When founding members of the Church of Jesus Christ of Latter-Day Saints based themselves in Utah in 1847, they invested some amount of contributions so that the church and its members could become self-sufficient.
“It started way back with Brigham Young as soon as they got to Utah Valley,” said Rick Richmond, an attorney for the Church.
Young became the leader of the commonly-called Mormon Church after the founder, Joseph Smith, was murdered in 1844. Soon after, he established the Zion Cooperative Mercantile Institution (ZCMI), a department store chain.
“The Church has always invested in various commercial activities in the early days just as a matter of survival and in later days as a way of investing some amount of reserves in a variety of ways to create a cushion for a rainy day,” Richmond told the Southern California Record.
Some 174 years later, a lawsuit filed in the Central District of California on March 22 by James Huntsman, the brother of wealthy Mormon businessman and former Utah governor Jon Huntsman Jr., has placed that tradition in the spotlight.
“Courts are reluctant to entertain claims like the one by Mr. Huntsman because the First Amendment protects the rights of churches to determine how their own doctrines and religious practices affect the spending and investing of unrestricted contributions,” Richmond said.
A federal judge is set to decide whether to grant a motion for summary judgment requested by the Church in the litigation in which Huntsman, now a former member, accused the church of misusing the tithes of followers.
As previously reported, Huntsman, alleges the Church spent tithes on commercial real estate projects instead of on missionary work, temple construction, and charitable projects.
But in his Aug. 9 motion for summary judgment, Richmond stated that no tithing funds were used to revitalize the area in downtown Salt Lake City, Utah called the City Creek project.
“Mr. Huntsman’s case is meritless,” he said. “No tithing money was spent on the development of the City Creek project as he claims. Instead, all of the funds for the City Creek project came from the earnings on the Church’s invested reserve funds and from commercial entities affiliated with the Church.”
For his part, Huntsman is seeking a refund of some $5 million he allegedly tithed to the Church along with interest and penalties.
“All of Mr. Huntsman’s contributions to the Church were voluntary and were given with no strings attached,” Richmond said. “The law says he cannot get them back.”
A senior portfolio manager named David Nielsen from Ensign Peak Advisors (EPA) offered testimony in the form of an affidavit in support of Huntsman stating that funds were administered by a church committee known as the Council on the Disposition of the Tithes.
“Over a five-year period, the Council approved EPA’s withdrawal of approximately $1.4 billion in tithing funds to pay for the commercial development of the City Creek Mall,” Nielsen stated in his declaration. “The Council likewise approved EPA’s withdrawal of $600 million in tithing funds to bail out a company called Beneficial Life Insurance Company.”
But Richmond said Nielsen is mistaken.
“There are 120-pages of financial records submitted to the court that prove he’s wrong,” he said. “The idea that the church owned a life insurance company called Beneficial Life and supported it in one way or another was never a secret. No one in the church ever said that they were not going to support Beneficial Life. So, the church did not fraudulently support Beneficial Life Insurance Company.”
The case is currently pending before U.S. District Judge Stephen Wilson who is expected to decide soon whether to dismiss the case.
“Mr. Huntsman began making his contributions to the Church long before the City Creek project began, all during the development of the project, and after the project was finished,” Richmond added. “He only stopped making contributions because he stopped believing in Church doctrines, lost his faith, and then quit the Church.”
Huntsman's attorney, David Jonelis, did not immediately respond to requests for comment.