A recent federal lawsuit has put The Church of Jesus Christ of Latter-day Saints under scrutiny for alleged misuse of hundreds of thousands of dollars in charitable donations. The lawsuit claims that the church’s investment arm, instead of using the funds for their intended charitable purposes, invested them. This legal action raises questions about the transparency of the Mormon church’s financial holdings, which are largely sustained by members’ tithes, equivalent to 10% of their income. Unlike other religious organizations, the church does not publicly disclose detailed information about its finances.
This lawsuit is similar to one filed in federal court in California by James Huntsman, brother of former Utah Governor Jon Huntsman, Jr. The initial lawsuit seeks the return of $5 million that Huntsman donated before leaving the church. The California court of appeals recently granted partial success to the lawsuit, which remains pending. These legal actions shine a light on the church’s investment practices and raise questions about the use of donated funds.
Adding to the mounting concerns, in February, the U.S. Securities and Exchange Commission (SEC) fined the church and Ensign Peak, its investment subsidiary, $5 million. The SEC penalized them for using shell companies to obscure the actual size of the church’s investment portfolio. The church agreed to pay $1 million, while Ensign Peak agreed to pay $4 million. However, church officials have yet to comment on the recent lawsuit.
The Church of Jesus Christ of Latter-day Saints depends heavily on member contributions, which the church claims are utilized for various religious purposes. This includes missionary work, education, humanitarian causes, and the construction of churches, temples, and other religious buildings. However, both lawsuits question whether the church’s investments, which include stocks, bonds, real estate, and agriculture, align with the intentions of the donors.
The recent lawsuit alleges that the church misled its donors by proclaiming that all donations were used for charitable relief. However, the plaintiffs argue that instead of utilizing these funds for charitable work, the church secretly invested them in accounts that never serve any charitable purposes. The lawsuit specifically mentions “tithes,” the regular 10% donations expected from church members. According to the lawsuit, these funds were transferred to Ensign Peak Advisors, a nonprofit organization that allegedly holds over $100 billion in value.
The lawsuit includes three plaintiffs: Daniel Chappell from Virginia, and Masen Christensen and John Oaks from Utah. Combined, they claim to have donated approximately $350,000 to the church over the past decade. They are seeking class-action certification, which potentially involves millions of church members. Additionally, they demand the establishment of an independent entity responsible for overseeing the collection and proper use of church donations.
Like Huntsman’s lawsuit, this case relies heavily on the testimony of whistleblower David Nielsen, a former Ensign Peak investment manager. Nielsen submitted a 90-page memorandum to the U.S. Senate Finance Committee, urging them to investigate the church’s financial practices. Both lawsuits allege that Ensign Peak has only spent funds twice in its 26-year history. In 2009, it allocated $600 million to rescue a failing church-owned life insurance company. From 2010 to 2014, Ensign Peak invested $1.4 billion in a mall near Temple Square in Salt Lake City.
Initially, the church won the case against Huntsman. However, in August, the U.S. Ninth Circuit Court of Appeals partially disagreed with the ruling and sent the case back to the district court for further proceedings. The church has requested a rehearing in the appeals court, claiming that the project was financed by investment earnings rather than tithing funds.
As these lawsuits unfold, they shed light on the financial practices of The Church of Jesus Christ of Latter-day Saints. The allegations of mishandling charitable donations prompt conversations about transparency, accountability, and whether the church’s investments align with the intentions of its donors. The outcomes of these lawsuits will likely have significant implications for the future of the church’s financial practices and the degree of oversight required.