CHEYENNE, Wyo. (AP) — 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 in instead of using it for charitable purposes as they claim, it was promised.
The lawsuit brings deeper scrutiny into how the faith widely known as the Mormon Church manages its vast financial assets supported by so-called “tithing” from members who contribute 10 percent of their income . The Church does not publicly disclose details of its finances.
This new lawsuit against Church business and investment entities in U.S. District Court in Salt Lake City is similar to one filed in California federal court by James Huntsman, brother of the former governor of Utah, Jon Huntsman, Jr., who was recently granted a trial. partial success on appeal and remains pending. This lawsuit seeks to recover the $5 million he donated before leaving the church.
In February, the United States Securities and Exchange Commission a fine to the church and the sign A $5 million spike for the use of shell companies to hide the size of the investment portfolio under Church control. The church agreed to pay $1 million and Ensign Peak will pay $4 million.
Church officials did not immediately respond to comment on the lawsuit.
The Church has previously defended how it handles member contributions, calling Huntsman’s claims baseless while asserting that contributions serve a variety of religious purposes, including missionary work, education, humanitarian causes and charity. construction of churches, temples and other buildings important to the work of the Church.
At issue in both lawsuits is whether the Church’s investments in stocks, bonds, real estate and agriculture reflect the wishes of its donors.
The corporate arm of the Church, 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 aren’t true, the latest lawsuit claims.
Instead, the Church allegedly hid the fact that some, if not all, of the donations are permanently invested in accounts never used for charitable purposes. This includes tithes; regular donations amounting to 10% of a person’s income expected from church members. The money went to Ensign Peak Advisors, a nonprofit founded in 1997 that grew to be worth more than $100 billion, according to the lawsuit.
The lawsuit is filed by Daniel Chappell, of Virginia, and Masen Christensen and John Oaks, both of Utah. They say between the three of them they have donated about $350,000 to the church over the past decade. Their lawsuit seeks authorization for a class-action lawsuit, 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 relies on the allegations of whistleblower David Nielsen, a former Ensign Peak investment manager who submitted a 90-page memorandum to the committee this year Senate finance mandate demanding oversight of church finances.
Ensign Peak has only spent funds twice in its 26-year history, according to both lawsuits. In 2009, Ensign Peak spent $600 million to bail out a bankrupt church-owned for-profit life insurance company. From 2010 to 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 the Huntsman 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 a more in-depth procedure. The church requested a rehearing before the appeals court, saying the church president explained that the project would be financed by investment income and not tithing funds.
