Judge dismisses lawsuit against LDS church over how it uses donations

The LDS Church office building in Salt Lake City, Utah. | EastIdahoNews.com file photo SALT LAKE CITY (AP) — A federal judge on Thursday dismissed a lawsuit alleging that The Church of Jesus Christ of Latter-day Saints arm misused hundreds of thousands of dollars in donations by investing it instead of using it for charitable purposes. U.S. District Judge Robert Shelby said a three-year statute of limitations on fraud claims in Utah passed before the lawsuit was filed in October 2023. The judge also said the plaintiffs failed to adequately show how any fraud had occurred. The legal action from a group of donors to the church brought renewed scrutiny over how the faith known widely as the Mormon church handles its vast financial holdings. Those holdings are bolstered by so-called “tithing” from church members who contribute 10% of their income. The lawsuit was directed at business and investment entities under the church, which doesn’t publicly disclose details about its finances. Attorneys for the plaintiffs wanted an independent entity to oversee donated funds. They also sought class-action certification that could have brought millions of church members into the case. Church spokesperson Sam Penrod said tithing donations are an “expression of faith” that allow it to fulfill its mission. “These donations are carefully used and wisely managed, under the direction of senior Church leader,” Penrod said in an emailed statement. “The legal claims brought against the Church were rightfully dismissed by the court.” Plaintiffs’ attorney Christopher Seeger said the dismissal would make it harder for church members to understand how donations are used. “For decades members of The Church of Jesus Christ of Latter-day Saints have contributed 10% of their hard-earned income as tithes, and they have the right to know how these donations are being used,” Seeger said. A similar lawsuit was filed in federal court in California in 2021 by James Huntsman, brother of former Utah Gov. Jon Huntsman, Jr., who was seeking the return of $5 million he donated before he left the church. The 9th U.S. Circuit Court of Appeals in January upheld a lower court ruling that sided with the church. At issue in the lawsuits was whether the church’s investments in stocks, bonds, real estate and agriculture reflect the wishes of its donors. The U.S. Securities and Exchange Commission fined the church and subsidiary Ensign Peak Advisers $5 million in February 2023 for using shell companies to obscure the size of the investment portfolio under church control. The church agreed to pay $1 million and Ensign Peak will pay $4 million. The church has previously defended how it handles member contributions, calling the fraud claims baseless and saying contributions go to a variety of religious purposes including missionary work, education, humanitarian causes and construction of churches, temples and other buildings important to church work. The church’s corporate arm, the Corporation of the President of the Church of Jesus Christ of Latter-day Saints, solicits donations for humanitarian relief with promises that all donations are used to help those in need. But the Utah lawsuit argued that the church hid information that some, if not all, donations are permanently invested in accounts never used for charitable work. That includes tithes — regular donations amounting to 10% of a person’s income that are expected from church members. The money instead has gone to Ensign Peak Advisors, a nonprofit created in 1997 that has grown to over $100 billion in value, the lawsuit alleged. Like the lawsuit filed by Huntsman, the case leaned on allegations by whistleblower David Nielsen, a former Ensign Peak investment manager who submitted a 90-page memorandum to the U.S. Senate Finance Committee demanding oversight into the church’s finances. Details on his allegations were publicized by The Associated Press and other media organizations in late 2019 and early 2020, according to Thursday’s ruling. Shelby said the plaintiffs in the Utah case should have been aware of the fraud allegations by early 2020, yet did not file their case for more than three years — too late for the statute of limitations. Ensign Peak has spent funds only twice in its 26-year history, according to both lawsuits. In 2009, it spent $600 million to bail out a failing church-owned, for-profit life insurance company. Beginning in 2010 it put $1.4 billion to build a mall near Temple Square in downtown Salt Lake City.The post Judge dismisses lawsuit against LDS church over how it uses donations appeared first on East Idaho News.
Source: eastidahonews.com