Federal judges began poking this week at the legal thickets surrounding accusations of fraud brought by former members of The Church of Jesus Christ of Latter-day Saints over tithing.
A three-judge panel of the 10th U.S. Circuit Court of Appeals, sitting in Denver, heard arguments Monday and asked probing questions about a 2019 case brought on behalf of three former Latter-day Saints accusing church leaders of racketeering over the practice.
Various judges are being asked to weigh the church’s constitutional protections as a religion against the legal rights of ex-members who assert they were fraudulently misled, including about core questions such as how sacred scriptures got translated and how billions of dollars in donations were spent.
Arguments in another federal tithing case against the Utah faith, filed in 2021 by wealthy Utahn James Huntsman, will get their own airing Wednesday in San Francisco before the full 9th U.S. Circuit Court of Appeals. That 3:30 p.m. MDT hearing is scheduled to be livestreamed.
A series of tithing lawsuits have been filed in the wake of an IRS whistleblower’s revelations about church finances, which broke in 2019 and pointed to once-secret investments topping as much as $100 billion and spending on commercial ventures.
The faith’s attorneys argue the tithing cases undercut bedrock issues of church autonomy and religious freedom that should shield the Utah-based faith from legal inquiries into its beliefs.
After having most of their case dismissed, former Latter-day Saint Laura Gaddy and two co-plaintiffs are pressing their lawsuit on appeal under the Racketeer Influenced and Corrupt Organizations Act, or RICO, accusing the church of mail and wire fraud in communicating what the plaintiffs contend are false teachings that misled them into paying tithing.
In the give-and-take heard Monday, the judges seemed to agree with strict church-autonomy barriers. One called any delving into actual matters of faith “deep religious waters” and off-limits to the courts.
Some of their questions, however, also hinted that secular ways remain for ascertaining fraud in the case, without violating the U.S. Constitution or legal precedent.
Arguments were heard by the 10th Circuit Judges Harris L. Hartz, Gregory A. Phillips and Allison H. Eid. It’s unclear when they might rule.
‘Facts’ vs. ‘beliefs’
(The Church of Jesus Christ of Latter-day Saints) Actor portraying Joseph Smith in the church's 2005 movie, "Joseph Smith: The Prophet of the Restoration," examines gold plates containing the Book of Mormon.
Monday’s hearing brought up a fascinating turn in Mormon history, when Phillips questioned church lawyer David Jordan on conflicting accounts about the Book of Mormon being translated by founding prophet Joseph Smith from gold plates — or through visions from a brown “seer stone” in a hat.
Gaddy’s Salt Lake City lawyer, Kay Burningham, argued that the co-plaintiffs would have reassessed their beliefs, membership and tithing had they known of varying accounts of church history that were withheld from members, for fear, according to an affidavit, that some would stop donating.
Those “material omissions,” Burningham stated, are integral to proving fraud under federal racketeering laws — without implicating issues of faith.
“Facts,” Burningham said, “are different than beliefs.”
“Fraud is a misrepresentation of fact, and that’s what we have here,” she said. “And all these artifacts and what’s called the stone have been in the church’s possession for over 100 years, and they knew, or were charged with the knowledge, that the stone was there.”
Jordan sought to counter that point later, when pressed by Phillips. “Isn’t that a bizarre thing to say?” the church’s lead lawyer said of the plaintiffs.
“They say specifically, ‘We don’t dispute that the Book of Mormon is true. We don’t dispute that it was translated by the gift and power of God. We dispute whether it was translated using the Urim and Thummim, a clear stone or an opaque stone.
“That almost sounds silly,” he continued. “Churches have the right to define, develop and evolve their own history. ... Who knows what happened in 1820 or whether he sat at a table and looked at gold plates?”
Gaddy was asking the court “to intrude on the miraculous,” he said, “on matters of faith.”
Jordan said at another point that the plaintiffs were, in effect, asking for “a heresy trial” into religious teachings.
“It’s a determination of what is the orthodox belief,” Jordan said, “as if there were some monolithic understanding of every detail of church history by every leader of the church or every church member from 1820 to today.”
‘Deep religious waters’
Phillips seemed to turn part of that line of argument aside.
“Nobody’s asking that,” the judge said. “Their argument is, you all have your beliefs and keep them, and we respect that, but don’t join us in without telling us key information, like there was a seer stone.
“I don’t think [the plaintiffs] are here to prove the untruth or the untruth of LDS Church,” Phillips said. “They’re saying, ‘If we had only known these facts, which weren’t revealed, we wouldn’t have participated, and you all do as you please.’”
To that, Jordan said that requiring the church to reveal certain elements of its own beliefs to members amounted to “asking the court to prescribe the manner in which the church teaches its doctrine ... to put particular emphasis on the method by which the Book of Mormon was translated, and any disputes about that, or anything that hasn’t been given emphasis in the past.”
“That,” said Jordan, “is an intrusion on a deeply rooted religious matter.”
“Is there any limit to that principle?” Phillips asked. “Can a church conceal anything, even if it thinks, ‘Wow, we’re going to lose half our membership on this. We better put it in a vault somewhere.’ Is there any limit on what a church can conceal and not be subject to civil RICO [racketeering laws.]”
Replied Jordan: “There is no limit at all on what a church is required to teach or not teach, emphasize or not emphasize. I think that would be a deep intrusion into what you described as ‘deep religious waters.’”
Is tithing completely shielded by ‘church autonomy’?
Later, Hartz, another 10th Circuit judge, asked a separate attorney supporting the church’s position if the religious autonomy doctrine would also insulate Latter-day Saint leaders on how they use tithing funds.
The church, for instance, has insisted that earnings from tithing, not the donations themselves, went toward commercial ventures.
“If church leaders had said, ‘Tithing funds will not directly be used in a commercial project ... but in this case, tithing funds were funneled directly to the commercial project, that would not be covered by this doctrine, would it?” Hartz asked.
“It is covered by the church autonomy doctrine,” lawyer Gene Schaerr, representing the National Association of Evangelicals and other religious advocacy groups in friend-of-the-court briefs.
“Tithing is an inherently religious concept,” Schaerr responded. “It can’t be purely secular. Hypothetically, if the church had said something like, ‘No church funds of any kind will be used in this project,’ that statement by itself could be considered to be purely secular, but when the statement at issue is ‘no tithing funds will be used,’ that’s inherently a religious matter.”
Asked Hartz: “But how is that dangerous to religious freedom, to say to churches, ‘You have to to tell your parishioners the truth about how your money is going to be used?’”
The very question, Schaerr replied, highlighted a very real legal danger.
“Even just to identify what constitute tithing funds versus nontithing funds, that’s a religious question,” he said. “And so if you file a complaint based on a religious leader’s statement about how tithing funds will be used, you are necessarily raising a religious matter. It’s not purely secular.”
