LDS Church slapped with a string of new ‘copycat’ tithing lawsuits

The Church of Jesus Christ of Latter-day Saints is sounding alarm bells about a spate of new class-action lawsuits filed recently against the Utah-based faith and its investment firm over tithing.

Similar federal complaints filed in Utah, Illinois, Tennessee, Washington and California aim to recover donations made by former Latter-day Saints in light of allegations that the church fraudulently used tithing funds to finance City Creek Center, a luxury mall in downtown Salt Lake City.

The latest of these suits surfaced Monday in U.S. District Court in California, seeking a refund of $40,000 on behalf of an elderly couple living in San Leandro, near Oakland. The church and its investment arm, Salt Lake City-based Ensign Peak Advisors, “now face a reckoning in a multitude of jurisdictions,” attorneys for Gene and Michelle Judson wrote.

The couple’s case, their lawyers added, seeks to hold high-ranking church leaders and Ensign Peak officials “accountable for their misconduct and hubris.”

Like the others, this suit alleges that church leaders, including then-President Gordon B. Hinckley, misled members with statements from the pulpit and in news outlets that tithing was used only for specific religious purposes, while $1.4 billion was transferred from Ensign Peak investment accounts and spent on City Creek.

There were also legal moves afoot as of last month to consolidate these separate class-action suits into one nationwide case agains the church, either in Utah or California.

Church attorneys warn the new string of court actions — with five of them filed since late October — signals a wave of legal peril headed toward the faith and other religious groups.

The cases confirm their assertion, the lawyers contend, that a prior ruling in the high-profile case brought by Utahn James Huntsman “would open the floodgates for ‘copycat’ suits endangering religious liberty and church autonomy.”

In a kind of legal retort filed last week, a lawyer for a Washington-based Americans United for Separation of Church and State submitted a brief questioning any linkage between more lawsuits filed against the church and Huntsman’s own action.

“The church,” attorney Bradley Girard wrote, “cites no authority for the proposition that additional cases against the defendant for the same illegal conduct somehow gets the defendant off the hook.”

‘The threat is real’

Huntsman, who resigned his church membership in 2020, sued the faith in March 2021. His suit — which is not seeking class-action status — and these other actions cite the sworn testimony from whistleblower David Nielsen, a former portfolio manager with Ensign Peak, that church leaders knowingly misled members on how money was being spent.

A son of the late industrialist Jon Huntsman Sr. and brother to former Utah Gov. Jon Huntsman Jr., James Huntsman is seeking the return of a total of $5 million in tithing, plus penalties and interest. A federal judge tossed out his case, only for it to be revived on appeal and sent back to U.S. District Court.

The church has appealed that move, urging that the full 9th U.S. Circuit Court of Appeals in California to take another crack at the 2-1 ruling, issued by a three-judge appellate panel.

The Utah-based faith filed lengthy briefs in October and November, arguing the decision violated free speech and religious protections and threatened to expose it and other faiths, nonprofits, colleges, universities and other groups to unwarranted, unconstitutional legal intrusions.

In a Jan. 22, 2024, letter to 9th Circuit Court Clerk Molly Dwyer, church lawyer Paul Clement said that continued class-action assaults against the church and other religions “are inevitable” as long as the decision to resurrect Huntsman’s personal fraud lawsuit remained on the books.

“While Huntsman dismissed those prognostications as ‘catastrophizing,’” Clement wrote, the “copycat suits filed in four months and the looming prospect of [consolidation] make clear that the threat is real.”

The church argues that Huntsman’s case lures the courts into legal territory shielded by the First Amendment’s protections of the free exercise of religion, adding that it threatens to erode church autonomy by subjecting the actions and statements of faith leaders to legal review.

In nearly identical language, the recent class-action suits contend that none of their allegations implicate religious beliefs, practices, doctrines or how the church is organized or governed.

Instead, the plaintiffs in Utah, Illinois, Tennessee, Washington and California maintain that, in effect, theirs is a solely secular dispute, stemming from statements made by church leaders that tithing was not used for commercial, for-profit business purposes while, they contend, evidence suggests otherwise.

“In other words,” many of the lawsuits state, “this case has nothing to do with, and does not implicate, the First Amendment and/or the free exercise clause in the Constitution.”

Common claims

The recent cases also accuse the church and Ensign Peak of frustrating the intentions of Latter-day Saints by failing to use tithing funds on worthy cases, such as care of the poor and needy. They say their donations have resulted in the church and its investment arm “receiving and retaining an unjust benefit, which must be disgorged.”

In the Huntsman case, the church has consistently countered that earnings from tithing funds invested by Ensign Peak on the church’s behalf and transferred to a holding account — and not tithing itself — was used to fund City Creek.

