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

[webbles]

2 hours ago, Analytics said:

Having reserve funds is great. In general, an organization the size of the Church should have reserves around $10 billion to $20 billion. Exactly where the line is drawn is blurry and subject to debate, but saving much more than $20 billion "for a rainy day" is indisputably hoarding.

You can't say that more than $20 billion is "indisputably hoarding".  The church spends around $10 billion a year.  I would say that $20 billion in reserves is far too small.  Maybe you think having only 2 years worth of reserves is hoarding, but you can't say it is "indisputable".

[smac97]

1 hour ago, Amulek said:

There's actually more to it than that - none of which is captured by your simplistic "$1.00 today is equal to $1.05 in a year" comment that you made to smac

Yes, that struck me as pretty facile.  If in 1981 I stuff a $100 bill under my mattress, then pull it out today, I still have $100.  However, due to inflation the purchasing power of that $100 has significantly diminished.  Per this calculator, the equivalent in 2021 of the 1981 $100 in terms of purchasing power  is $313.80.  That is, I would need to spend $313.80 today what would have cost $100 in 1981.

So my understanding has been that money loses value over time, such that it must be invested to get ahead of, or at least keep up with, inflation.

Thanks,

-Smac

[webbles]

10 minutes ago, Analytics said:

I thought this line does in fact get to the heart of it:

Did the Church use tithing funds to develop the City Creek Mall and bail out Beneficial Life Insurance notwithstanding its repeated representations that tithing funds were not used for such non-charitable purposes? If the answer is yes (which it is), Mr. Huntsman wins the case. If the answer is no (as the Church has misled its members to believe), Mr. Huntsman loses.

In other words, would a reasonable person think investment income on "tithing funds" are also "tithing funds"? 

I think a similar question is, "Should we tithe investment income?".  Because if you don't think investment income should be tithed, then that would mean that investment income is not the same as regular income with regards to tithing.  And if you think that, then investment income of tithing funds would also not be the same as tithing funds.

I don't think the church has ever explicitly said if investment income should be tithed.  And looking online, it looks like it is a fairly big debate in the Christian world.  And since the definition of tithing is a faith based idea, I don't see how the courts can rule on this.  They would have to decide whether investment income on tithing funds is tithing and that is the purview of religion, not courts.

[Amulek]

2 hours ago, Analytics said:

Having reserve funds is great.

I agree.

 

Quote

In general, an organization the size of the Church should have reserves around $10 billion to $20 billion. Exactly where the line is drawn is blurry and subject to debate, but saving much more than $20 billion "for a rainy day" is indisputably hoarding.

Yet I dispute it.

Unlike other charitable organizations, the Church isn't just pursuing some nice cause. It is literally God's Church on the Earth, and it needs to plan on being able to operate (with costs only expected to increase) in perpetuity. 

 

Quote

That said, what specifically are you referring to when you claim that "is exactly what the Church did with its reserve funds - employing people and creating jobs in the midst of a major economic downturn." Are you referring to building a mall?

Along with the bailout of Beneficial Life, yes.

Do you deny that these actions were a net positive for the community?

 

Quote

Is it saving hundreds of billions of tithing dollars so that if there is another great recession, it can build another mall?

Well, I guess they could just do what the government does and go into debt in order to finance their counter-cyclical investments instead.

Somehow I doubt that would make critics any happier.

 

[smac97]

45 minutes ago, Analytics said:

As I’ve repeated in this thread, as a matter of principle I find the argument that interest and principal are independent to be weak.

That's a very subjective value judgment, but sure, reasonable minds can disagree about it.

45 minutes ago, Analytics said:

It’s nice to read that the Supreme Court has said “the rule that ‘interest follows principal’ has been established under English common law since at least the mid 1700's. Not surprisingly, this rule has become firmly embedded in the common law of the various States.”

What do you think this "rule" means?

See, e.g., this SCOTUS case:

Quote

The rule that “interest follows principal” has been established under English common law since at least the mid-1700’s. Beckford v. Tobin, 1 Ves. Sen. 308, 310, 27 Eng. Rep. 1049, 1051 (Ch. 1749) (“[I]nterest shall follow the principal, as the shadow the body”). Not surprisingly, this rule has become firmly embedded in the common law of the various States. The Court of Appeals in this case, two of the three judges of which are Texans, held that Texas also follows this rule, citing Sellers v. Harris County, 483 S. W. 2d 242, 243 (Tex. 1972) (“The interest earned by deposit of money owned by the parties to the lawsuit is an increment that accrues to that money and to its owners”).

What do you think the "and to its owners" means?

Once money is donated to the Church, who is the owner?  The Church.  To whom does interest on the tithed funds accrue?  The Church.  

If I donate a million dollars to a charitable organization, and if that charitable organization thereafter invests that million dollars and makes a profit of an additional four million dollars, how much money am I entitled to report as a charitable contribution?  $1 million, or $5 million?

45 minutes ago, Analytics said:

The statement “no tithing money was used” (because it was really just interest on tithing money that was used) was misleading, at best.

Nah.

45 minutes ago, Analytics said:

In context, Huntsman's explicit point is that this is a case about fraud, not faith, and implicates no religious principles or tenets of Mormonism. 

I don't believe him, though.  

45 minutes ago, Analytics said:

The footnote is an example of one of the "religious principles or tenets of Mormonism" that are not being litigated.

