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James huntsman (jon's brother) sues church for 'fraud'


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12 minutes ago, smac97 said:

Here we go again:

The above link (this one) takes you to the Complaint.  A few thoughts:

1. The Complaint is written "emotionally," which seems a bit out of place for a pleading filed in federal court.  Lots of conclusory and/or loaded words and phrases like "these profound words by the esteemed former leader of the Church," "For decades, in a fraudulent effort to elicit the donation of tithing funds," "the LDS Corporation secretly lined its own pockets," "brazenly and offensively," "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," "{b}eginning in 2003 ... the LDS Corporation began its campaign of lies and deceit," and so on.  There is also quite a bit of underlining ("dishonestly and fraudulently placed its own commercial financial interests," "purely non-commercial purposes"), and italicized and bolded text ("this is not a case about faith; it is a case about fraud and corporate greed," "the LDS Corporation actually spent an estimated $1.5 Billion of money donated by the Church’s members to develop the City Creek Mall," "or so he thought," "build a commercial shopping mall and bail out a private insurance company," "doubled down," "tripled down," "for the fifth time").

2. The Complaint characterizes the "LDS Corporation" as "the corporate arm of the Church."  Here's an interesting table published by LDS Philanthropies:

Church-Entities.jpg

A "corporation sole" is "a legal entity consisting of a single ('sole') incorporated office, occupied by a single ('sole') natural person."  Here is a brief summary of the two "corporations sole" listed above (in a 1987 U.S. Supreme Court case) :

See also here:

Huh.  I guess I hadn't realized that the Church itself is "an unincorporated entity."

3. The suit includes a single claim for "fraud."  It appears to be based solely on the financing of the City Creek Mall.

4. I'm not sure the allegations in the complaint are sufficient.  In order to pursue a fraud claim in federal court, the plaintiff must explain the allegations with specificity or "particularity."  In California, “‘{t}he elements of fraud ... are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or “scienter”); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.’”  The specific statements that are deemed fraudulent all pertain to the development of City Creek not using tithed funds.  However, the allegations are also that the Church "fraudulently concealed that they intended to use Plaintiff’s tithing funds for purely commercial purposes."  "Fraud" is making a false statement, "fraudulent concealment" is not disclosing (or concealing) something you have a duty to disclose.  The elements for a claim for fraudulent concealment are (1) failure to disclose or concealed a material fact with an intent to defraud the victim, (2) a duty to disclose, (3) the plaintiff is unaware of the fact and would not have acted as he or she did if he or she knew of the fact, and (4) the plaintiff has suffered damages as a result. 

So the only cause of action here is a bit muddled, as I am not sure if it is for "fraud" or "fraudulent concealment."  Moreover, I'm not really seeing "particular" allegations as to the falsity of the Church's statements about City Creek.  The Church clearly said at the time that "{n}o tax dollars, nor tithes from the 12.5 million Mormons, will be used in construction."  The Church further explained in 2007:

So can Mr. Huntsman simply declare "I think tithes were used," and thereafter file suit?  That seems sort of unlikely.  A key allegation is in paragraph 23: "On information and belief, at the time Mr. McMullin’s statement was made, he had already issued checks from the LDS Corporation’s accumulation of tithing principal for use in connection with the City Creek Mall development and the Beneficial Life Insurance bailout." 

5. FAIR has a pretty good treatment of the City Creek topic here: City Creek Center Mall in Salt Lake City

6. Similarly, the Church has a pretty good 2018 FAQ regarding its finances: Church Finances and a Growing Global Faith

7. Our own Robert F. Smith has commented on this issue here:

As did I:

And here:

8. The Church apparently did not expect to see much in the way of profit from City Creek.  See here:

9. I think a review of D. Michael Quinn's book (and our discussion about it, both linked above) would be helpful for those interested in this topic.

10. I wonder if the federal judge assigned to this case will see it as a sort of "fishing expedition," as a pretext to try to use the power of the judiciary to get a look at the Church's finances.  

Thoughts?

Thanks,

-Smac

I had no idea that a member of the Huntsman family is so vitriolic. Sad. 

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Huntsman is a disingenuous loser. On one hand, he says he was among the most devout members. Then he says he wouldn’t have contributed tithes if he had known the “true purpose.”  Well, if he was truly devout then he would have paid his tithing either way. There can be no reliance on the stated purpose of the funds if the giving was as a demonstration of faith.

This case should be dismissed. There is a complete lack of particularity. For example, what did statements in 2012 have to do with contributions given in 1993? Sorry - no causation, no case.

The only fraud here is the creatine, James Huntsman.

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3 minutes ago, Fair Dinkum said:

See I told you we were in the lull before the storm.

 

Do you really think this frivolous and vexatious lawsuit amounts to the onset of a storm?

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18 minutes ago, smac97 said:

 

Thanks,

-Smac

Have not read your whole first post, so I apologize in advance if my question has been answered herein. Isn't use of charitable donations by the receiver or use of gifts by the receiver a none suit by the giver, as in once it leaves my hands as a gift to you (you being a 501(c 3), you are permitted to utilize as you see fit? 

