Tithing lawsuits against LDS Church might have been a bust, but here is what they did reveal

Several lawsuits over the financial dealings of The Church of Jesus Christ of Latter-day Saints have now come and gone, so what have we learned about the megamillions owned by the Utah-based faith from these headline-grabbing legal tangles?

Federal judges have repeatedly rejected three lawsuits accusing top church leaders of fraud in their handling of tithing — all of them cases tied to a whistleblower’s 2019 assertion that the global faith had hoarded $100 billion in investments without spending any of it on charity.

First there was Laura Gaddy, a North Carolina resident who joined two other disaffected Latter-day Saints in suing the church in 2019, alleging a long-standing conspiracy to mislead members. After multiple legal setbacks, that case remained pending as of late January on a last-stand appeal to the U.S. Supreme Court.

Then came wealthy Utahn James Huntsman, who sued in 2021, also alleging church leaders lied and seeking millions of his own tithing back. His case has been dismissed.

Multiple other lawsuits from former church members then bubbled up in Utah, Illinois, Washington, Texas, Tennessee and California as Huntsman’s case appeared to gain traction. They got balled together in 2024 in a would-be class-action case and sent to a Utah courtroom. That’s been thrown out of court, too.

But what, if anything, have these cases revealed along the way about the church’s money?

Church keeps a huge, centralized investment fund built from ‘excess tithing’

Initial details on the church’s vast and once-secret portfolio managed by Salt Lake City-based Ensign Peak Advisors, the church’s investment arm, first came to light with revelations from whistleblower David Nielsen, a former senior Ensign Peak fund manager.

Though the whistleblower urged the U.S. Senate in 2023 to investigate the faith’s financial practices, accusing it of dodging billions in taxes, nothing appears to have come from that request — at least publicly — nor from his initial whistleblower filing with the IRS.

But since early 2020, Ensign Peak has disclosed the contents of that portfolio of stocks, bonds, mutual funds and private equity to federal regulators once a quarter. The investment fund stands at $60.9 billion, as of the latest reports.

Church members learned even more in 2023, when the U.S. Securities and Exchange Commission fined the church $1 million and Ensign Peak $4 million as part of a settlement for going to “great lengths” to “obscure” the size and scope of that portfolio from public view.

Filings in all three tithing lawsuits leaned on some of those pieces of information. Huntsman even included an affidavit in his suit from Nielsen. The would-be class action in U.S. District Court in Utah hinged on Nielsen’s allegations and what was revealed in the SEC settlement.

In his sworn statement, Nielsen said that all the funds in the portfolio were repeatedly “referred to and revered” as tithing, “regardless of whether they were referring to principal or earnings on that principal.”

The church has since made clear, partly through court documents, that it views Ensign Peak as the fruits of investing “excess” tithing funds — or “earnings on invested reserves” — for a crucial part of its substantial overall financial strategy, kept primarily to buffer against the effects of any future economic downturns.

How tithing and the church’s for-profit ventures such as City Creek fit together

The cases have — so far — stopped well short of proving any fraud, but they have pushed into plainer view how tithing funds and the proceeds from investing them feed into the church’s wider financial picture.

The suits brought by Gaddy, Huntsman and plaintiffs in the proposed class-action case all shared a common thread: that church members believed the 10% donated in tithing from their incomes went to spiritual and charitable work, while Latter-day Saint leaders diverted large sums into a gigantic reserve and, then, into for-profit ventures.

Thanks mostly to the Huntsman case, the public has additional clarity on two multimillion-dollar financial transfers from Ensign Peak to commercial projects: City Creek Center, the church’s upscale shopping mall in downtown Salt Lake City; and its Beneficial Life insurance company.

The church has since acknowledged its transfers from Ensign Peak of up to $1.4 billion to boost City Creek and $600 million for Beneficial Life — both came in a time of economic downturn during the Great Recession.

Exact meanings of key church terms such as “tithing,” “earnings on tithing” and “business funds” might remain murky on a legal level with those cases consistently rejected, but the financial path those funds followed to reach the church’s private ventures is clearer now than it was before the litigation.

The legal challenges also have tacitly revealed the relative rarity of direct expenditures from Ensign Peak, apparently limited to those two transfers, first toward completion of the City Creek development and another to prop up the financially ailing Beneficial Life.

Revealing clues on how City Creek came to be

Telltale and sometimes bitter exchanges between Huntsman’s lawyers and the church’s attorneys before his lawsuit was filed also came into view, along with details of the church’s business dealings to make City Creek a reality.

Most of the land for the center straddling Main Street was already owned by the church, a lead attorney for the church wrote in a prelitigation letter, and the faith either purchased, leased or acquired leasing contracts on any remaining acreage to assemble the two city blocks the mall now spans.

Church officials then entered into a long-term contract with Michigan-based Taubman, a high-end shopping center developer and operator, which made “a significant contribution,” according to church lawyer David Jordan’s letter, toward the development and construction costs.