Strange, then, that the footnote makes a religious argument.

45 minutes ago, Analytics said:

Yes, it gratuitously implies that the Church is hypocritical on this point. But it is a one-liner in a footnote. The judge may or may not chuckle, but I can't imagine him thinking this is asking him to litigate an issue of faith.

You have a lot of experience with federal judges chuckling at footnotes, eh?

Of course Huntsman's lawyers are not going to directly ask a federal judge to "litigate an issue of faith."  But that nevertheless seems to be the substance of the dispute.

Huntsman paid tithing both before and after the Church said anything about tithes not being used to fund City Creek.  It's kinda hard for him to say that he relied on statements about City Creek when he paid tithes.  And since he has to present "clear and convincing" evidence that he did rely on those statements as a precondition for payment of tithing...

45 minutes ago, Analytics said:

I thought this line does in fact get to the heart of it:

Did the Church use tithing funds to develop the City Creek Mall and bail out Beneficial Life Insurance notwithstanding its repeated representations that tithing funds were not used for such non-charitable purposes? If the answer is yes (which it is), Mr. Huntsman wins the case. If the answer is no (as the Church has misled its members to believe), Mr. Huntsman loses.

In other words, would a reasonable person think investment income on "tithing funds" are also "tithing funds"? 

Would a reasonable person think that my $1M donation to a charitable organization can be reported to the IRS as a $5M donation?

Thanks,

-Smac

Edited August 17, 2021 by smac97

[Analytics]

11 minutes ago, Danzo said:

Private Foundation?

Explain to me (who prepares form 990 PF for a living) why it would be a private foundation.

Citations from the Internal Revenue Code, or Treasury regulations would be helpful.

Ensign Peak Advisors is a 501(c)(3) which claims to be a public charity. According to the IRS:

Every organization that qualifies for tax exemption as an organization described in section 501(c)(3) is a private foundation unless it falls into one of the categories specifically excluded from the definition of that term (referred to in section 509(a)). In addition, certain nonexempt charitable trusts are also treated as private foundations. Organizations that fall into the excluded categories are institutions such as hospitals or universities and those that generally have broad public support or actively function in a supporting relationship to such organizations.

Even if an organization falls within one of the categories excluded from the definition of private foundation, it will be presumed to be a private foundation, with some exceptions, unless it gives timely notice to the IRS that it is not a private foundation.

See Private Foundations | Internal Revenue Service (irs.gov)

If you look at 509(a) of Title 26 of the U.S. Code (26 U.S. Code § 509 - Private foundation defined | U.S. Code | US Law | LII / Legal Information Institute (cornell.edu)), you'll see that EPA does fall into any of the categories specifically excluded from the definition of that term.

 

 

[Danzo]

34 minutes ago, Analytics said:

Ensign Peak Advisors is a 501(c)(3) which claims to be a public charity. According to the IRS:

Every organization that qualifies for tax exemption as an organization described in section 501(c)(3) is a private foundation unless it falls into one of the categories specifically excluded from the definition of that term (referred to in section 509(a)). In addition, certain nonexempt charitable trusts are also treated as private foundations. Organizations that fall into the excluded categories are institutions such as hospitals or universities and those that generally have broad public support or actively function in a supporting relationship to such organizations.

Even if an organization falls within one of the categories excluded from the definition of private foundation, it will be presumed to be a private foundation, with some exceptions, unless it gives timely notice to the IRS that it is not a private foundation.

See Private Foundations | Internal Revenue Service (irs.gov)

If you look at 509(a) of Title 26 of the U.S. Code (26 U.S. Code § 509 - Private foundation defined | U.S. Code | US Law | LII / Legal Information Institute (cornell.edu)), you'll see that EPA does fall into any of the categories specifically excluded from the definition of that term.

 

 

Look Closer

How about section 509 (a) (1)

 

[Analytics]

32 minutes ago, smac97 said:

That's a very subjective value judgment, but sure, reasonable minds can disagree about it.

What do you think this "rule" means?

See, e.g., this SCOTUS case:

It means exactly what I've been saying--money has time value. The interest earned on a client's money is still the client's money. And interest earned on tithing money is still tithing money.

It's ironic that you take issue with me saying this, because it's exactly how EPA handles the Church's money. EPA doesn't strictly keep "tithing money" into one account that can only be used for sacred things like building temples and earning interest, and then put the interest into a separate account which can be used for less-sacred things such as bailing out insurance companies and building malls. They comingle the funds and consider all of it equally sacred. They consider all of it tithing money.

32 minutes ago, smac97 said:

Strange, then, that the footnote makes a religious argument.

In context, it gives an example of one of the Church's teachings. In context, it is an example of what the lawsuit is not about. In context, they are not asking the judge to make a ruling based on a religious argument.

32 minutes ago, smac97 said:

You have a lot of experience with federal judges chuckling at footnotes, eh?

Of course Huntsman's lawyers are not going to directly ask a federal judge to "litigate an issue of faith."  But that nevertheless seems to be the substance of the dispute.

No its not. That is a one-liner in the footnote. The substance of the dispute is whether the Church was honest when it said tithing money wasn't used.

32 minutes ago, smac97 said:

Huntsman paid tithing both before and after the Church said anything about tithes not being used to fund City Creek.  It's kinda hard for him to say that he relied on statements about City Creek when he paid tithes.  And since he has to present "clear and convincing" evidence that he did rely on those statements as a precondition for payment of tithing...