“I wish to give the entire church the assurance that tithing funds have not and will not be used” for the mall, Hinckley declared at General Conference in 2003. “Funds for this have come and will come from those commercial entities owned by the church. These resources, together with the earnings of invested reserve funds, will accommodate this program.”

But the class-action cases all cite elements of Nielsen’s whistleblower assertions that Ensign Peak officials viewed all the funds in the church’s $100 billion-plus portfolio as sacred tithing. Nielsen has alleged the firm made no charitable expenditures over more than two decades and that senior fund managers endeavored to hide the transfers for City Creek out of fears the information might lead some faithful members to stop from tithing altogether.

The class-action cases also all refer to a February 2023 settlement between the church and the Securities and Exchange Commission, which found top church officials had authorized the creation of 13 shell companies partly to evade public reporting laws and obscure the size of the faith’s investment portfolio. The SEC fined Ensign Peak $4 million and the church $1 million.

With the same wording, four of the class-action suits contend “[t]he SEC action against the LDS Church and Ensign Peak reveals a pattern of conduct and corporate culture that valued dishonesty and concealment over honesty and transparency.”

‘60 Minutes’ episode was instrumental

Two months after the 9th Circuit’s August ruling to reinstate Huntsman’s lawsuit, Daniel Chappell, a Virginia resident, and Masen Christensen and John Oaks, both from Utah, sued the church over a combined $350,000 they had donated to the church over the past decade.

Three more suits were then filed by former Latter-day Saints within a week of one another in December, according to court dockets, in federal courts in Illinois, Washington and Tennessee.

Plaintiff Joel Long, a resident of Chesterfield, Mo., is seeking $60,000 he says he paid in tithing while living in Metropolis, Ill. He was led to believe by regularly watching church broadcasts and reading church publications, according to his lawsuit, that the church spent tithing only for religious purposes.

Long’s attorneys say he learned of whistleblower Nielsen’s assertions after relatives informed him of a May 14, 2023, “60 Minutes” segment, which Long then viewed on YouTube.

Kevin Risdon, who lives in Cashmere, Wash., says he was active in the church from 1989 to 2016. His lawsuit also involves about $60,000 in tithing. He, too, says in court documents he was reassured those funds were not spent on land purchases or development at City Creek by statements made during the faith’s biannual General Conferences and reading its official magazine. The suit says Risdon learned about Nielsen’s assertions on “60 Minutes” from a “Mormon Stories” podcast.

Brandall Brawner lives in Gallatin, Tenn., and has filed his suit over approximately $30,000 in tithing between 2003 and 2012, documents show. He was an active member from 1995 to 2014 and also regularly watched General Conference. He heard about Nielsen’s “60 Minutes” appearance from a former Latter-day Saint and close friend from high school.

The latest plaintiffs, Gene and Michelle Judson, say they watched the “60 Minutes” episode live. One of their lead attorneys, Los Angeles-based David Jonelis, is also Huntsman’s lawyer in his personal case against the church.

Combine them into one — but where?

Lawyers for Long, the Illinois plaintiff, have also filed briefs in the matter with the federal Judicial Panel on Multidistrict Litigation, which reviews similar actions filed in different federal courts. They’re arguing that because the suits brought by Chappell, Long, Brawner and Risdon all deal with the same legal questions, they should be combined to avoid duplication or divergent legal findings.

Although Huntsman’s case is not a class action, they argue in favor of transferring the class actions to the original courtroom where Huntsman’s case started, under Judge Stephen V. Wilson.

“Judge Wilson is no doubt,” they wrote, “more familiar with the matter than other judges overseeing the new filings.”

The lawyers acknowledge that plaintiffs in the other cases may argue for transferring all these cases to Utah, headquarters of the 17 million-member global faith, but they contend Los Angeles — where Wilson’s court is located — is more convenient for travel and hotel stays.

They contend that while Utah’s Latter-day Saint population is much larger, California has the second largest in the U.S., giving the Golden State “a real and tangible connection to the members” of a class of plaintiffs who might be certified if the cases are consolidated.

More pointedly, they note that church members make up a comparatively smaller percentage of California’s population than in Utah — but, the attorneys say, “it does not have the cultural influence that may inadvertently seep into the litigation as in Utah.”

“The reality is,” the brief states, “that the influence of the LDS Church upon all facets of life in Utah is overwhelming. The LDS Church owns significant property, countless businesses, media outlets, and is a significant social and economic driver for the region. ... Proceedings in California are far less likely to be impacted by atmospherics outside of the litigation itself.”

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