CHEYENNE, Wyo. — A federal lawsuit filed Tuesday alleges that the investment arm of the Church of Jesus Christ of Latter-day Saints misused hundreds of thousands of dollars donated by three men by investing the money instead of using it for charitable purposes such as They claim that it was promised.
The legal action brings greater scrutiny to how the faith widely known as the Mormon Church manages its vast financial assets backed by the so-called “tithe” of members contributing 10% of their income. The church does not publicly disclose details about its finances.
This new lawsuit against church-dependent business and investment entities 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., who recently obtained a The appeal was partially successful and remains pending. That lawsuit seeks the return of $5 million he donated before leaving the church.
In February, the U.S. Securities and Exchange Commission fined the church and Ensign Peak $5 million for using shell companies to conceal the size of the investment portfolio under the church’s control. The church agreed to pay $1 million and Ensign Peak will pay $4 million.
Church officials did not immediately respond to requests for comment on the lawsuit.
The church has previously defended how it handles contributions from members, calling Huntsman’s claims unfounded while claiming that contributions go toward a variety of religious purposes, including mission work, education, humanitarian causes and church building, temples and other buildings important to the work of the church.
At stake in both lawsuits is whether the church’s investments in stocks, bonds, real estate and agriculture reflect the wishes of its donors.
The church’s corporate arm, the President’s Corporation of the Church of Jesus Christ of Latter-day Saints, solicits donations for humanitarian aid with the promise that all donations will be used to help those in need. But those promises are false, the latest lawsuit argues.
Instead, the church allegedly hid the fact that some, if not all, donations are permanently invested in accounts that are never used for charitable work. That includes tithes; regular donations amounting to 10% of the income that a person expects from church members. Instead, the money went to Ensign Peak Advisors, a nonprofit created in 1997 that has grown to be worth more than $100 billion, the lawsuit alleges.
The lawsuit is brought by Daniel Chappell, of Virginia, and Masen Christensen and John Oaks, both of Utah. They claim that the three together have donated around $350,000 to the church over the last decade. Their lawsuit seeks class action certification, potentially involving millions of church members, and an independent entity to oversee the collection and use of church donations.
Like the lawsuit filed by Huntsman, the lawsuit filed by the three men is based on allegations from whistleblower David Nielsen, a former Ensign Peak investment manager who this year submitted a 90-page memo to the Senate Finance Committee. United States demanding oversight of church finances.
Ensign Peak has spent funds only twice in its 26-year history, according to both lawsuits. In 2009, Ensign Peak spent $600 million to bail out a for-profit life insurance company owned by a bankrupt church. Between 2010 and 2014, it invested $1.4 billion to build a shopping center near Temple Square in downtown Salt Lake City.
A judge ruled in favor of the church in Huntsman’s case, but in August the U.S. Court of Appeals for the Ninth Circuit disagreed in part and sent the case back to the district court for further proceedings. . The church requested a new appeals court hearing, saying the church president had explained that the project would be paid for by investment earnings and not tithe funds.