That's a much better argument than what the Church argued in their request for summary judgment. 

32 minutes ago, smac97 said:

Would a reasonable person think that my $1M donation to a charitable organization can be reported to the IRS as a $5M donation?

Of course not. What is your point?

[Analytics]

1 hour ago, webbles said:

You can't say that more than $20 billion is "indisputably hoarding".  The church spends around $10 billion a year.  I would say that $20 billion in reserves is far too small.  Maybe you think having only 2 years worth of reserves is hoarding, but you can't say it is "indisputable".

Please see the following link: How Big Should a Charity's Reserves Be.

I'll donate $100 to LDS Charities for every link you can find from credible sources that say charities (or churches) should have a target reserve greater than or equal to 10 times their annual charitable (or religious) expenses. (Maximum donation, $1,000).

 

 

[Analytics]

17 minutes ago, Danzo said:

Look Closer

How about section 509 (a) (1)

 

We are talking about Ensign Peak Advisors. What in 509(a)(1) indicates that Ensign Peak Advisors is not a private foundation? 

[Analytics]

1 hour ago, smac97 said:

Yes, that struck me as pretty facile.  If in 1981 I stuff a $100 bill under my mattress, then pull it out today, I still have $100.  However, due to inflation the purchasing power of that $100 has significantly diminished.  Per this calculator, the equivalent in 2021 of the 1981 $100 in terms of purchasing power  is $313.80.  That is, I would need to spend $313.80 today what would have cost $100 in 1981.

So my understanding has been that money loses value over time, such that it must be invested to get ahead of, or at least keep up with, inflation.

Thanks,

-Smac

The time value of money isn't about sticking $100 under your mattress, and it isn't about inflation. It's about the reason why interest follows the money.

[bOObOO]

1 hour ago, Analytics said:

In other words, would a reasonable person think investment income on "tithing funds" are also "tithing funds"? 

I  know reasonable people often disagree, and sometimes with good reason, but I would say that most reasonable people would say no to that, as long as they correctly understand what tithing is.

By definition, tithing is 10% of a person's income when donated to the Lord through his church, and when donations of multiple people are combined it is 10% of those person's income.  Interest on those tithing funds is not tithing and often not even 10%.

[webbles]

42 minutes ago, Analytics said:

Please see the following link: How Big Should a Charity's Reserves Be.

I'll donate $100 to LDS Charities for every link you can find from credible sources that say charities (or churches) should have a target reserve greater than or equal to 10 times their annual charitable (or religious) expenses. (Maximum donation, $1,000).

 

 

You were talking about $20 billion.  That's only 2x their annual expense.  You said that $20 billion was indisputably hoarding.  I was refuting that statement.

[webbles]

Maybe this could be seen similarly to contributions with restrictions.  If I donate money to Harvard's endowment fund and I put restrictions on it, do those restrictions also affect the investment income that was gained on top of my original donation?  Or, can Harvard use that money in any way it sees fit?

I came across https://rsmus.com/pdf/muse_accounting_reporting_endowment_funds.pdf which states:

Quote

Absent explicit donor stipulations or law to the contrary, interest and dividends and gains on permanently restricted endowment funds are classified as temporarily restricted net assets until appropriated for expenditure by the organization.

That sounds like the investment income of the donation would not be considered restricted unless I (as the donator) stipulate it.  Since tithing donations do not contain that stipulation, then it would seem that investment income on the tithing principal would not be considered restricted.

[Amulek]

57 minutes ago, Analytics said:

The interest earned on a client's money is still the client's money. And interest earned on tithing money is still tithing money.

These two statements are not the same thing. You are conflating ownership of interest with accounting for the interest.

 

Quote

It's ironic that you take issue with me saying this, because it's exactly how EPA handles the Church's money. EPA doesn't strictly keep "tithing money" into one account that can only be used for sacred things like building temples and earning interest, and then put the interest into a separate account which can be used for less-sacred things such as bailing out insurance companies and building malls. They comingle the funds and consider all of it equally sacred. They consider all of it tithing money.

Allegedly.

And all of this is based on the statement and opinion of one guy (Nielsen) who is not an accountant.

I would caution against relying too much on his authority. If this case goes far enough for the Church to actually bring out their CPAs and tax attorneys, look forward to a witnessing a master class on all the things you think you know but aren't so.

 

[smac97]

1 hour ago, Analytics said:

Quote

Quote

It’s nice to read that the Supreme Court has said “the rule that ‘interest follows principal’ has been established under English common law since at least the mid 1700's. Not surprisingly, this rule has become firmly embedded in the common law of the various States.”

What do you think this "rule" means?

See, e.g., this SCOTUS case:

It means exactly what I've been saying--money has time value.

I don't think so.  

Look at SCOTUS decision, the most salient parts of which are, I think:

Quote

All agree that under Texas law the principal held in IOLTA accounts is the client's “private property.”  Moreover, the general rule that “interest follows principal” applies in Texas.

...
The rule that “interest follows principal” has been established under English common law since at least the mid-1700's. Beckford v. Tobin, 1 Ves.Sen. 308, 310, 27 Eng.Rep. 1049, 1051 (Ch. 1749) (“[I]nterest shall follow the principal, as the shadow the body”).  Not surprisingly, this rule has become firmly embedded in the common law of the various States.5
...

