Lawyers for The Church of Jesus Christ of Latter-day Saints say a would-be class-action lawsuit accusing the faith of fraud over tithing is legally flawed on multiple fronts and needs to be thrown out.
Their latest salvos in Salt Lake City’s U.S. District Court center on First Amendment barriers they say forbid current and disaffected Latter-day Saints in five states from challenging how top leaders solicit funds, and how they save and invest members’ sacred donations.
They point to the church’s temple-building blitz and “ever-growing” philanthropic efforts as examples of bolstering the Lord’s work, partly through “prudent” investment. What plaintiffs call fraud “is mere disagreement with the church’s financial decisions,” the attorneys contend, “and that is precisely why the First Amendment bars plaintiffs’ claims.”
“The only way this court could say the church’s representations are false is to conclude that saving and investing do not further the church’s mission, or that the church is simply saving and investing too much,” they argue. “The First Amendment forbids secular courts from trespassing into this religious domain.”
The arguments emerge as Judge Robert Shelby prepares to hear oral arguments in mid-January on motions by the church and its investment arm, Ensign Peak Advisors, to dismiss the fraud lawsuit.
Church lawyers also say the lawsuit fails to declare valid legal claims and that it might have been filed too late — based on a legal clock that should have started in late 2019, they state, when an IRS whistleblower first leaked details on the faith’s amassing of more than $100 billion in a reserve fund.
Others, including wealthy Utahn James Huntsman, filed complaints against the church based on those revelations, yet the plaintiffs in this case waited, church lawyers argue, potentially missing a statute-of-limitations deadline.
“Plaintiffs,” the church’s attorneys say, “have no real answer as to why they could not have timely filed their claims.”
The last-ditch filings also attack the plaintiffs’ arguments for certifying a class of millions of active Latter-day Saints in the case, saying they were trying “to turn all faithful church members who tithed over the past 26 years into litigants against their own faith.”
“Plaintiffs,” the attorneys state, “entirely disregard how faithful members of the church would feel about having their interests represented in a court of law by persons who reject church doctrine and church leadership and who instead unabashedly want to fundamentally change the church through litigation. Such a class has never been certified before, and it certainly should not be here.”
‘Copycat cases’
Nine plaintiffs in Utah, Illinois, Tennessee, Washington and California accuse the faith’s top leaders of soliciting tithes and other donations for charitable purposes over decades, but instead diverting much of that money to Ensign Peak, where managers multiplied it into “vast reserves” the faith sought to conceal.
The legal principle of church autonomy from legal intrusion doesn’t apply to their fraud case nor does it bar their action, the plaintiffs contend, as their assertions involve “purely secular representations.” The courts, they argue in briefs filed in mid-November, “have never suggested that, ‘under the cloak of religion,’ church officials may ‘with impunity, commit frauds upon the public.’”
A federal panel in April consolidated five tithing lawsuits from across the country against the worldwide faith into one and moved it to Shelby’s Salt Lake City courtroom.
Church lawyers have called these actions “copycat cases” flowing from a now-contested ruling in another high-profile case brought by Huntsman.
(Chris Samuels | The Salt Lake Tribune) James Huntsman, shown in 2023, is awaiting a federal appellate court's ruling in his tithing lawsuit.
The wealthy brother of former Utah Gov. Jon Huntsman has accused the church of fraudulently claiming that tithing was used only for specific religious purposes, while $1.4 billion was transferred from Ensign Peak investment accounts and spent on City Creek Center, a luxury mall in downtown Salt Lake City.
After oral arguments in September, Huntsman’s case awaits a ruling from the California-based 9th U.S. Circuit Court of Appeals.
‘Hoarding’ or ‘prudent preparation’
(Susan Walsh | AP) Attorney Paul Clement makes a statement outside of the Supreme Court in 2019. The former U.S. solicitor general is now defending The Church of Jesus Christ of Latter-day Saints in a federal fraud lawsuit.
Court filings show the church has added attorney Paul Clement, a former U.S. solicitor general and prominent expert on religious liberty, to its roster of lawyers in the would-be class-action case. Clement also argued for the church before the 9th Circuit in the Huntsman case and is likely to lead its Jan. 17 arguments before Shelby.
The core of church arguments in multiple court venues has been that the plaintiffs are seeking to probe unjustifiably into protected religious matters — based in this case “on the strange fallacy that invested money is gone forever and cannot serve the church’s mission.”
(Leah Hogsten | The Salt Lake Tribune) U.S. District Judge Robert Shelby, shown in 2017, is overseeing a would-be class-action lawsuit against The Church of Jesus Christ of Latter-day Saints.
Imagine, church attorneys say in their latest documents, that donations to the worldwide church “are all placed in one large bucket” — with assurances “that everything in that bucket is ‘always used’ for purposes like building construction, missionary work, education of church members, and care for the poor and needy.”
“Plaintiffs theorize that invested donations are taken out of that bucket, never to be used for their promised purpose,” the faith’s lawyers say. “But investments, and earnings on investments, are still in the bucket and still irrevocably dedicated to the church’s mission. They cannot be used for any other purpose. So the issue is one of prayerful timing, not diversion of funds from their intended purpose.
“What plaintiffs call ‘hoarding,’” attorneys say, “church leaders believe is prudent preparation for the church to fulfill its religious mission.”
They also cite the worldwide faith’s “increasing pace of temple building” and its “ever-growing humanitarian efforts — now exceeding $1 billion annually” as ways the church’s money is being used “to advance the Lord’s work beyond anything we have yet experienced.”
“Despite their insistence,” the filings say, “plaintiffs cannot reasonably deny that the church’s decisions regarding how to advance that divine work are immune from suit, and in any event, do not constitute fraud in the slightest.”
(The Salt Lake Tribune; The Church of Jesus Christ of Latter-day Saints) Church President Russell M. Nelson, center, surrounded by newly constructed temples in Utah, Wyoming and Argentina. Nelson has announced 185 temples — 50.4% of the 367 planned or existing temples worldwide — during his nearly seven-year presidency.
Missed a deadline?
Church lawyers also are seeking to undermine the suit by saying it fails to adequately state basic elements of a fraud claim against Latter-day Saint leaders, for lack of showing there was any legal breach of fiduciary duty or fraudulent misrepresentations, concealment or unjust enrichment.
And at any rate, delving into proving those sorts of assertions, the church’s briefs contend, would likely require the courts to probe religious thought and doctrine to get at, for example, what might motivate members to donate — “which the First Amendment forbids.”
Attorneys for the faith also take issue with the plaintiffs’ assertions they were prompted to file their suit after learning of the church’s conduct in a 2023 settlement with the U.S. Securities and Exchange Commission.
The SEC settlement levied $4 million in penalties against Ensign Peak and $1 million against the church for failing to properly disclose past stock holdings and going to “great lengths” to deliberately “obscure” the scale and scope of the faith’s investment portfolio.
In their original lawsuit, the plaintiffs contend the SEC settlement “put an end” to a “deliberate, decadeslong, illegal concealment” of a fund worth billions of dollars.
But even a cursory look at their complaint, church lawyers say, shows its allegations come instead from a whistleblower’s letter to the IRS in late 2019. Their action “looks no different now than it would or could have looked if they had filed suit three years ago.”
As such, the plaintiffs’ suit missed a crucial deadline, they contend, and Shelby should reject it “with prejudice” — meaning it couldn’t be refiled.
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