When movie mogul and son of a Mormon billionaire James Huntsman sued his former church for $5million over its alleged misuse of member donations, church authorities warned it could ‘open the floodgates’ for a series of copycat claims.
They weren’t wrong.
Earlier this month, the fifth such ‘copycat’ lawsuit filed since October thundered down on the desk of church leaders in Salt Lake City earlier this month.
Gene and Michelle Judson, a Mormon couple from California who have both 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 cash.
It joined similar complaints filed in Utah, Illinois, Tennessee and Washington over the past six months, sparking the couple’s attorneys to declare that the church now faced ‘a reckoning in a multitude of jurisdictions’.
Six lawsuits have now been filed against the Mormon church alleging it fraudulently misspent member donations. The latest claimed leaders now faced ‘a moment of reckoning’
James Huntsman (pictured), the son of a billionaire Mormon philanthropist, is suing the church over claims it ‘lied’ about how it spent billions of dollars of its followers’ hard-earned cash
Gene and Michelle Judson (pictured), who filed the latest suit in California, are trying to get back $40,000 paid in tithing spanning decades of membership
Certainly, with the church now on the hook for multi-million pound payouts to once loyal members accusing it of fraud, it does not appear an overstatement.
But legal experts have questioned the validity of their claims, with one suggesting they smacked of disaffected 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 judgment day.
Meanwhile, The Church of Jesus Christ of Latter-day Saints (LDS), commonly referred to as the Mormon church, has dismissed the complaints as ‘baseless’.
The claims all assert that the church fraudulently misrepresented how it was spending member donations, known as tithes.
They allege that ecclesiastical leaders, including former President Gordon B. Hinckley, made statements from the pulpit that tithing was only used for specific religious purposes.
In fact, the church spent $1.4billion in tithing funds on City Creek Center, a luxury mall in downtown Salt Lake City, the lawsuits state.
The spate of filings was triggered when, in August, an appeal court overturned a decision to dismiss Huntsman’s $5million claim against the church, originally filed in 2021.
Huntsman, the son of billionaire philanthropist Jon Huntsman, claimed the church was ‘in dire straits’ as followers were ‘fleeing’ the church amid allegations of fraud in an exclusive interview with DailyMail.com in the wake of the decision.
His and the class-action suits that have followed all cite allegations by whistleblower David Nielsen, a former employee of the church’s secretive investment arm Ensign Peak, who alleged the fund was spending member donations on City Creek.
They also lean on a decision by the U.S. Securities and Exchange Commission in February last year to fine the church and Ensign Peak $5million for using shell companies to ‘obscure’ the size of its investment portfolio.
Their cases appear to hinge on a statement made in 2003 by then-President Hinckley, who Huntsman says 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, with the money coming instead from ‘commercial entities owned by the church’ and the ‘earnings of invested reserve funds’.
Huntsman claims that a statement made in 2003 by the church’s then-president, Gordon B. Hinckley (pictured), made it clear that tithes would not be used on City Creek
Huntsman’s suit was sparked by a complaint by David Nielsen (pictured), a former employee of the church’s investment fund, who said it used member donations to prop up its City Creek development in Salt Lake City
A City Creek Center sign sits across the street from the Church of Jesus Christ of Latter-Day Saints world headquarters in Salt Lake City, Utah
The church has insisted throughout the case that no actual tithing was used for the $1.4billion project, only earnings from invested tithings managed by Ensign Peak.
LDS spokesman Sam Penrod has previously said ‘the church did exactly what President Gordon B. Hinckley stated when it invested earnings on reserve funds in the City Creek project,’ he said.
Professor Brunson has called on the church to be more transparent about its finances, adding that Huntsman’s suit tapped into a broader ‘movement’ of Mormons unhappy about how they believe the church is handling their money.
But he doubted whether his claims would resonate with the majority of loyal members, who he said didn’t view the allegations as ‘sincere’.
‘They come across very strongly as disaffected people trying to get their money back,’ he told DailyMail.com.
‘Frankly, that’s probably an accurate representation.’
He added: ‘I suspect there are a number of former members who would love to get their tithing paid back…
‘But wanting to get money back is different from being able to prove that you were defrauded.’
Brunson has said he thinks the cases are likely to fail, despite Huntsman’s victory in the appeal court last year.
He explained that the dispute over what constituted tithing was a ‘religious question’, which would play into the church’s hands.
‘The plaintiffs can argue that tithing includes the return on invested tithing. But if the LDS church says “no, tithing only represents the amount that members paid in, and not any earnings on it”, that’s an internal doctrinal issue and the courts are going to accept it.’
The cases come after details emerged of how the church has amassed an estimated value of $236billion, with the majority of this stashed as ready cash in its secretive investment arm, Ensign Peak Advisors.
Details have emerged of how the church has amassed such vast wealth – thought to be on a par with the sovereign wealth fund of South Korea.
Its leaders expect the rank-and-file to donate 10 percent of their income in tithing, which is put towards annual expenditure, 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 unnamed current and former Mormons.
The report’s authors claim much of the fund’s estimated $175billion in assets sits unused instead of being put towards charitable causes, as its followers expect.