In sum, we hold that the interest income generated by funds held in IOLTA accounts is the “private property” of the owner of the principal. We express no view as to whether these funds have been “taken” by the State; nor do we express an opinion as to the amount of “just compensation,” if any, due respondents. We leave these issues to be addressed on remand. The judgment of the Court of Appeals is

 

Affirmed.

---

5. E.g., Freeman v. Young, 507 So.2d 109, 110 (Ala.Civ.App.1987) (“The earnings of a fund are incidents of ownership of the fund itself and are property just as the fund itself is property” (internal quotation marks omitted)); Pomona City School Dist. v. Payne, 9 Cal.App.2d 510, 512, 50 P.2d 822, 823 (1935) (“[O]bviously the interest accretions belong to such owner”); Vidal Realtors of Westport, Inc. v. Harry Bennett & Assocs., Inc., 1 Conn.App. 291, 297–298, 471 A.2d 658, 662 (1984) (“As long as the attached fund is used for profit, the profit ... is impounded for the benefit of the attaching creditor and is subject to the same ultimate disposition as the principal of which it is the incident” (internal quotation marks omitted)); Burnett v. Brito, 478 So.2d 845, 849 (Fla.App.1985) (“[A]ny interest earned on interpleaded and deposited funds follows the principal and shall be allocated to whomever is found entitled to the principal”); Morton Grove Park Dist. v. American Nat. Bank & Trust Co., 78 Ill.2d 353, 362–363, 35 Ill.Dec. 767, 771, 399 N.E.2d 1295, 1299 (1980) (“The earnings on the funds deposited are a mere incident of ownership of the fund itself ”); B & M Coal Corp. v. United Mine Workers, 501 N.E.2d 401, 405 (Ind.1986) (“[I]nterest earnings must follow the principal and be distributed to the ultimate owners of the fund”); Unified School Dist. No. 490, Butler County v. Board of County Commissioners of Butler County, 237 Kan. 6, 9, 697 P.2d 64, 69 (1985) ( “[I]nterest follows principal”); Pontiac School Dist. v. City of Pontiac, 294 Mich. 708, 715–716, 294 N.W. 141, 144 (1940) (“The generally understood and applied principles that interest is merely an incident of the principal and must be accounted for”); State Highway Comm'n v. Spainhower, 504 S.W.2d 121, 126 (Mo.1973) (“Interest earned by a deposit of special funds is an increment accruing thereto” (internal quotation marks omitted)); Siroky v. Richland County, 271 Mont. 67, 74, 894 P.2d 309, 313 (1995) (“[I]nterest earned belongs to the owner of the funds that generated the interest”); Bordy v. Smith, 150 Neb. 272, 276, 34 N.W.2d 331, 334 (1948) (“Once settled clearly and definitely whose money the principal sum was, the interest necessarily belongs to that person as an increment to the principal fund”); State ex rel. Board of County Commissioners v. Montoya, 91 N.M. 421, 423, 575 P.2d 605, 607 (1978) ( “[T]he general rule is that interest is an accretion or increment to the principal fund earning it”); Stuarco, Inc. v. Slafbro Realty Corp., 30 A.D.2d 80, 82, 289 N.Y.S.2d 883, 885 (1968) (plaintiff “is entitled to the interest actually accrued ... despite the absence of any agreement to pay interest on the deposit, and this precisely and only because interest was in fact earned thereon”); McMillan v. Robeson County, 262 N.C. 413, 417, 137 S.E.2d 105, 108 (1964) (“The earnings on the fund are a mere incident of ownership of the fund itself”); Des Moines Mut. Hail & Cyclone Ins. Assn. v. Steen, 43 N.D. 298, 301, 175 N.W. 195 (1919) ( “[A]ccruing interest follows the principal”); Board of Educ., Woodward Public Schools v. Hensley, 665 P.2d 327, 331 (Okla.App.1983) (“The interest earned ... becomes a part of the principal of the fund which generates it”); University of S.C. v. Elliott, 248 S.C. 218, 220, 149 S.E.2d 433, 434 (1966) (“[I]nterest earned ... is simply an increment of the principal fund, making the interest the property of the party who owned the principal fund”); Board of County Commissioners of the County of Laramie v. Laramie County School Dist. No. One, 884 P.2d 946, 953 (Wyo.1994) (“In general, interest is merely an incident of the principal fund, making it the property of the party owning the principal fund”).

Look at footnote 5.  "Interest follows principal" pertains to the ownership of the interest, not its "time value."

• "The earnings of a fund are incidents of ownership of the fund itself."  
• "{O}bviously the interest accretions belong to such owner."
• "{A}ny interest earned on interpleaded and deposited funds follows the principal and shall be allocated to whomever is found entitled to the principal."
• "The earnings on the funds deposited are a mere incident of ownership of the fund itself."
• “{I}nterest earnings must follow the principal and be distributed to the ultimate owners of the fund.”
• “Interest earned by a deposit of special funds is an increment accruing thereto.”
• “{I}nterest earned belongs to the owner of the funds that generated the interest.”
• “Once settled clearly and definitely whose money the principal sum was, the interest necessarily belongs to that person as an increment to the principal fund.”
• “{T}he general rule is that interest is an accretion or increment to the principal fund earning it.”
• “{I}nterest earned ... is simply an increment of the principal fund, making the interest the property of the party who owned the principal fund.”
• “In general, interest is merely an incident of the principal fund, making it the property of the party owning the principal fund.”

