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The Mormon church is being sued for $5 million by a prominent ex-member over accusations of fraud

Kelsey Vlamis   

The Mormon church is being sued for $5 million by a prominent ex-member over accusations of fraud
  • A 2019 IRS complaint alleged the Mormon church improperly used charity funds on commercial projects.
  • James Huntsman is suing the church for $5 million, the amount he says he donated over decades.
  • If returned to him, he says he will donate the funds to charity. The church has denied wrongdoing.

The Church of Jesus Christ of Latter-day Saints has been accused of fraud by a member of a prominent Mormon family. James Huntsman, brother of former Utah Gov. Jon Huntsman, filed a lawsuit in a US District Court in California on Tuesday seeking to recover $5 million.

James Huntsman said the church defrauded him and other members by accepting billions of dollars intended for charity and instead using it for commercial purposes.

"For decades, in a fraudulent effort to elicit the donation of tithing funds from Mr. Huntsman and other devout Church members, the LDS Corporation repeatedly and publicly lied about the intended use of those funds, promising that they would be used for purely non-commercial purposes consistent with the Church's stated priorities," the lawsuit says.

"Behind the scenes, however, rather than using tithing funds for the promised purposes, the LDS Corporation secretly lined its own pockets by using the funds to develop a multi-billion dollar commercial real estate and insurance empire that had nothing to do with charity," it continues.

A tithe, or tithing funds, is a payment by a church member equal to 10% of their income. In Mormonism, like some other religious traditions, members pay a tithe to the church, with the funds intended to be used for mission work, building and maintaining temples, education, and humanitarian causes.

In a statement provided to Insider, Eric Hawkins, spokesperson for The Church of Jesus Christ of Latter-day Saints, denied the church had misused tithing funds.

"Mr. James Huntsman resigned his Church membership last year. Now, he is demanding through his lawyers that tithing he paid to the Church as charitable contributions be returned to him," Hawkins said, calling Huntsman's claims "baseless."

Citing early 2000s remarks by former Church President Gordon B. Hinckley, the statement said the funds for the mall in question came from "commercial entities owned by the Church" and the "earnings of invested reserve funds."

The lawsuit alleges the church spent funds intended for charity on a shopping mall and a private insurance company

The lawsuit claims the church "brazenly misappropriated" charitable funds "to build a commercial shopping mall and bail out a private insurance company."

It cites a whistleblower complaint to the Internal Revenue Service that was filed more than a year ago by David Nielsen, a former senior-level investment manager with Ensign Peak Advisors, the investment arm of the church.

The complaint, obtained by The Washington Post in December 2019, alleges the Mormon church stockpiled $100 billion in accounts intended for charity and used tax-exempt member donations to support two business ventures, spending more than $2 billion over 10 years.

Nielsen said Ensign bailed out Beneficial Life, a church-run insurance company, in 2009 with $600 million in funds. He said another $1.4 million was invested from 2009 to 2014 into the City Creek Shopping Center, a mall in downtown Salt Lake City that is partially owned by the church.

Church leaders have repeatedly said tithing funds were not used on the mall.

According to The Post, the IRS complaint also said Ensign had not directly used funds for religious, educational, or charitable activities in decades, though there was no documentation provided to back up the claim.

Huntsman said if the tithes he paid are returned to him, he will donate them to groups 'marginalized' by the church

In addition to being the brother of a former Utah governor, Huntsman is also the son of Jon Huntsman Sr., the late billionaire businessman and philanthropist.

The lawsuit uses harsh words against the church that Huntsman belonged to for much of his life. It says he paid an annual tithing from 1993 to 2017, amounting to millions of dollars, and that he held leadership and teaching positions in the church during that time.

But, it says, the church engaged in a "campaign of lies and deceit" to defraud church members of billions of dollars.

"This is not a case about faith; it is a case about fraud and corporate greed," the lawsuit says. "Make no mistake, the Church's status as a religious organization does not give its corporate arm carte blanche to defraud the Church's members and the general public."

Huntsman said after learning about the IRS complaint he repeatedly asked the church to return his donations but the church refused, prompting him to file the lawsuit.

He said if the funds are returned to him, he plans to donate them to groups that have been marginalized by the church, "including by donating to charities supporting LGBTQ, African-American, and women's rights."

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