Judge Dismisses Lawsuit Against Mormon Church Over Donation Use
A federal judge on Wednesday
dismissed a lawsuit
claiming that The Church of Jesus Christ of Latter-day Saints improperly used hundreds of thousands of dollars in contributions by diverting it towards investments rather than utilizing it as intended.
charitable purposes
.
U.S. District Judge Robert Shelby stated that since the filing of the lawsuit in October 2023, more than a three-year limitation period for fraud allegations in Utah has expired. Additionally, he noted that the plaintiffs did not sufficiently demonstrate evidence of any fraudulent activity.
Legal proceedings initiated by a coalition of church donors have sparked fresh examination into how the religious organization commonly referred to as the Mormon Church manages its extensive financial assets. These resources are augmented by what is termed “tithing,” where adherents contribute one-tenth of their earnings.
The legal action targeted businesses and financial institutions affiliated with the church, which chooses not to make its economic information public. The lawyers representing the claimants requested the appointment of an external body to manage contributions. Additionally, they aimed for class-action status that might have involved numerous church members in the proceedings.
Sam Penrod, a church spokesperson, stated that tithing contributions serve as an “act of faith” enabling the organization to carry out its purpose.
These contributions are meticulously utilized and prudently managed, guided by prominent church leaders,” stated Penrod in an email. “The legal actions filed against the Church were appropriately rejected by the judiciary.
The plaintiffs’ lawyer, Christopher Seeger, stated that dismissing the case would complicate matters for congregation members trying to comprehend how their contributions are utilized.
“For many years, members of The Church of Jesus Christ of Latter-day Saints have been giving 10% of their earnings as tithes, and they should be informed about how these contributions are utilized,” Seeger stated.
In 2021, James Huntsman—a sibling of ex-Utah Governor Jon Huntsman, Jr.—initiated a comparable legal action in California’s federal court. He aimed to recover the $5 million he had contributed prior to his departure from the church. In January, the 9th U.S. Circuit Court of Appeals supported a previous judgment made by a lower court.
sided with the church
.
The crux of the lawsuits centered around whether the church’s investments in equities, debt securities, property, and farming align with the intentions of its contributors.
The U.S. Securities and Exchange Commission imposed a fine
The church along with its affiliate Ensign Peak Advisors
In February 2023, $5 million was allocated due to the use of shell corporations to conceal the extent of the investment portfolio managed by the church. The church consented to paying $1 million, with Ensign Peak agreeing to cover $4 million.
Previously, the church has upheld its methods for managing member donations, dismissing allegations of fraud as unfounded. They stated that these contributions fund various religious activities such as missionary efforts, educational programs, aid initiatives, and the building of churches, temples, and other facilities essential to their operations.
The church’s organizational wing, known as the Corporation of the President of The Church of Jesus Christ of Latter-day Saints, seeks contributions for humanitarian aid, assuring donors that all funds will be utilized to assist those who require support.
However, the Utah lawsuit claimed that the church concealed details indicating that some—or possibly all—donations were consistently placed into investment accounts not utilized for charitable purposes. This encompasses tithes—which represent 10% of an individual’s earnings and are mandatory contributions from church members. According to the suit, these funds have been directed towards Ensign Peak Advisors, a non-profit organization established in 1997 that has since expanded to exceed $100 billion in assets.
Similar to the lawsuit brought forth by Huntsman, this case was based on claims made by whistleblower David Nielsen, a previous Ensign Peak investment manager who provided a 90-page document to the U.S. Senate Finance Committee. This submission called for scrutiny over the financial dealings of the church.
The details about these accusations were made known by The Associated Press and various other news outlets in late 2019 and early 2020, as stated in Thursday’s decision. According to Shelby, the people involved in the Utah lawsuit ought to have been conscious of the fraud claims by early 2020 but failed to submit their case within over three years—past the deadline set by the statute of limitations.
Ensign Peak has allocated funds just two times throughout its 26-year existence, as stated in both legal complaints. In 2009, it disbursed $600 million to rescue a struggling, church-affiliated for-profit life insurance firm. Starting from 2010, it committed approximately $1.4 billion towards constructing a shopping center close to Temple Square in downtown Salt Lake City.