from a Latter-day Saint mission, a decade before Hinckley’s statement. He stopped doing so 12 years after the church leader’s speech.

“In short, from 1993 to 2015, Huntsman gave tithes because he believed God wanted him to,” they write, “and he stopped giving when he no longer believed in the church’s teachings.”

Huntsman’s lawyers counter the church is mischaracterizing the court record and that he relied on several misrepresentations from leaders in continuing to tithe. When he stopped around 2015, it was because he was disillusioned with church doctrines, “including its support of polygamy and its open disdain for members of the LGBTQ community.”

Huntsman sought the return of past tithing only when he learned in 2019 of the whistleblower’s contentions, according to his attorneys, who say he has also pressed a separate legal argument that the church “fraudulently concealed” their use of tithing.

Hovering over the entire case is the question of the First Amendment and whether its protections of religion bar some of Huntsman’s legal arguments. Tithing, the church argues, is a religious doctrine and pursuing some of Huntsman’s claims would run afoul of the U.S. Constitution.

“The mysteries of religious faith,” they contend, “cannot be adjudicated in secular courts.”

Huntsman’s lawyers say his assertions center on “the use and misappropriation of specific church tithing funds, as opposed to the religious teachings underpinning the practice of tithing or any other dogma.”

“In other words,” they write, “this is a case about fraud, not faith, and implicates no religious principles or tenets of Mormonism.”

Editor’s note This story is available to Salt Lake Tribune subscribers only. Thank you for supporting local journalism. In addition, James Huntsman is a brother of Paul Huntsman, chairman of the nonprofit Salt Lake Tribune’s board of directors.