Multiple “copycat” lawsuits accusing The Church of Jesus Christ of Latter-day Saints of fraud over tithing have now been rolled into one boundary-pushing case.
After being transferred this spring to a federal courtroom in Salt Lake City — the faith’s global headquarters — five federal suits from across the nation have been formally reshaped into a single beefed-up class-action complaint, clearing a new path for litigation before U.S. District Judge Robert Shelby.
The newly consolidated case, filed July 12, is being pressed by former or disaffected Latter-day Saints in Utah, Illinois, Washington, Tennessee and California.
A total of nine plaintiffs — so far — are alleging that senior church leaders and their money managers lied for decades about using member tithing donations solely for charitable causes while instead investing the cash in a multibillion-dollar “slush fund” at Ensign Peak Advisors, the faith’s investment arm.
The lawsuit accuses Ensign Peak and the church of fraud, unjust enrichment and breaching fiduciary duties. Backers seek the return of varying amounts in individual donations they gave — ranging from $3,700 to $183,256 — along with other remedies, including possible creation of a national class of plaintiffs with similar interests.
A legal road map issued for the class-action case by Shelby calls for the church to file its counterarguments in September, as part of a calendar of planned legal clashes stretching to year’s end and beyond.
Shelby also told an array of at least 16 lawyers working on the case in late May that he would seek to keep its proceedings open and transparent.
“This is of great importance to a great many people,” the judge said May 30 from the bench, adding that he was honored to preside over the matter.
Tithing fights on several fronts
In a variety of court venues and public statements until now, church officials and their lawyers have steadfastly denied that top faith leaders ever misled members on the use of tithing.
Church attorneys have called these suits “copycat” actions stemming from a separate legal battle brought more than three years ago by prominent Utahn and onetime church member James Huntsman, who also accuses top Latter-day Saint leaders of misleading the faithful over how tithing donations were spent.
A son of the late industrialist-philanthropist Jon Huntsman Sr. and brother to former Utah Gov. Jon Huntsman Jr., James Huntsman seeks the return of $5 million in tithing, plus penalties and interest, but is not pursuing class-action status.
The church and its legal supporters are mounting arguments in Huntsman’s case that digging into aspects of tithing and the motivations of senior faith leaders in a courtroom risks violating religious protections under the U.S. Constitution. The issue is being closely followed nationally, not least for its implications on the legal principles of religious autonomy and potential impact on a range of nonprofits relying on donations.
Huntsman, who resigned his church membership in 2020, sued the faith in March 2021.
As attorneys and advocates on both sides continue to fight his case before the 9th U.S. Circuit Court of Appeals, these other lawsuits emerged, making similar assertions of fraud and seeking the return of past donations.
The class-action suit says the amount in controversy exceeds $5 million, not including interest and legal costs. Plaintiffs say a future class in the lawsuit could expand to millions of members, if the court approves its formation.
Expanding what could be at stake
In addition to tithing refunds, the class-action suit calls for declaring the church’s financial practices illegal and ordering a halt to tithing altogether while accountants sort through the faith’s finances or the court appoints a special monitor.
Along with tithing, in which faithful Latter-day Saints donate a tenth of their incomes to the church, the suit now implicates charitable contributions from non-Latter-day Saint groups and so-called fast offerings. Once a month, devout members go without food for 24 hours and then give the money saved by skipping those meals to help the poor.
Court documents show the new complaint draws heavily from the revelations of an IRS whistleblower in late 2019, including his assertions to U.S. tax authorities about Ensign Peak’s alleged penchant for secrecy as “a massive hedge fund that never reinvests funds” in church activities.
Plaintiffs say they also expect additional withdrawals from Ensign Peak accounts for unrelated business items to come to light, based on the whistleblower’s written assertions, as discovery of new evidence in their case proceeds.
The refashioned suit also cites a February 2023 settlement between the church and the U.S. Securities and Exchange Commission over a complex scheme to evade public reporting requirements on Ensign Peak’s huge portfolio by holding the investments in a series of shell accounts.
The SEC fined Ensign Peak $4 million and the church $1 million as part of that settlement. Plaintiffs say that church leaders and Ensign used the shell companies in part “to avoid negative consequences in light of the size of the church’s portfolio.” They quote Roger Clarke, Ensign Peak’s CEO, as saying it sought anonymity on its investments so as to not deter some Latter-day Saints from continuing to pay tithing.
Subtle shifts in approach
In this latest form, the class-action complaint also shows shifts in approach from earlier legal challenges over tithing.
• Nowhere does the latest lawsuit mention former church President Gordon B. Hinckley nor his 2003 assurances during General Conference that no tithing funds wound be used on the construction and development of City Creek Center in downtown Salt Lake City.
In that global broadcast, the church leader insisted that tithing funds “have not and will not be used” for the shopping center, stating that the money came from “commercial entities owned by the church” and the “earnings of invested reserve funds.”
Hinckley’s remarks feature prominently in Huntsman’s legal arguments now pending before the 9th Circuit. That, in turn, has drawn counterarguments from church lawyers and religious-freedom advocates that the direction of Huntsman’s case threatens to violate constitutional protections by having the courts parse the veracity of religious speech.
The class-action suit quotes other church leaders aside from Hinckley in making similar assurances about the source of funds for City Creek not coming from tithing, but in more secular settings and not from the pulpit.
• The suit goes to great lengths to illustrate the church’s public assurances through the years that the donations it solicits and collects via tithing or fast offerings are spent primarily on philanthropy, including help for the poor and needy, education, missionary work and other ecclesiastical ends. It includes repeated statements from church leaders to that effect, along with snapshots of church websites and even copies of tithing envelopes.
“Despite [the church’s] representations to the contrary, a substantial and significant amount of the donations it receives are not directed towards humanitarian aid, nor any other philanthropic or charitable purpose,” the suit states. “Instead, they are transferred through a complex hub of entities to Ensign.”
• The suit includes diagrams, charts and other references drawn from the 2019 report of the IRS whistleblower, former Ensign Peak portfolio manager David Nielsen. It also includes copies of a portion of a 2007 tax form on which Clarke, Ensign Peak’s CEO, declared the book value of all the fund’s assets at $1 million — when, the suit says, it was closer to $38 billion.
On the same tax form filed in 2010, Clarke declared, under penalty of perjury, that Ensign Peak’s value was “over” $1 million.
Plaintiffs label these declarations as part of “making misrepresentations to the IRS to keep the trove a secret” and failing to disclose “its large-scale hoarding of donated funds.”
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