A federal lawsuit was filed on Tuesday accusing The Church of Jesus Christ of Latter-day Saints investment arm of misusing hundreds of thousands of dollars donated by three men. The lawsuit claims that instead of using the money for charitable purposes as promised, the church invested it. This legal action has brought more scrutiny to how the Mormon church handles its substantial financial holdings, which are supported by members’ tithing contributions.
The lawsuit, filed in U.S. District Court in Salt Lake City, is similar to one filed in federal court in California by James Huntsman, brother of former Utah Gov. Jon Huntsman Jr. The California lawsuit recently achieved a partial success on appeal and is still pending. James Huntsman seeks the return of $5 million that he donated before leaving the church.
Earlier this year, the U.S. Securities and Exchange Commission fined the church and Ensign Peak $5 million for using shell companies to conceal the size of their investment portfolio. The church agreed to pay $1 million, while Ensign Peak will pay $4 million.
When asked for comment, church officials did not provide an immediate response regarding the lawsuit. The church has previously defended its handling of member contributions, dismissing Huntsman’s claims as baseless. They maintain that the donations go towards various religious purposes such as missionary work, education, humanitarian causes, and the construction of churches, temples, and other significant buildings.
The main focus of both lawsuits is whether the church’s investments align with the intentions of its donors. The latest lawsuit argues that the church deceived donors by investing their contributions instead of using them for charitable work. This includes tithes, which are regular donations amounting to 10% of a person’s income, expected from church members. The lawsuit claims that this money has instead been directed to Ensign Peak Advisors, a nonprofit organization that has amassed over $100 billion in value since its establishment in 1997.
The lawsuit has been filed by Daniel Chappell from Virginia, and Masen Christensen and John Oaks from Utah. Together, they claim to have donated approximately $350,000 to the church over the past decade. Their lawsuit seeks class-action certification, potentially involving millions of church members, as well as the establishment of an independent entity to oversee the collection and use of church donations.
Similar to Huntsman’s lawsuit, the lawsuit filed by these three men relies on allegations made by whistleblower David Nielsen. Nielsen, a former Ensign Peak investment manager, submitted a 90-page memorandum to the U.S. Senate Finance Committee earlier this year, demanding oversight into the church’s finances.
According to both lawsuits, Ensign Peak has only spent funds twice in its 26-year history. In 2009, $600 million was used to rescue a failing church-owned, for-profit life insurance company. From 2010 to 2014, $1.4 billion was allocated towards the construction of a mall near Temple Square in downtown Salt Lake City.
In Huntsman’s case, a judge ruled in favor of the church. However, in August, the U.S. Ninth Circuit Court of Appeals partially disagreed and sent the case back to the district court for further proceedings. The church has filed for a rehearing in the appeals court, stating that the project would be financed through investment earnings rather than tithing funds, as explained by the church president.