Edited by provoman
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22 hours ago, smac97 said:

Thoughts?

I wonder if anyone filed suit against Joseph during the 7 fat years in Egypt.

Personally, I find it a blessing to pay tithing.  I can't set out any specific blessings I've received, other than the joy of knowing that a portion of my earnings is returned to the Lord to do His work.  10% seems like a small thing compared to what the Savior has done for me.  It's saddening to see someone who has so lost themselves in the proverbial mists of darkness.

Edited by ksfisher
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21 minutes ago, smac97 said:

I think the case lacks merit, but let's avoid personally attacking Mr. Hunstman.

Thanks,

-Smac

Sorry, but that bridged was crossed when Jimmy Huntsman filed a frivolous lawsuit based on personal (and demonstrably dishonest) grounds.  There’s very little to attack but him, because his allegations are all about....him.

He’s a loser because his case is a loser. He’s disingenuous because, as I’ve noted, his self-characterization as devote is dishonest.

John Sr. would be rolling in his grave to think he’s financed this apostate son’s hit job.

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3 minutes ago, provoman said:

Have not read your whole first post, so I apologize in advance if my question has been answered herein. Isn't use of charitable donations by the receiver or use of gifts by the receiver a none suit by the giver, as in once it leaves my hands as a gift to you, you are permitted to utilize as you see fit? 

Fraud is, legally speaking, a miracle solvent.  It can dissolve almost anything.  So I imagine that a person who was defrauded into making a charitable donation might be able to make a colorable claim for fraud, and as a remedy get the donation back.

I don't think this case is that, though.

Thanks,

-Smac

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9 minutes ago, smac97 said:

I'm something of a hypocrite on this point, but I have tried to correct myself when I cross that bridge.  Consider these remarks by Pres. Oaks:

1ce6332c4b5eefb08fa94bf4ebf6b1b2.jpg

And these by Elder Renlund:

Thanks,

-Smac

Sadly, I was being civil....

After all, calling him “creatine” isn’t a personal attack. He probably works out. It’s not like I called him a “cretin” or something particularly rude. 

Edited by PacMan
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29 minutes ago, smac97 said:

It's not exactly prophetic to anticipate lawsuits against the Church.  

Thanks,

-Smac

Indeed it’s not. Vexatious lawsuits have been a weapon of choice against the Church and its leaders since the days of the Prophet Joseph Smith. 

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8 hours ago, Scott Lloyd said:

Indeed it’s not. Vexatious lawsuits have been a weapon of choice against the Church and its leaders since the days of the Prophet Joseph Smith. 

And it’s time the church starts countersuing and/or moving for fees and costs. The American legal system encourages frivolous actions. If there’s a legitimate case against the church, so be it. The church has and will makes mistakes. And it should be libel for those costs. But in the face of frivolous filings, sanctions against a plaintiff and his attorneys are appropriate. 
 

I’m still waiting (hoping) for the church to sue the so-called whistleblower and his brother. 

Edited by PacMan
Typo
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45 minutes ago, Fair Dinkum said:

See I told you we were in the lull before the storm.

What is so amazing about this frivolous lawsuit is that it is utterly meaningless.  It will go nowhere, and the judge will likely be very annoyed at this guy wasting his time.  Master James needs to be sent back outside to make mudpies.

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9 minutes ago, PacMan said:

But in the face of frivolous filings, sanctions against a plaintiff and his attorneys are appropriate. 

I recall reading a short story years ago about the legal system of a fictional society.  In this story, at the conclusion of a trial, the losing attorney was executed. 

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44 minutes ago, Robert F. Smith said:

What is so amazing about this frivolous lawsuit is that it is utterly meaningless.  It will go nowhere, and the judge will likely be very annoyed at this guy wasting his time.  Master James needs to be sent back outside to make mudpies.

First off, Huntsman filed his lawsuit in a Federal California court which will probably be more sympathetic to his P.O.V.  If Huntsman wins it would be appealed to the very liberal and based in San Francisco 9th and not the 10th circuit. Second, based solely on the merits of the suite, doesn't Huntsman have some justification for his suit?  The church has not been very transparent with how it uses tithing funds since it stopped releasing that information back in the late 1950's other then to repeatedly state that tithing is used to to fund missionary program, temple, build chapels etc.  No where has the church ever stated that it would build a massive reserve fund and invest in for profit real estate and bail out its insurance affiliates.

However every tithing slip does have this disclosure: "Though reasonable efforts will be made to use donations as designated, all donations become the Church's property and will be used at the Church's sole discretion to further the Church's overall mission.

Wouldn't it be fun to get an invitation to the Huntsman's Family Thanksgiving Dinner this year?

