The Church of Jesus Christ of Latter-day Saints and its investment arm have mounted their toughest defenses to date in a multipronged effort to persuade a federal judge to toss out a lawsuit by current and disaffected members over tithing.
In new briefs filed late Tuesday, the Utah-based faith says the plaintiffs pressing a would-be class-action case accusing it of fraud over the sacred donations are now seeking to breach ironclad legal shields forged under the First Amendment, which church lawyers contend bars such intrusions into its religious affairs by the courts.
Not only does that legal quest clash with the well-established legal precedent of church autonomy, lawyers argue, but the claims have also missed a crucial deadline — coming as they have more than four years after an IRS whistleblower’s explosive revelations about the worldwide faith’s finances.
“Too little and too late,” the church states in its latest filing submitted to U.S. District Court Judge Robert Shelby. “...How the church spends worshippers’ contributions is central to the exercise of religion” — and therefore off-limits to any judicial probes.
Nine plaintiffs from Utah, Tennessee, Illinois, Washington and California allege that senior church leaders and their money managers lied for decades about using members’ tithing solely for charitable causes while instead investing portions of the money in what they refer to as a multibillion-dollar “slush fund” at Ensign Peak Advisors, the faith’s Salt Lake City-based investment firm.
Their claims flow largely from the highly publicized 2019 allegations by former Ensign Peak portfolio manager David Nielsen that the firm had stockpiled more than $100 billion in investments on the faith’s behalf — without spending any of it on charity.
Ensign Peak’s latest filing with federal regulators valued its publicly reported holdings in stocks, mutual funds and other investments at $54.7 billion.
Along with seeking to recover their own donations over the years, the current and former Latter-day Saints want Shelby to declare the church’s financial practices illegal and order a halt to tithing altogether while accountants sort through the faith’s finances or the court appoints a special monitor.
Their legal retort to the latest motions from church and Ensign Peak to dismiss their case is expected in mid-November.
Having reserves is not ‘fraud’
In three separate legal salvos, the church and Ensign Peak say the suit should be thrown out of court as a flagrant attack on religious liberties enshrined in the U.S. Constitution.
“Plaintiffs cloak their claims in the language of fraud,” church lawyers argue, “but they are nothing like the oft-publicized cases where a minister fleeces the flock to line their own pockets.
“Like the IRS [whistleblower],” they add, “plaintiffs allege only that the church is saving too much and doing so in secret.”
But having and investing reserve funds do not amount to fraud, church attorneys say. Plaintiffs might allege financial malfeasance, but their suit is really about competing views “of what should be done with church money and who gets to say so.”
“Whether the church is ‘hoarding’ or wisely preparing for the future depends on one’s vision of the church’s future and faith in its teachings and leaders,” the filing says. “But the First Amendment resolves that power struggle, by giving churches autonomy in making decisions regarding their own affairs.’ "
‘Copycat’ cases
(Chris Samuels | The Salt Lake Tribune) The Orrin G. Hatch United States Courthouse in Salt Lake City is shown in August 2024. A would-be class-action lawsuit over tithing against The Church of Jesus Christ of Latter-day Saints is based at this court.
Church lawyers have called the original lawsuits behind this case “copycat” actions stemming from a separate legal battle brought by James Huntsman in which the prominent Utahn and onetime church member accuses top Latter-day Saint leaders of lying about how tithing contributions were spent.
As church attorneys and legal supporters continue to fight Huntsman’s 2021 case before the 9th U.S. Circuit Court of Appeals, these other nearly identical actions have bubbled up across the country, making similar assertions of fraud and seeking the return of varying sums in donations.
The plaintiffs’ five separate fraud suits got wrapped into one in July by a federal panel in Washington, D.C., which sent the combined case to Shelby’s Salt Lake City courtroom partly due to its proximity to church headquarters.
The church and Ensign Peak now want the newly consolidated case rejected “with prejudice” — meaning it couldn’t be revised and refiled later — based partly on how directly they say its line of inquiry would violate religious freedoms.
In recent weeks, church lawyers have used the same argument to urge Shelby to delay any discovery of evidence in the case — until he can rule on dismissing the underlying claims outright.
In a separate brief this week, lawyers for Ensign Peak say the fraud allegations against it are also baseless because the plaintiffs “have no relationship” with the 27-year-old firm. They “did not donate any funds to Ensign Peak, and Ensign Peak made no representations to them.”
“Ensign Peak’s duty is to the church,” they contend, “not the church’s donors.” And the plaintiffs, the attorney add, fail to otherwise show any legal fiduciary duty or obligation for financial transparency owed to them on behalf of either the investment firm or church leaders.
Too many conflicts?
A third brief filed jointly by the church and Ensign Peak attacks the idea that disaffected Latter-day Saints could legally pursue a class action on behalf of devout members who still adhere to the sacred practice of donating a tenth of their incomes.
As proposed for certification by the plaintiffs, their lawyers say, the class could involve millions of members, many of whom might be reluctant to join.
“At the most basic level, plaintiffs seek to condemn and oppose the church and its leaders — men revered as prophets and apostles by faithful church members — for their handling of tithes,” the filing says, “and enjoin the church from further investment or saving of any donated funds.”
Current Latter-day Saints, it continues, “have a strong, faith-based interest in opposing this lawsuit, not joining it, in order to protect the funds they have consecrated to the church and to protect the church’s right to practice its beliefs.”
Those faith-based conflicts, the brief says, “extend not only to tithing but also to other donated funds.”
Probing the case’s allegations that members might’ve relied on information from the church as a basis for tithing, meanwhile, “necessarily involves religious and personal faith-based questions,” church attorneys assert. That, in turn, ignores “the fact that the primary reason faithful church members give is a deep religious belief that God commanded them to tithe, not because of secular concerns or because of any concerns about the size of the church’s reserve fund at any given time.”
So obedience to that tenet is not linked to church financial needs “but is instead based on religious conviction,” it says. That, too, puts any legal delving into those personal reasons out of reach to legal analysis under the U.S. Constitution’s protections for matters of faith.
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