"Interest follows principal," as invoked in Huntsman's memorandum, appears to be a non sequitur.  Take a look:

Quote

However, even looking past the fact that EPA commingled tithing funds with the interest thereon, whether principal tithing funds or earnings were used for a commercial purpose is a distinction without a difference – as these are two sides of the same financial coin. Indeed, it has long been a maxim of Anglo-American law that “interest follows the principal as the shadow does the substance.” 

If Huntsman was arguing that the Church committed fraud by using money belonging to Huntsman to generate interest, and then claiming to own that interest, then invoking "interest follows principal" would make sense.

Instead, Huntsman's attorneys are trying to say that Huntsman's "donations" include not only the money he donated, but also the interest generated by the investment of those monies.  I just don't think that works. 

1 hour ago, Analytics said:

The interest earned on a client's money is still the client's money.

Which is an issue of ownership, not value.  

There is no dispute that Huntsman donated money to the Church.  The Church thereafter invested its money.  Once donated, it ceased to belong to Huntsman.

1 hour ago, Analytics said:

And interest earned on tithing money is still tithing money.

With respect, I disagree.  Again: If I donate a million dollars to a charitable organization, and if that charitable organization thereafter invests that million dollars and makes a profit of an additional four million dollars, how much money am I entitled to report as a charitable contribution?  $1 million, or $5 million?

1 hour ago, Analytics said:

It's ironic that you take issue with me saying this, because it's exactly how EPA handles the Church's money. EPA doesn't strictly keep "tithing money" into one account that can only be used for sacred things like building temples and earning interest, and then put the interest into a separate account which can be used for less-sacred things such as bailing out insurance companies and building malls. They comingle the funds and consider all of it equally sacred.

Okay.

1 hour ago, Analytics said:

They consider all of it tithing money.

I don't think so.  You are re-defining the meaning of "tithing" to suit your antipathy against the Church.

A tithe is a voluntary donation of money, typically 1/10th of one's annual income.  It is the money I give to the Church.  Thereafter, the tithed funds belong to the Church.  If the Church thereafter invests and grows my tithed donations, I have no claim to any of it.  That the Church took my money and invested it and received interest does not increase the amount I tithed, nor does it mean that I can count that interest as part of my tithe.

That the Church and the good people at Ensign Peak took their responsibilities seriously, that they viewed the manage of funds as a sacred responsibility, that they felt as obligated to prudently manage interest as much as the original principal, only speaks to their good and wise intentions.  It does not transmute interest generated on tithed funds into tithed funds because nobody tithed - donated - the interest.  And under the "interest follows principal" concept, the interest belongs . . . to the Church, not the person who donated the original principal.

1 hour ago, Analytics said:

Quote

Quote

In context, Huntsman's explicit point is that this is a case about fraud, not faith, and implicates no religious principles or tenets of Mormonism. 

Strange, then, that the footnote makes a religious argument.

In context, it gives an example of one of the Church's teachings.

You're not winning here.  Quoting scripture to a federal judge as part of telling the judge that the lawsuit is not about doctrinal/religious disagreements was . . . a misstep.  

1 hour ago, Analytics said:

In context, it is an example of what the lawsuit is not about.

Funny how context works.  I think quoting the Bible exposes some of the motivation underlying the lawsuit.  Even you admit that the footnote "implies that the Church is hypocritical on this point."  Hypocrisy by way of . . . acting according to religious doctrines.  

Yeah, that doesn't sound like a religious dispute at all.  

1 hour ago, Analytics said:

In context, they are not asking the judge to make a ruling based on a religious argument.

A first-year law student would know not to ask a judge to "make a ruling based on a religious argument."

However, it is quite possible to cloak an impermissible legal claim (such as a "religious argument") under the guise of a legal claim that would not get immediately shot down.  That happens all the time.  I am in the middle of a lawsuit where I represent a defendant who has been sued under a theory of fraud.  The funny thing is, the plaintiff has adamantly denied that she is suing for fraud.  Nevertheless, the court granted my motion to dismiss the claims that "sound in fraud" (pretty much all of them), but gave the plaintiff permission to try again.  

Similarly, I think Huntsman is saying his lawsuit is about "fraud."  He has to say that, as admitting it would kill his case.  But the lawsuit walks and talks like a vendetta.  Like him seeking a pound of flesh.  Like him wanting to make the Church look bad.  Read the complaint again.  It reeks of malice.  It was a poorly drafted legal document, but it does quite well at telegraphing his animus against the Church.

Again, Huntsman donated tithing from, he says, 1993 to 2017.  In the middle of that, in 2003, the Church made some announcements about building City Creek, including assurances about tithed funds not being used for it.

It rather strains credulity to think that Huntsman's 1993-2003 tithes were not reliant on representations about the Church's use of tithes, but that all post-2003 donations were necessarily reliant on the handfull of statements he points to about City Creek.  That just seems . . . implausible.  But for those statements he would not have donated to the Church?  That seems a bit . . . farfetched.