Edited by Fair Dinkum
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3 minutes ago, Analytics said:

I do find this paragraph of the Church's response to be misleading:

“In fact, tithing was not used on the City Creek project.  As President Hinckley said in the April 2003 General Conference of the Church, the funds came from ‘commercial entities owned by the Church’ and the ‘earnings of invested reserve funds.’ A similar statement was made by President Hinckley in the October 2004 General Conference.  Mr. James Huntsman’s claim is baseless.

Every year, the size of the church's for-profit investment portfolio grows from two components: from new tithing money that is being saved for a future "rainy day," and from the profits of the commercial entities. On the rare occasions when the funds are tapped, such as when one of its insurance companies needs a bailout or when it needs to build a mall, how does it know it is the commercial profits that are being tapped and not the tithing money? Money is fungible--how does it know which specific dollars in its investment portfolio are from tithing and which are not?

My best guess is that at this point, about half of the church's annual income is from tithing, and half is profits from its for-profit businesses and investments. Further, my best guess is that the the church uses about 80% of its tithing income to run the church, and saves the remaining 20% in its reserve fund "for a rainy day." If those numbers are right, then of its total income (tithing + investments), 40% is used for religious purposes and 60% is used to purchase more stocks, bonds, taxable businesses, agricultural interests, and commercial and residential property.

If those numbers are in the right ballpark and less than half of its total income is used for charitable purposes and the rest is used to further grow the business empire, I can understand why a major donor would regret donating to this organization rather than to, say, the Huntsman Cancer that only gets about 2% of its annual revenue from investment income, because it spends the vast majority of its income on its charitable purposes rather than growing its balance sheet.

 

Agree!!

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2 minutes ago, Fair Dinkum said:

First off, Huntsman filed his lawsuit in a California court which will probably be more sympathetic to his P.O.V.  Second, based solely on the merits of the suite, doesn't Huntsman have some justification for his suit?  The church has not been very transparent with how it uses tithing funds since it stopped releasing that information back in the late 1950's other then to repeatedly state that tithing is used to to fund the

oh but Pres. Hinckley said the members do know...not.

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5 minutes ago, Analytics said:

I do find this paragraph of the Church's response to be misleading:

“In fact, tithing was not used on the City Creek project.  As President Hinckley said in the April 2003 General Conference of the Church, the funds came from ‘commercial entities owned by the Church’ and the ‘earnings of invested reserve funds.’ A similar statement was made by President Hinckley in the October 2004 General Conference.  Mr. James Huntsman’s claim is baseless.

Every year, the size of the church's for-profit investment portfolio grows from two components: from new tithing money that is being saved for a future "rainy day," and from the profits of the commercial entities. On the rare occasions when the funds are tapped, such as when one of its insurance companies needs a bailout or when it needs to build a mall, how does it know it is the commercial profits that are being tapped and not the tithing money? Money is fungible--how does it know which specific dollars in its investment portfolio are from tithing and which are not?

Wouldn't that be a matter of accounting?

And what is it about this statement that you find "misleading?"

5 minutes ago, Analytics said:

My best guess is that at this point, about half of the church's annual income is from tithing, and half is profits from its for-profit businesses and investments. Further, my best guess is that the the church uses about 80% of its tithing income to run the church, and saves the remaining 20% in its reserve fund "for a rainy day." If those numbers are right, then of its total income (tithing + investments), 40% is used for religious purposes and 60% is used to purchase more stocks, bonds, taxable businesses, agricultural interests, and commercial and residential property.

Have you read D. Michael Quinn's book regarding the Church's finances?

5 minutes ago, Analytics said:

If those numbers are in the right ballpark and less than half of its total income is used for charitable purposes and the rest is used to further grow the business empire, I can understand why a major donor would regret donating to this organization rather than to, say, the Huntsman Cancer Institute that only gets about 2% of its annual revenue from investment income, because it spends the vast majority of its income on its charitable purposes rather than growing its balance sheet.

People "regret" all sorts of things.  The issue here is a federal lawsuit for fraud (or fraudulent nondisclosure - it's hard to tell based on the complaint).

Thanks,

-Smac

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20 minutes ago, smac97 said:

Wouldn't that be a matter of accounting?

You throw that out there as if it were a simple matter.  It is not.

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I can't imagine this case will go anywhere but it does bring up some interesting questions. I think most people pay tithing with the expectation that the funds will be used to build up the church in religious ways; Temples, chapels, missions etc. Most people don't expect their donation to be placed into investments for highrise housing in Philadelphia or malls or cattle farms etc. IMO the church can do whatever it wants to with donated monies but that doesn't change the fact that the use of funds may not meet the donor's expectations. That's a PR issue and I think the church is responsible for creating those expectations. How many lessons have we heard about tithing and its uses? Rarely, if ever is it taught that donations will go into a massive investment structure and that the church will function primarily on the annual returns from those investments. I wish I could finance my life that way but I don't think most people expect the church to function that way.

The issue of the Corporation Sole is interesting. Legally there is no Church of Jesus Christ of Latter-day Saints. The church is essentially a trademark with legal entities surrounding it controlled by 1 person.

 

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