In a recent federal lawsuit, it has been alleged that The Church of Jesus Christ of Latter-day Saints misused hundreds of thousands of dollars in donations by investing the money instead of using it for charitable purposes as promised. This lawsuit raises concerns about the financial practices of the church, particularly regarding the handling of its vast financial holdings, primarily funded by member contributions known as “tithing.” While the church has not publicly disclosed details about its finances, this legal action sheds light on potential mismanagement of funds and lack of transparency within the organization.
This lawsuit, filed in U.S. District Court in Salt Lake City, is similar to a previous lawsuit brought against the church in federal court in California by James Huntsman, brother of former Utah Gov. Jon Huntsman, Jr. Although the California lawsuit is still pending, it recently achieved partial success on appeal. James Huntsman seeks the return of $5 million he donated before leaving the church, further fueling the debate surrounding the church’s financial practices.
The church’s financial practices have already faced scrutiny earlier this year when the U.S. Securities and Exchange Commission (SEC) fined the church and Ensign Peak $5 million for using shell companies to obscure the size of their investment portfolio. While the church agreed to pay $1 million and Ensign Peak will pay $4 million, this penalty raises questions about the transparency and accountability of the church’s financial operations.
According to the lawsuit, the issue at hand is whether the church’s investments, including stocks, bonds, real estate, and agriculture, align with the intentions of its donors. The Corporation of the President of the Church of Jesus Christ of Latter-day Saints, the church’s corporate arm, solicits donations for humanitarian relief, assuring donors that their contributions will be used solely for charitable purposes. However, the latest lawsuit argues that the church concealed the fact that some, if not all, donations are permanently invested and not utilized for charitable endeavors. This includes tithes, which members are expected to contribute in the amount of 10% of their income.
The lawsuit alleges that instead of fulfilling its promised charitable obligations, the church redirected the funds to Ensign Peak Advisors. Established in 1997, this nonprofit organization has since accumulated over $100 billion in value, according to the plaintiffs. The significant growth of Ensign Peak Advisors suggests that the donations channeled to this entity were not appropriately utilized for their intended purpose.
The lawsuit, filed by Daniel Chappell of Virginia, Masen Christensen, and John Oaks of Utah, asserts that the three individuals collectively donated approximately $350,000 to the church over the past decade. Seeking class-action certification, the plaintiffs hope to represent millions of church members, demanding an independent oversight entity to manage the collection and allocation of church donations.
Whistleblower Allegations and Limited Expenditures
Similar to Huntsman’s lawsuit, this legal complaint draws on allegations made by whistleblower David Nielsen. Nielsen, a former Ensign Peak investment manager, submitted a 90-page memorandum to the U.S. Senate Finance Committee earlier this year, urging an investigation into the church’s finances. The lawsuits highlight Ensign Peak’s minimal utilization of funds, claiming that it has only spent money twice in its 26-year history. The organization used $600 million in 2009 to rescue a failing church-owned, for-profit life insurance company and allocated $1.4 billion between 2010 and 2014 for the construction of a mall near Temple Square in downtown Salt Lake City.
Although the church prevailed in Huntsman’s case, a significant development occurred in August when the U.S. Ninth Circuit Court of Appeals disagreed in part with the ruling and sent the case back to the district court for further proceedings. The church has filed for a rehearing in the appeals court, maintaining that the project in question would be funded through investment earnings rather than tithing funds, as asserted by the church president.
Amid mounting allegations and legal action, The Church of Jesus Christ of Latter-day Saints faces increasing public scrutiny regarding its financial practices. The lawsuits filed by individuals who have donated substantial amounts to the church suggest widespread concerns about the handling of funds and the lack of transparency surrounding their utilization. As these legal battles persist, the church must address these allegations and restore public trust through increased accountability and transparency in its financial affairs.