The Mormon church is current under a lawsuit from donors for the mishandling of charity funds using it towards its shell companies.
The lawsuit was filed against shell companies under the church that were donated by three men that enabled bad faith practices from the investment arm of the church.
Daniel Chappell, of Virginia, and Masen Christensen and John Oaks, both of Utah initiated the lawsuit against the congregation.
The plaintiffs leaned on allegations by the whistleblower David Nielsen, former Ensign Peak investment manager, that submitted a 90-page memorandum to the U.S. Senate Finance Committee arguing in demand for oversight of the church’s finance.
Promises were broken from the church according to the lawsuit.
Members of the Church of Jesus Christ of Latter-day Saints contribute 10 percent of their income to the house of worship.
“Each year, non-profits are required to show distribution of funds that includes a 1099 filing,” said Nouvelle Gonzalo, head attorney of Gonzalo Law based in Florida. “The U.S Security Exchange Commission has requirements when it comes to investments.
According to Gonzalo, the Internal Revenue Service doesn’t have specific guideline of quotas for food or supplies.
Ensign Peak Advisors, the investment management firm for assets of the LDS church, spent funds only twice in its 26-year history, according to both lawsuits.
In 2009, Ensign Peak spent $600 million to bail out a failing church-owned, for-profit life insurance company. From 2010-2014 it put $1.4 billion to build a mall near Temple Square in downtown Salt Lake City
The SEC had previously fined the church and Ensign Peak for $5 million for hiding the size of investment portfolio under the church’s shell companies.
The money that the Mormon church had raised from donors was a massive fund that was never touched.
A complaint was filed with the IRS in 2019 alleging the church didn’t spend a dime for more than 20 years and claimed it reeled in $100 billion in charitable contribution from the church members.
The church claimed there were investments in charity work. During the 20 years of donations, it stayed invested in stocks, bonds, and mutual funds.
In a similar lawsuit, James Huntsman, brother of former Utah Gov. John Huntsman, filed a federal lawsuit in Los Angeles alleging the church’s practicing of tithing, defrauding members of the church and misuse of donations.
Huntsman accused the church using the funds for the church’s for-profit business ventures that included construction of the City Creek Mall, a shopping center in Salt Lake City Utah.
The church denied any wrongdoing of tithing. Huntsman was seeking $5 million in damages according to the lawsuit.
“The Mormon church have about $175 billion in reserves where they misused hundreds of thousands of dollars that were donated by three individuals,” said Gonzalo about the information of assets. “There are certainly lists of most corrupt or dishonest nonprofits, yet LDS does not ever appear in that group.”
Notable non-profits in a list by Money Inc that were named the worst charities to donate included the Cancer Fund of America, American Breast Cancer Foundation, Children’s Wish Foundation, and Disabled Veterans National Fund were among weary organizations to donate.
The LDS church did not make the last despite the complaint from with IRS in funds that weren’t spent in a 20-year span.
“They hope to receive their money back. However, this is difficult because generally once you donate your money for a general purpose, you do not have control over where it goes,” said Gonzalo about the implications to the donors. “If it was fully misused, they can still ask for it, yet it is not guaranteed.”
Gonzalo also pointed out that there was lack of transparency from the church’s lack of transparency of the corporate arm, the Corporation of the President of the Church of Jesus Christ of Latter-day Saints, soliciting donation for humanitarian relief.
