The Church of Latter-day Saints Faces Another Legal Challenge Over Tithing Funds Usage

by Ethan Kim
tithing funds mismanagement

A new federal lawsuit was lodged on Tuesday, claiming that the investment division of The Church of Jesus Christ of Latter-day Saints misappropriated several hundred thousand dollars given by three individuals. Instead of allocating it to charitable endeavors, as purportedly guaranteed, the funds were invested. This litigation casts further light on the financial management of the church, colloquially known as the Mormon church, which has accrued considerable wealth through member contributions, often 10% of their earnings, termed “tithing.” However, the church does not publicly reveal its financial details.

This recent legal challenge, taking place in the U.S. District Court in Salt Lake City, mirrors a previous case in a California federal court. That case was brought forward by James Huntsman, brother to ex-Utah Governor Jon Huntsman, Jr. and is still unresolved, although it achieved some success in an appellate court. Huntsman’s case demands the repayment of the $5 million he gifted before departing the church.

Earlier in the year, the church and its entity, Ensign Peak, faced a $5 million penalty from the U.S. Securities and Exchange Commission for camouflaging the magnitude of the church-managed investment portfolio using shell companies. The church has agreed to pay $1 million, with Ensign Peak shouldering the remaining $4 million.

Although church representatives have not yet commented on this lawsuit, in the past, the church has justified its management of donations. It has refuted Huntsman’s assertions, emphasizing that donations are channeled to diverse religious activities such as missionary work, education, humanitarian assistance, and infrastructure related to the church’s mission.

Both lawsuits question if the church’s investments in various assets truly mirror donor intentions. The church’s corporate entity solicits humanitarian relief donations, assuring that all contributions directly aid those in distress. This recent lawsuit, however, contests this claim, suggesting that some, if not all, contributions are indefinitely invested in accounts never utilized for charitable activities. This also pertains to tithes, which are 10% contributions from members’ earnings. These funds are allegedly directed to Ensign Peak Advisors, a 1997-established nonprofit that has reportedly amassed over $100 billion in assets.

The plaintiffs, Daniel Chappell from Virginia and Utah residents Masen Christensen and John Oaks, allege that over the last ten years, their combined donations to the church amount to roughly $350,000. Their litigation is pursuing class-action status, potentially encompassing numerous church members, and the introduction of an impartial entity to supervise church donations.

Drawing parallels with the Huntsman case, this litigation also hinges on whistleblower David Nielsen’s accusations. Nielsen, a past investment manager at Ensign Peak, presented a comprehensive report to the U.S. Senate Finance Committee this year, advocating for enhanced oversight of the church’s financial affairs.

Historical records from both lawsuits indicate that Ensign Peak has only expended funds on two occasions in its 26-year existence: once in 2009, utilizing $600 million to rescue a faltering church-affiliated life insurance firm, and between 2010-2014, allocating $1.4 billion to construct a shopping center near Temple Square in Salt Lake City’s heart.

In the ongoing Huntsman case, a judicial decision initially favored the church. However, in August, the U.S. Ninth Circuit Court of Appeals partially reversed this decision, sending the case back to the district court. The church has requested another hearing in the appellate court, asserting that the church head had clarified that the project would be financed through investment returns and not tithing resources.

Frequently Asked Questions (FAQs) about tithing funds mismanagement

What is the primary allegation in the recent federal lawsuit against The Church of Jesus Christ of Latter-day Saints?

The lawsuit alleges that the church’s investment arm misused several hundred thousand dollars donated by three individuals by investing the funds instead of allocating them to charitable activities as had been guaranteed.

How does this lawsuit compare to the one filed in California?

This recent legal challenge is similar to a previous case brought forward in a California federal court by James Huntsman. Both lawsuits question the church’s investment decisions and if they align with the intentions of the donors.

Has the church faced any financial penalties recently?

Yes, earlier in the year, the U.S. Securities and Exchange Commission fined the church and its entity, Ensign Peak, $5 million for using shell companies to camouflage the size of their investment portfolio.

Who are the plaintiffs in the current lawsuit?

The plaintiffs are Daniel Chappell from Virginia, and Masen Christensen and John Oaks, both from Utah. They claim to have donated a combined total of about $350,000 to the church over the past decade.

What role does the whistleblower, David Nielsen, play in this situation?

David Nielsen, a former investment manager at Ensign Peak, has presented allegations against the church’s financial dealings in a comprehensive report to the U.S. Senate Finance Committee. Both the Huntsman case and the current lawsuit rely on Nielsen’s revelations.

How has the church previously responded to such allegations?

The church has defended its management of member donations, emphasizing that they are channeled to diverse religious activities. They have refuted Huntsman’s assertions and have highlighted contributions to missionary work, education, humanitarian assistance, and infrastructure.

What is the historical spending record of Ensign Peak, as mentioned in the lawsuits?

The lawsuits indicate that Ensign Peak has expended funds on two distinct occasions in its 26-year existence: $600 million in 2009 to rescue a failing church-affiliated life insurance firm and $1.4 billion between 2010-2014 to construct a shopping center near Temple Square in Salt Lake City.

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Raj P. November 2, 2023 - 7:11 am

How can a church have a corporate arm? Feels like its strayed away from its original mission. just my 2 cents.

Mike R. November 2, 2023 - 7:41 am

Wait, I’ve been donating to the church for years. This is disturbing if true. anyone else worried?

Carla H. November 2, 2023 - 3:48 pm

Whistleblowers like Nielsen are so important. Without them we’d be in the dark about so much.

Sammy T. November 2, 2023 - 7:25 pm

Always thought something was off with the massive constructions around Temple Square. Now it makes sense..

Terrence L. November 3, 2023 - 2:54 am

So where is all the money going? this is why transparency is so important in such big organizations…

Jenna K. November 3, 2023 - 6:09 am

I read about the Huntsman case. Didn’t realize it was this deep. hope it gets sorted.


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