Alternatively, if Huntsman is what he comes across as - a disgruntled former member of the Church out to stick to his former faith - then his Complaint makes perfect sense.  Lawsuits trying to clawback donations to charitable organizations virtually never work.  The narrow exception to this is . . . donations obtained via fraud.  Fraud is Huntsman's only legal option.  And it's a longshot.  He has to prove up all nine elements, including falsity (a pretty tall order, as even you have admitted that the central issue - the characterization of "tithes" - amounts to "theoretical" and "semantics"), reasonable reliance, and causation.  I see the chances of him proving these up to be . . . pretty low.  So his lawyers are doing what they can when they have a legal theory that is unlikely to succeed on its merits: make a big stink about it, so that at least some bad press is generated.  They did that in the complaint, and they did so again in the recent memorandum.  

1 hour ago, Analytics said:

Quote

Of course Huntsman's lawyers are not going to directly ask a federal judge to "litigate an issue of faith."  But that nevertheless seems to be the substance of the dispute.

No its not.

Yes, I think it is.

1 hour ago, Analytics said:

That is a one-liner in the footnote.

A line that exposes something, I think.  A vendetta.

1 hour ago, Analytics said:

The substance of the dispute is whether the Church was honest when it said tithing money wasn't used.

"The substance of the dispute" is a fraud claim that has, in my view, very little chance of success.  And it seems like a pretext, a means of using the courts to embarrass the Church, to get his pound of flesh.

1 hour ago, Analytics said:

Quote

Huntsman paid tithing both before and after the Church said anything about tithes not being used to fund City Creek.  It's kinda hard for him to say that he relied on statements about City Creek when he paid tithes.  And since he has to present "clear and convincing" evidence that he did rely on those statements as a precondition for payment of tithing...

That's a much better argument than what the Church argued in their request for summary judgment. 

Well, they still get the last word.  They will file a reply to Huntsman's memo.

1 hour ago, Analytics said:

Quote

Would a reasonable person think that my $1M donation to a charitable organization can be reported to the IRS as a $5M donation?

Of course not. What is your point?

Isn't it obvious?  You've spilled all sorts of ink about how differentiating principal from interest is dishonest/misleading.  But when the chips are down, you admit that a donor cannot say to the IRS that he "tithed" $5 million by donating $1 million to a charity that thereafter invested it wisely.  That the additional $4 million would never be construed as a charitable donation.  Which makes sense, since that $4 million was generated by investments, not by someone donating it to the Church.

So you do, after all, differentiate between tithed funds and interest generated from investment of those funds.  Huntsman's memo scoffs at what it calls the Church's "'earnings versus principal' theory," declaring it to be "untenable under both the law and common sense."  But here you are, cheering on Huntsman for disputing what you acknowledge here: that interest derived from investing donated funds is distinguishable from the donated funds.

You've hung your hat on conflating what you now admittedly differentiate.  You've railed against the Church for weeks/months by arguing against a distinction you now admit exists.

That is my point.

Thanks,

-Smac

Edited August 17, 2021 by smac97

[Danzo]

1 hour ago, Analytics said:

We are talking about Ensign Peak Advisors. What in 509(a)(1) indicates that Ensign Peak Advisors is not a private foundation? 

The Answer is . . . . 

Its a Church!!

"For purposes of this title, the term “private foundation” means a domestic or foreign organization described in section 501(c)(3) other than— (1) an organization described in section 170(b)(1)(A) (other than in clauses (vii) and (viii));"

The first thing mentioned in section 170 (b)(1)(A) is . . . . . "a church or a convention or association of churches"

 

You have a ways to go before you can practice tax law.

 

 

[JAHS]

Even if the church used tithing funds or the interest earned on the tithing funds to build City Creek mall I would still see it as a charitable donation to the city of Salt Lake to keep the community from becoming run down and worthless. It was a risk to do that but I think most church members have faith that what the church does with God's (not my) finances will eventually benefit the community, the Church and it's members. Those who think of money donated still belongs to them never understood the principle of tithing in the first place. Money donated while the person is an active member of the church is not refundable, regardless of what the church does with it. Huntsman will lose the case.

[smac97]

1 minute ago, JAHS said:

Even if the church used tithing funds or the interest earned on the tithing funds to build City Creek mall I would still see it as a charitable donation to the city of Salt Lake to keep the community from becoming run down and worthless.

Well, sorta.  The Church was certainly trying to stave off blight, but it was also intending to get an ROI.  The Church could have just donated the money, with no thought of recompense.  That, in my view, is the gravamen of a charitable donation.

However, how would it look for the Church to give money to a private entity to build a mall and not seek a return on the money?  If that had happened I am sure Analytics would have harped on for months/years about how the Church was a poor steward of its finances.  

Heads, the critics win.  Tails, the Church loses.

Ain't faultfinding fun?

1 minute ago, JAHS said:

It was a risk to do that but I think most church members have faith that what the church does with God's (not my) finances will eventually benefit the community, the Church and it's members. Those who think of money donated still belongs to them never understood the principle of tithing in the first place. Money donated while the person is an active member of the church is not refundable, regardless of what the church does with it. Huntsman will lose the case.

I think Huntsman understood the principle of tithing.  Now he's angry at the Church and wants to lash out and punish it.  Hence his lawsuit.

