On Thursday, a federal judge dismissed a lawsuit that accused an arm of The Church of Jesus Christ of Latter-day Saints of improperly using donations by investing them rather than allocating them for charitable purposes. The judge, Robert Shelby, ruled that the fraud claims fell outside Utah’s three-year statute of limitations. He also determined that the plaintiffs had not sufficiently demonstrated any fraudulent activity.
The lawsuit, initiated by a group of church donors, stirred renewed examination of how the Mormon church oversees its extensive financial assets. These holdings are considerably bolstered by “tithing,” where church members donate 10% of their income. The suit focused on business and investment divisions of the church, which traditionally keeps its financial dealings private. The plaintiffs’ attorneys sought to appoint an independent body to manage the donated funds and pursued a class-action status, potentially involving millions of church members in the lawsuit.
Sam Penrod, a spokesperson for the church, emphasized that tithing donations are a fundamental part of the faith that enables the church to carry out its mission. “These donations are carefully used and wisely managed under the direction of senior Church leaders,” Penrod stated, affirming that the court’s dismissal of the claims was correct.
Christopher Seeger, attorney for the plaintiffs, argued that the court’s decision impedes church members’ ability to comprehend the allocation of their contributions. “Church members have long been contributing a portion of their income as tithes, and they deserve transparency on their usage,” Seeger remarked.
A related lawsuit was previously filed in California in 2021 by James Huntsman, related to former Utah Governor Jon Huntsman, Jr. James Huntsman sought the repayment of $5 million donated prior to his departure from the church. The 9th U.S. Circuit Court of Appeals recently upheld a lower court decision that favored the church. Central to the lawsuits was whether church investments in various financial instruments reflected donor intentions.
Earlier this year, the church and its subsidiary, Ensign Peak Advisors, were fined $5 million by the U.S. Securities and Exchange Commission for employing shell companies to conceal the extent of the church’s investment portfolio. Both parties agreed to pay fines, with the church responsible for $1 million and Ensign Peak covering the remaining $4 million.
The church has long defended its management of member contributions, labeling the fraud allegations as unfounded. It asserts that donations facilitate an array of religious objectives, from missionary endeavors to education, humanitarian projects, and the construction of essential church properties. The Corporation of the President of the Church of Jesus Christ of Latter-day Saints solicits donations for humanitarian relief, asserting that all funds are used to aid those in need.
However, the lawsuit filed in Utah alleged the church misled people by suggesting that donations were solely for charitable purposes, while some remained permanently invested, never supporting direct charitable work. These included tithes, equal to 10% of members’ income. Instead, the lawsuit claims funds were diverted to Ensign Peak Advisors, a nonprofit established in 1997, now valued in excess of $100 billion.
Like the Huntsman case, the Utah lawsuit heavily referenced accusations made by David Nielsen, a former investment manager at Ensign Peak. Nielsen had submitted a detailed report to the U.S. Senate Finance Committee that called for greater oversight of the church’s financial activities. His allegations became widely publicized by various media outlets in 2019 and 2020. According to the recent ruling, Judge Shelby noted plaintiffs should have been aware of these fraud claims by early 2020 but waited more than three years to file their lawsuit, missing the statute of limitations.
The lawsuits detail how Ensign Peak, over its 26-year operation, has used its funds only twice. In one instance, it spent $600 million in 2009 to rescue a struggling church-owned life insurance company. Additionally, beginning in 2010, it allocated $1.4 billion for constructing a shopping center near Salt Lake City’s Temple Square.