LDS Church seeks to keep ‘extremely sensitive’ financial data secret in fight with James Huntsman

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James Huntsman wants the public to know some of the financial secrets he says led a California court last fall to dismiss his fraud charges against The Church of Jesus Christ of Latter-day Saints.

With the former Utahn’s headline-grabbing lawsuit for millions of dollars in tithing now before the 9th U.S. Circuit Court of Appeals, he’s seeking to uncover the information filed undercover by the attorneys. of the church last year as they sought to refute his claims that Latter-Day Saints leaders misled members about how that money was being spent.

San Diego-area resident and son of the late Utah industrialist and philanthropist Jon Huntsman Sr. claims in a new legal filing that it appears from the church’s redactions of documents filed with the U.S. District Court of Los Angeles “that his main concern here is concealing the amount of money he has.

The sealed information in question does not reveal “trade secrets of ownership or corporate strategy,” Huntsman’s attorneys noted. Instead, the documents “simply purport to show the source of funds used to develop City Creek Mall,” Salt Lake City’s upscale downtown mall, and that information, they wrote, should be public.

“What we have here is a tax-exempt organization that claims it did not mislead the public about how it used its tax-exempt funds,” said Huntsman’s lawyers based in Los Angeles, “and yet fights hard to keep the public from seeing how he actually used those funds.

“…It is patently unfair for the church, on the one hand, to publicly accuse Mr. Huntsman of making “unsubstantiated” allegations, while refusing to release the very documents that purport to refute Mr. Huntsman,” says the March 4 appeal brief.

Lawyers for the Utah-based faith counter that Huntsman’s arguments are legally flawed as they fight to keep the disclosures out of the public eye.

In a response filed Monday, attorneys for the Los Angeles-based church said Huntsman was trying to overturn an earlier legal agreement to keep the “extremely sensitive information” sealed while the federal judge considers the case. They refer to this latest move to open church finances as “highly suspect” and “a clear bait and switch tactic”.

“The only reasonable conclusion is that Mr. Huntsman is impermissibly seeking to ‘promote public scandal’ through the release of the church’s confidential financial records for the purpose of causing irreparable harm to the church,” they wrote. . “…The real injustice would be to remove the seal from the church’s confidential financial records simply because Mr. Huntsman disagrees with the district court’s decision.”

It is unclear when the 9th Circuit may rule in the dispute over the documents.

How the legal battle started

James Huntsman appealed his tithe dispute to the 9th U.S. Circuit Court of Appeals.

The high-profile case emerged in March 2021, when Huntsman sued his former religion, alleging then-church president Gordon B. Hinckley and other high Latter-day Saint authorities had misrepresented how regular member donations were spent.

Devout Latter-day Saints among the church’s 16.6 million members worldwide pay one-tenth of their annual income in tithe.

Huntsman alleged that despite top leaders repeatedly telling him and other members to the contrary, they diverted up to $2 billion in tithing money to two private companies owned by the church, including City Creek and Beneficial Life Insurance Co.

Owner of a Los Angeles movie distribution company called Blue Fox Entertainment, Huntsman has sought to recover at least $5 million in tithes, interest and penalties, after negotiations to settle the matter failed. . He resigned his church membership in 2020.

His case drew heavily on separate allegations made by whistleblower David Nielsen, a former portfolio manager at Ensign Peak Advisors, an investment arm of the church.

In December 2019, Nielsen filed a lawsuit with the IRS accusing church officials of amassing a $100 billion reserve fund earmarked for — but never spent — on charities in potential violation of laws. tax. Nielsen also provided an affidavit in support of Huntsman’s case, citing personal knowledge that the funds in the Ensign account were all called tithes.

Nielsen’s whistleblower case also quantified claims about the size of the church’s reserves and aired allegations that he diverted $1.4 billion to City Creek Center and another $600 million to Beneficial Life. while its leaders assured members that the tithe was not used.

Relying in part on sealed documents filed in the case to detail a series of transactions behind the expenses, the church successfully argued in federal court that the money in question came from investment income on the tithe, not of the tithe itself.

The church has called the reserves a “rainy day” fund to help pay, in part, for operations in impoverished parts of the world and to hedge against the effects of future economic downturns.

Subsequent public filings revealed that Ensign Peak held more than $52 billion at the end of 2021 in a diversified portfolio of more than 2,100 separate stocks and mutual funds, including multi-billion dollar stakes in tech giants such as Apple and Microsoft.

U.S. District Judge Stephen Wilson dismissed Huntsman’s lawsuit in September, saying no reasonable jury would believe his claims that church leaders misrepresented how tithing funds would be used.

Huntsman appealed that decision last month.

Does the public need to know?

(Trent Nelson | The Salt Lake Tribune) Funding for the City Creek Center, presented in August 2021, is at the center of a legal dispute between James Huntsman and The Church of Jesus Christ of Latter-day Saints.

As an appeals court, the 9th Circuit disregards arguments raised for the first time, church attorneys said, and because Huntsman did not resist having sensitive documents sealed in public view during the lower court’s review, he waived that right on appeal.

Church officials never claimed the sealed documents held trade secrets, but court filings show they swore the documents contained ‘confidential information that gives improper insight into strategic decisions’ .

Huntsman, they claim, “does not explain why the public interest outweighs the church’s compelling reasons to maintain the seal.”

Huntsman, through his attorneys, said the 9th Circuit instead has “a strong presumption in favor of public access to documents” and that the public has a “legitimate” interest in how exempt organizations taxes use their money.

His legal brief cites testimony from a joint congressional committee on taxation in January 2000 to support the public interest in tax-exempt groups complying with federal tax laws.

Church lawyers counter that the committee’s statement “is not law and has no binding effect” – and does not address the disclosure of confidential financial documents belonging to a church.

The two sides offer different views on the First Amendment and its scope in the dispute. Church lawyers argue it gives religious organizations special rights beyond those of private corporations to keep their financial books closed, if they so choose. Additionally, they note, Wilson reviewed the documents and found no fraud.

Huntsman’s lawyers cite legal precedent that the First Amendment does not protect fraudulent activity carried out in the name of religion.

“Because the very financial information that the church seeks to keep sealed is the same financial information that the church claims exonerates it from the alleged fraud,” its lawyers claim, “it cannot hide behind the first amendment”.

Editor’s note • This story is only available to Salt Lake Tribune subscribers. Please support local journalism. Additionally, James Huntsman is the brother of Paul Huntsman, chairman of the board of the nonprofit Salt Lake Tribune.

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