I'd be interested in hearing from the attorneys on this board who have seen a fraud case successfully prosecuted on the merits.  In 17 years, I've seen . . . one (fraudulent nondisclosure, to be precise).  I pursued it.  And I won largely because the defendant failed to respond to my motions.  That said, I still think I could have won if he had fought it, as I got him to admit in a deposition that A) he knew about the defect in the property (a misplaced easement) and B) he never disclosed that defect to my client (a private party who loaned him money secured by the property).

I think Huntsman will lose, too.  His case may survive the current motion for summary judgment, though.

Thanks,

-Smac

[Analytics]

 

1 hour ago, smac97 said:

...With respect, I disagree.  Again: If I donate a million dollars to a charitable organization, and if that charitable organization thereafter invests that million dollars and makes a profit of an additional four million dollars, how much money am I entitled to report as a charitable contribution?  $1 million, or $5 million?

 

That has absolutely nothing to do with my point.

This will be the last time I try to explain it.

Say I am a devout member of the church and made $10 million 17 years ago, so I owed the Church $1 million in tithing. I put that $1 million into an investment account and let it grow at 10% for 17 years. Now it has grown to $5 million in my account.

At this point, how much money do I owe the Church?

You might say I owe the Church $1.4 million--I owe $1 million of the original tithing, at an additional $0.4 million on the $4 million in investment income I made.

Somebody who understands the time value of money would say I owe the Church the full $5 million; the Church could have turned the $1 million into $5 million over 17 years just as easily as I could have, and that is exactly what they would have done with it had I paid it promptly. So from the perspective of finance, whether the Church turns $1 million into $5 million or whether I turn $1 million into $5 million is irrelevant. $1 million 17 years ago is equivalent to $5 million today.

That is why the employees at EPA consider all of the money in their accounts to be tithing. The money in their account grows. It is all still rightfully theirs. And it is all still rightfully considered tithing. That is the basic principle of the time value of money, which is the theoretical basis for the concept of "the interest follows the money." 

 

1 hour ago, smac97 said:

 Quoting scripture to a federal judge as part of telling the judge that the lawsuit is not about doctrinal/religious disagreements was . . . a misstep.  

Perhaps. But you were simply wrong when you said Huntsman was asking the judge to litigate an issue of faith.

1 hour ago, smac97 said:

Funny how context works.  I think quoting the Bible exposes some of the motivation underlying the lawsuit.  Even you admit that the footnote "implies that the Church is hypocritical on this point."  Hypocrisy by way of . . . acting according to religious doctrines.  

Yeah, that doesn't sound like a religious dispute at all.  

A first-year law student would know not to ask a judge to "make a ruling based on a religious argument."

Its not an argument, and they aren't asking the judge to rule based on it. They are explicitly asking for the opposite. 

1 hour ago, smac97 said:

Similarly, I think Huntsman is saying his lawsuit is about "fraud."  He has to say that, as admitting it would kill his case.  But the lawsuit walks and talks like a vendetta.  Like him seeking a pound of flesh.  Like him wanting to make the Church look bad.  Read the complaint again.  It reeks of malice.  It was a poorly drafted legal document, but it does quite well at telegraphing his animus against the Church.

Again, Huntsman donated tithing from, he says, 1993 to 2017.  In the middle of that, in 2003, the Church made some announcements about building City Creek, including assurances about tithed funds not being used for it.

Those are all fine points. It's too bad the Church's can't argue so persuasively and instead are off in left field saying that tithing that has grown with interest miraculously ceases to be tithing.

[Analytics]

2 hours ago, Danzo said:

The Answer is . . . . 

Its a Church!!

"For purposes of this title, the term “private foundation” means a domestic or foreign organization described in section 501(c)(3) other than— (1) an organization described in section 170(b)(1)(A) (other than in clauses (vii) and (viii));"

The first thing mentioned in section 170 (b)(1)(A) is . . . . . "a church or a convention or association of churches"

 

You have a ways to go before you can practice tax law.

 

 

Ensign Peaks isn't a Church. It is a hedge fund that claims to be a public charity.

[SeekingUnderstanding]

4 hours ago, webbles said:

The church spends around $10 billion a year. 

Where do you get this number from? 

[Danzo]

32 minutes ago, Analytics said:

Ensign Peaks isn't a Church. It is a hedge fund that claims to be a public charity.

Who owns it?

 

 

[Danzo]

35 minutes ago, Analytics said:

Ensign Peaks isn't a Church. It is a hedge fund that claims to be a public charity.

Does it invest its own funds or does it invest the churches funds?

[smac97]

47 minutes ago, Analytics said:

Quote

...With respect, I disagree.  Again: If I donate a million dollars to a charitable organization, and if that charitable organization thereafter invests that million dollars and makes a profit of an additional four million dollars, how much money am I entitled to report as a charitable contribution?  $1 million, or $5 million?

That has absolutely nothing to do with my point.

Sure seems like it has a lot to do with Huntsman's case.

47 minutes ago, Analytics said:

This will be the last time I try to explain it.

Say I am a devout member of the church and made $10 million 17 years ago, so I owed the Church $1 million in tithing. I put that $1 million into an investment account and let it grow at 10% for 17 years. Now it has grown to $5 million in my account.

Okay.

47 minutes ago, Analytics said:

At this point, how much money do I owe the Church?

That's up to you.  It's a subjective religious question, not a legal one.

Meanwhile, surely you recognize that your hypothetical above is materially distinguishable from Huntsman?  He donated money, and the Church invested the money.  "Interest follows the principal" kicks in here.  Who owns the principal?  The Church.  Who owns the interest?   The Church.