Taubman, a publicly traded company with nearly $3.6 billion in total assets, reported to the SEC that its investment in City Creek was $75 million and a church-owned company, called City Creek Reserve, “provided all of the construction financing.”

Jordan wrote that under its contract with the church, Taubman owns and operates the center, collects rents from mall tenants and, in turn, pays yearly rent to the landowner — which property records show is City Creek Reserve.

Key touch points in the whistleblower’s claims

Records submitted to the California-based 9th U.S. Circuit Court of Appeals in 2023 in the Huntsman case offered another rare data point: Ensign Peak made $3.9 billion in total investment profits that same year it moved to transfer cash to City Creek and Beneficial Life, according to church officials.

The Widow’s Mite Report website, which studies the church’s finances based on public documents, billed it as the first ever church-supplied piece of financial information related to the fund. It also matched a key timeline of assets held in Ensign Peak and related funds offered by the IRS whistleblower.

The court records validated another of Nielsen’s assertions about the total value of the church’s investment in City Creek Center — at around $1.438 billion.

On the other hand, Widow’s Mite analysts questioned church’s assertion in court documents that no actual tithing — as opposed to earnings off tithing — was ever used in the City Creek transaction, based on another key nugget:

For the church’s “no tithing was used” assertion to hold up, that would have meant it sold investments held in Ensign Peak before the transfers to City Creek and Beneficial Life, to harvest profits, as it were, from invested tithing.

Analysis of filings with the SEC, instead, indicate Ensign Peak was a net buyer, not a net seller, of stocks in that 2003-2004 window, before transferring money to City Creek. That means its spending on the mall, Widow’s Mite concludes, probably came instead from other accounts that did contain actual tithing funds.

“As a result,” its analysts write, “the investment in City Creek was most likely funded with tithing, not harvested profits.”

In contrast, a lead attorney for the church, Paul Clement, argued adamantly before the 9th Circuit that tithing and investment earnings were never commingled and that City Creek spending came exclusively from the latter.

And, in an April 2003 General Conference address, then-church President Gordon B. Hinckley 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.”

Courts draw firewall around religious ‘truth’ claims

Appellate judges at both the 9th and 10th circuits voiced grave concerns that the Huntsman and Gaddy cases threatened to take U.S. courts into territory defined as out of bounds by the U.S. Constitution: deciding religious questions.

Rulings to dismiss two of the three tithing lawsuits — Gaddy and Huntsman — featured this key argument: that a legal precedent known as the church autonomy doctrine, based on the First Amendment, limits courts from probing into religious affairs, including the practice of tithing.

Even parsing basic terminology in the lawsuit such as the word “tithing” or reviewing what might have been meant in reassuring statements from the pulpit by Hinckley, all seemed likely, the judges said, to run smack-dab into the U.S. Constitution.

Even delving into the meaning of the word “tithing” was problematic for at least some appellate judges. That high bar could deter future financial cases against the church and other faiths.

During high-profile oral arguments in 2024, Judge Milan D. Smith Jr. of 9th U.S. Circuit Court of Appeals abruptly cut off an attorney for Huntsman just as he began to argue for even a narrow legal path for the courts to examine his client’s claims.

“How can you say that?” Smith demanded, when Huntsman’s lawyer argued tithing wasn’t subject to a First Amendment shield. “To my understanding, tithing ... is a quintessential religious issue. In fact, I don’t know of any use of the term tithing that is not religious in context. What am I missing?”

And in throwing out the Gaddy case at one stage, judges wrote that any alleged misconduct by church leaders, “is religiously rooted, relating to core issues of faith.”

Invoking language in a prior ruling dismissing the case, the judges wrote that a court “can no more determine whether [church founder] Joseph Smith ... translated with God’s help gold plates [to produce the Book of Mormon] ... than it can opine whether Jesus Christ walked on water or Muhammad communed with the Archangel Gabriel.”

“We must decline the plaintiffs’ invitation to ‘enter [the] forbidden domain’ of assessing the ‘truth or falsity’ of religious beliefs and doctrine.”

In contrast, the would-be class-action case, presided over by federal Judge Robert J. Shelby in Utah, was instead tossed out on technical grounds, including what Shelby said were flaws in how its arguments were structured.

Shelby determined plaintiffs had waited too long after that first leak from the IRS whistleblower to file their cases, invoking a three-year statute of limitations after the church’s portfolio initially came to public light.

That appears to have to closed off the possibility of future lawsuits related to those whistleblower revelations.

Church fiercely guards its financial information

Particularly in the Huntsman case, church attorneys worked to avoid revealing details on the faith’s internal finances, including those needed to prove its arguments. Briefs were consistently redacted, especially when it came to the City Creek transaction.

Attorneys clashed over protocols for sharing documents in the Huntsman and the proposed class-action suit.

At several junctures, church attorneys argued that outside parties might try to use sensitive or proprietary data to undermine or harm the institution. And, in a rare move, a major appeals hearing in the Huntsman case before a panel of the 9th Circuit was closed to the public.

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