Whether City Creek Center money came from member donations or earnings, it was all called ‘tithing,’ Huntsman alleges in case against LDS Church
Latest court filings in federal fraud suit include a sworn statement from whistleblower in IRS case.
Former Utahn James Huntsman has added a whistleblower’s sworn statement to his accusations that leaders of The Church of Jesus Christ of Latter-day Saints and their money managers have engaged in a “calculated deception” that diverted $2 billion in church members’ donations to two commercial ventures.
Huntsman’s lawyers filed this new legal salvo late Monday in the California businessman’s high-profile federal lawsuit, accusing leaders of the Utah-based faith of fraud and seeking to recover millions in refunded tithing, interest and penalties.
They called the church’s move last week to have his case tossed out “its latest effort to deceive the public and distort the facts.”
Huntsman’s legal team is seeking to undermine the Utah-based faith’s assertions that those payments were not drawn from billions in tithing paid by Latter-day Saints — as the faithful have been repeatedly assured by top church leaders, including then-President Gordon B. Hinckley.
Church leaders have have relied on “a distinction without a difference,” Huntsman’s attorneys said, by mounting arguments that it used “earnings versus principal” for spending from church accounts on Salt Lake City’s City Creek Center shopping center and Beneficial Life insurance Co.
“Any use of earnings necessarily stems from a use of the underlying principal itself,” the California film distributor’s lawyers wrote in their motion filed Monday.
To buttress that argument, they included a sworn declaration from whistleblower David Nielsen, a former senior portfolio at Ensign Peak Advisors, an investment arm of the church.
Nielsen said that Ensign Peak’s senior managers told him and others the fund had been seeded with tithing funds in 1997. But all the funds in the portfolio were repeatedly “referred to and revered” as tithing “regardless of whether they were referring to principal or earnings on that principal,” stated the former fund manager from 2010 to 2019 at Ensign.
Donations were commingled with earnings, Nielsen said in his new declaration, and “every penny was referred to as the ‘widow’s mite’” — a biblical reference to its sacred nature. Based on his personal knowledge, he said, “it appeared the church’s public statements were intended to conceal the truth about EPA’s use of tithing funds for City Creek mall and Beneficial Life.”
In December 2019, Nielsen filed a whistleblower complaint with the IRS, accusing the church of amassing a $100 billion reserve fund from excess tithing intended for — but never spent on — charity in potential violation of tax laws. Nielsen also alleged then that billions in tithing money went toward those commercial ventures.
In their motion last week, church attorneys offered confidential financial data — redacted in public court documents — that detailed how money used for the shopping mall instead came from “commercial entities owned by the church” and “earnings on invested reserve funds,” rather than actual tithing.
That money went to the City Creek project via Property Reserve Inc., a for-profit real estate arm of the church, and from accounts set aside at Ensign Peak Advisors, created in 1997 to manage and build the church’s financial reserves for a possible “rainy day,” its chief lawyer in the matter, Rick Richmond, contended.
Even viewing the church’s “tortured theory in the best light possible,” Huntsman’s lead attorney, David Jonelis, wrote in Monday’s filings, “it still admittedly misrepresented how the funds donated by Mr. Huntsman and countless other members would ultimately be used.”
The latest filings also sought to turn aside church assertions that his lawsuit runs afoul of First Amendment protections of religion, arguing that such insistence “flies in the face of well-settled law preventing a religious organization from committing fraud under the guise of faith.”
“Simply stated, this is a case about fraud, not faith, and implicates no religious principles or tenets of Mormonism,” Huntsman’s lawyers wrote, referring to a recent ruling in a similar case in Utah as precedent.
In that case, involving former Latter-day Saint Laura Gaddy’s federal lawsuit over tithing, Judge Robert J. Shelby of the Utah’s U.S. District Court said the North Carolina woman was not arguing against “the religious principles of the church or the truth of the church’s beliefs concerning the doctrine of tithing.” Rather, she has “challenged secular representations concerning the use of money received by the church.”
Huntsman’s court papers allege church attorneys and a top official from the faith’s Finance and Records Department are now spinning “a wildly complex narrative” in legal moves for summary judgment to obscure the fraudulent intent of statements by church leaders that tithing would be used only for religious and philanthropic ends.
Huntsman — a brother of former Utah Gov. Jon Huntsman Jr. and a son of the late Utah industrialist-philanthropist Jon Huntsman Sr. — resigned his membership in 2020 over a crisis of faith and has sued for a refund on at least $5 million in donations “by cloaking his claim in the garb of a fraud action,” church attorneys argued last week in seeking to have his March lawsuit tossed out.
They said the case is based on “an inadequate substitute for actual facts and cannot justify Huntsman’s attempt to claw back his voluntary, unrestricted contributions.”
U.S. District Court Judge Stephen Wilson has set an Aug. 30 hearing in federal court in Los Angeles to decide if the case should proceed.
Editor’s note • James Huntsman is a brother of Paul Huntsman, chairman of the nonprofit Salt Lake Tribune’s board of directors.