47 minutes ago, Analytics said:

You might say I owe the Church $1.4 million--I owe $1 million of the original tithing, at an additional $0.4 million on the $4 million in investment income I made.

I don't say that.

47 minutes ago, Analytics said:

Somebody who understands the time value of money would say I owe the Church the full $5 million; the Church could have turned the $1 million into $5 million over 17 years just as easily as I could have, and that is exactly what they would have done with it had I paid it promptly. So from the perspective of finance, whether the Church turns $1 million into $5 million or whether I turn $1 million into $5 million is irrelevant. $1 million 17 years ago is equivalent to $5 million today.

I actually chuckled as I read this.  Your condescension would not go over well with the federal judge being asked to adjudicate a fraud claim that is predicated on conflating two things that even you differentiate: principal and interest.

47 minutes ago, Analytics said:

That is why the employees at EPA consider all of the money in their accounts to be tithing.

Oh come on.  You don't know that.  And in any event, so what?  Since when is a federal judge bound by what "employees at EPA consider?"

47 minutes ago, Analytics said:

The money in their account grows. It is all still rightfully theirs.

It belongs to the Church, yes.  The interest and principal.  

47 minutes ago, Analytics said:

And it is all still rightfully considered tithing.

Meh.  You're just making this up as you go along.

Feel free to demonstrate this "rightfully considered" thing.  Point me to case law that establishes that the subjective religiously-motivated sentiments possibly expressed by some "employees at EPA" are determinative in ascertaining whether interest accrued from investing donated tithes also counts as "donated tithes."  Explain to me how $4 million dollars generated from investments in various business interests can and ought to be construed as factually and legally synonymous with a private party unconditionally donating funds to a religious group.

Take your time.  I'll wait.  

47 minutes ago, Analytics said:

That is the basic principle of the time value of money, which is the theoretical basis for the concept of "the interest follows the money." 

Again, no.  "Interest follows principal" pertains to ownership, not time value.

I've cited case law to support my position.  I look forward to you presenting case law to support yours.  

47 minutes ago, Analytics said:

Quote

Quoting scripture to a federal judge as part of telling the judge that the lawsuit is not about doctrinal/religious disagreements was . . . a misstep.  

Perhaps. But you were simply wrong when you said Huntsman was asking the judge to litigate an issue of faith.

You don't know that.  I think Huntsman filed suit as part of a vendetta.  Payback.  As a way of making the Church look bad.

You disagree.  Fine.  We're both speculating on that point.  But I think my speculation is more likely to be correct.  Unfortunately, it looks like Huntsman is either A) a chump for pursuing a fraud claim (his lawyers are taking him for a ride by pursuing a nearly-certain-to-be-futile lawsuit, but are doing it because he's rich and angry, and hence willing to pay them to churn out the dreck we've been discussing), or B) he's a profligate spendthrift who is okay with burning through a few tens of thousands of dollars to stick it to the Church because he's rich and angry.

At least McKenna Denson had a solid factual basis for her claims.  She was just too much of a loose cannon to let the lawyers do their thing.  Huntsman, meanwhile, is a big fish.  Lots of money.  Lots of anger.  Wants to sue the Church.  The problem: He freely donated tithing to the Church.  The solution: Pursue what is perhaps the single most difficult legal theory available to a civil litigant: fraud.  It's a sisyphean task for the lawyers, but they're getting paid for it.  And Huntsman has the money.

47 minutes ago, Analytics said:

Quote

 

Funny how context works.  I think quoting the Bible exposes some of the motivation underlying the lawsuit.  Even you admit that the footnote "implies that the Church is hypocritical on this point."  Hypocrisy by way of . . . acting according to religious doctrines.  

Yeah, that doesn't sound like a religious dispute at all.  

A first-year law student would know not to ask a judge to "make a ruling based on a religious argument."

 

Its not an argument, and they aren't asking the judge to rule based on it.

Sure it is.  And yes, they are.

47 minutes ago, Analytics said:

They are explicitly asking for the opposite. 

And yet the entirety of the complaint reeks of of a vendetta.  Pound of flesh.

Sorry, Roger.  You're out of your wheelhouse on this one.  What the plaintiff says is not determinative.  The substance of the complaint comes across pretty strongly as a religious grievance, with "fraud" being a pretext for getting through the door.

47 minutes ago, Analytics said:

Quote

 

Similarly, I think Huntsman is saying his lawsuit is about "fraud."  He has to say that, as admitting it would kill his case.  But the lawsuit walks and talks like a vendetta.  Like him seeking a pound of flesh.  Like him wanting to make the Church look bad.  Read the complaint again.  It reeks of malice.  It was a poorly drafted legal document, but it does quite well at telegraphing his animus against the Church.

Again, Huntsman donated tithing from, he says, 1993 to 2017.  In the middle of that, in 2003, the Church made some announcements about building City Creek, including assurances about tithed funds not being used for it.

 

Those are all fine points.  It's too bad the Church's can't argue so persuasively and instead are off in left field saying that tithing that has grown with interest miraculously ceases to be tithing.

There's no "miracle."  And the Church isn't saying that.  "Tithing" is what the donor gives to the Church.  What the Church does afterwards with the money is not "tithing."

Thanks,

-Smac

Edited August 17, 2021 by smac97