When movie mogul and son of a Mormon billionaire James Huntsman sued his former church for $5 million for its alleged misuse of its members’ donations, church officials warned it could “open the floodgates” to a series of copycat accusations.
They were not wrong.
Earlier this month, the fifth copycat lawsuit filed since October landed on the desks of church leaders in Salt Lake City earlier this month.
Gene and Michelle Judson, a Mormon couple from California who have been members of the church for more than 50 years, effectively accused their once-vaunted leaders of lying to them about how they spent $40,000 of their hard-earned money.
It joined similar complaints filed in Utah, Illinois, Tennessee and Washington over the past six months, prompting the couple’s attorneys to declare that the church now faced “a reckoning in a multitude of jurisdictions.”
Six lawsuits have been filed against the Mormon church alleging that it fraudulently squandered its members’ donations. The last vindicated leaders now face “a moment of reckoning”
James Huntsman (pictured), son of a billionaire Mormon philanthropist, is suing the church over claims he “lied” about how he spent billions of dollars of his followers’ hard-earned money.
Gene and Michelle Judson (pictured), who filed the latest lawsuit in California, are trying to recover $40,000 paid in tithes spanning decades of membership.
Certainly, now that the church is having to pay multimillion-dollar payouts to once-loyal members accusing it of fraud, it doesn’t seem like a stretch.
But legal experts have questioned the validity of their claims, with one suggesting they smacked of disgruntled members desperate to get their money back.
Sam Brunson, a Mormon and tax law professor at Loyola University, said he was “skeptical” that this was the church’s day of reckoning.
Meanwhile, the Church of Jesus Christ of Latter-day Saints (LDS), commonly known as the Mormon church, has dismissed the complaints as “baseless.”
All claims claim the church fraudulently misrepresented how it spent members’ donations, known as tithes.
They allege that church leaders, including former President Gordon B. Hinckley, made statements from the pulpit that the tithe was only used for specific religious purposes.
In fact, the church spent $1.4 billion in tithing funds at City Creek Center, an upscale shopping center in downtown Salt Lake City, the lawsuits claim.
The flurry of filings was triggered when an appeals court in August overturned a decision to dismiss Huntsman’s $5 million claim against the church, originally filed in 2021.
Huntsman, son of billionaire philanthropist Jon Huntsman, claimed the church was “in dire straits” as followers were “fleeing” the church amid fraud allegations in an exclusive interview with DailyMail.com in the wake of the decision. .
Both his lawsuit and the class-action lawsuits that followed cite allegations from whistleblower David Nielsen, a former employee of the church’s secretive investment arm, Ensign Peak, who alleged that the fund was spending member donations on City Creek.
They also rely on a decision by the US Securities and Exchange Commission in February of last year to fine the church and Ensign Peak $5 million for using shell companies to “hide” the size of their portfolio. investments.
Their cases appear to hinge on a statement made in 2003 by then-President Hinckley, who Huntsman said used to fly on his family’s private jet.
Hinckley insisted at the church’s General Conference that tithes “have not and will not be used” for City Creek, but rather that the money comes from “church-owned business entities” and from “reserve fund earnings.” invested”.
Huntsman says a statement made in 2003 by then-church president Gordon B. Hinckley (pictured) made it clear that tithes would not be used at City Creek.
Huntsman’s lawsuit was sparked by a complaint from David Nielsen (pictured), a former employee of the church’s investment fund, who said he used donations from members to prop up his City Creek development in Salt Lake City.
A City Creek Center sign sits in front of the world headquarters of the Church of Jesus Christ of Latter-day Saints in Salt Lake City, Utah.
The church has insisted throughout the case that no actual tithe was used for the $1.4 billion project, only profits from invested tithes administered by Ensign Peak.
LDS spokesman Sam Penrod has previously said that “the church did exactly what President Gordon B. Hinckley stated when he invested reserve fund earnings into the City Creek project,” he said.
Professor Brunson has called on the church to be more transparent about its finances, adding that Huntsman’s lawsuit tapped into a broader “movement” of Mormons unhappy with how they believe the church is handling its money.
But he doubted his claims would resonate with most loyalists, who he said did not regard the allegations as “sincere.”
“They clearly look like disgruntled people trying to get their money back,” he told DailyMail.com.
“Frankly, it’s probably an accurate representation.”
He added: ‘I suspect there are several former members who would love to have their tithe returned…
“But wanting to get your money back is different from being able to prove that you’ve been defrauded.”
Brunson has said he believes the cases are likely to fail, despite Huntsman’s appeals court victory last year.
He explained that the dispute over what constituted the tithe was a “religious question”, which would favor the church.
‘Plaintiffs may argue that the tithe includes the return on the tithe invested. But if the LDS church says “no, the tithe only represents the amount members paid, and not profits,” that is an internal doctrinal issue and the courts will accept it.’
The cases come after details emerged of how the church has amassed an estimated $236 billion in value, with most of this hidden as cash on hand in its secretive investment arm, Ensign Peak Advisors.
Details have emerged of how the church has amassed such enormous wealth, it is believed to be on par with South Korea’s sovereign wealth fund.
Their leaders expect bases to donate 10 percent of their income in tithes, which go toward annual expenses such as building new temples.
The surplus is invested in a portfolio of stocks, bonds, private equity and other businesses.
It closely tracks the S&P 500, but with minor adjustments as its asset managers seek to outperform the index, according to a report by The Widow’s Mite, the group of anonymous current and former Mormons.
The report’s authors claim that much of the fund’s estimated $175 billion in assets goes unused rather than going to charitable causes, as its supporters hope.