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

[Analytics]

30 minutes ago, webbles said:

Is the bolded speculation or do you have a source?

It is speculation.

30 minutes ago, webbles said:

 Because the Time magazine article didn't just look at what the Church owned, but its entire "empire".  And that still would have included EPA since it is still part of the Church's "empire".  Or do you think that if the Time article was published today, it wouldn't have included the EPA value?  I highly doubt that the reason for the creation of the EPA was to "appear less opulent".

I would speculate that the Church was hoping that Time wouldn't know that EPA existed. For example, if there was a class action lawsuit and there was a hearing about punitive damages and the Church was ordered to disclose its assets, you can bet your bottom dollar it wouldn't disclose the assets of EPA as its own.

30 minutes ago, webbles said:

I also found https://www.forbes.com/sites/peterjreilly/2019/12/20/more-on-the-mormon-ensigngate/ which states

My thinking was that if it was an integrated auxiliary of the church it is really the church accumulating and there is really no rule about that. I consulted with a couple of people who should know and that seems to be the common view.

It looks very much like Ensign is still a part of the church, according to tax laws.

 

Peter Reilly is mistaken. According to the IRS:

The term integrated auxiliary of a church refers to a class of organizations that are related to a church or convention or association of churches, but are not such organizations themselves. In general, the IRS will treat an organization that meets the following three requirements as an integrated auxiliary of a church.  The organization must:

• Be described both as an Internal Revenue Code section 501(c)(3) organization and be a public charity under Code section 509(a)(1), (2), or (3),
• Be affiliated with a church or convention or association of churches, and
• Receive financial support primarily from internal church sources as opposed to public or governmental sources.

Men's and women's organizations, seminaries, mission societies and youth groups that satisfy the first two requirements above are considered integrated auxiliaries whether or not they meet the internal support.

emphasis added. See "Integrated Auxiliary of a Church" Defined | Internal Revenue Service (irs.gov)

Since Ensign Peak Advisors is not a public charity, it fails the first test and therefore is not an integrated auxiliary.

Ensign Peak Advisors is a private foundation.

[ksfisher]

15 minutes ago, Analytics said:

Of course if you look at your bank statement it will have a credit of $1,000 for the original deposit and subsequent credits for the $50 in interest. Of course. 

But if you then withdraw some money from your account, how do you know that the specific dollars you withdraw are from the original deposit, from interest, or from a mixture of the two? The fact is you can't. Once the money is in your account, every dollar is indistinguishable from every other dollar.

The individual dollars may be indistinguishable, but if I only withdraw $50 a year from this account it would seem to me that my original paycheck deposit was still in the bank and I've only been withdrawing interest. 

If I let things build up until $2000 are in the bank and then withdraw $1000 it still makes sense to me that the original paycheck is still in the bank, and once again I've only withdrawn the interest I've earned on that money.  If I was to take the balance down to $995 then it would seem to me that I've withdrawn part of the original deposit.

[Analytics]

9 minutes ago, ksfisher said:

The individual dollars may be indistinguishable, but if I only withdraw $50 a year from this account it would seem to me that my original paycheck deposit was still in the bank and I've only been withdrawing interest. 

If I let things build up until $2000 are in the bank and then withdraw $1000 it still makes sense to me that the original paycheck is still in the bank, and once again I've only withdrawn the interest I've earned on that money.  If I was to take the balance down to $995 then it would seem to me that I've withdrawn part of the original deposit.

Perhaps. But if you wanted to withdraw $50 of the original paycheck and leave the interest in your account, how would you go about doing that?

Anyway, if you set up a first-in-last-out principle for identifying dollars, you could distinguish dollars in the way you do. But the fact remains that tithing dollars were used to create interest dollars that were used to fund the mall, which means tithing dollars were used to fund the mall.

[webbles]

26 minutes ago, Analytics said:

I would speculate that the Church was hoping that Time wouldn't know that EPA existed. For example, if there was a class action lawsuit and there was a hearing about punitive damages and the Church was ordered to disclose its assets, you can bet your bottom dollar it wouldn't disclose the assets of EPA as its own.

Since the Times article found a lot of the Church's assets and that later researches (before the whistleblower) found the EPA assets and tied them to the church, I don't think the speculation is very well founded.  But since no one knows the real reason why EPA was created, I guess we can only speculate.

27 minutes ago, Analytics said:

Peter Reilly is mistaken. According to the IRS:

The term integrated auxiliary of a church refers to a class of organizations that are related to a church or convention or association of churches, but are not such organizations themselves. In general, the IRS will treat an organization that meets the following three requirements as an integrated auxiliary of a church.  The organization must:

• Be described both as an Internal Revenue Code section 501(c)(3) organization and be a public charity under Code section 509(a)(1), (2), or (3),
• Be affiliated with a church or convention or association of churches, and
• Receive financial support primarily from internal church sources as opposed to public or governmental sources.

Men's and women's organizations, seminaries, mission societies and youth groups that satisfy the first two requirements above are considered integrated auxiliaries whether or not they meet the internal support.

emphasis added. See "Integrated Auxiliary of a Church" Defined | Internal Revenue Service (irs.gov)

Since Ensign Peak Advisors is not a public charity, it fails the first test and therefore is not an integrated auxiliary.

Ensign Peak Advisors is a private foundation.

I am not a tax lawyer, so I only can depend on what others say.  And that website (as well as others) quote multiple people (who I assume are tax lawyers) and they pretty much all agree that the EPA would be considered an integrated auxiliary.  So maybe there is something that you are missing.

[Analytics]

6 minutes ago, webbles said:

Since the Times article found a lot of the Church's assets and that later researches (before the whistleblower) found the EPA assets and tied them to the church, I don't think the speculation is very well founded.  But since no one knows the real reason why EPA was created, I guess we can only speculate.

Given that EPA was created less than 2 months after the Times article came out, it would be a heck of a coincidence if the two events weren't related. And the effect of creating EPA was to remove assets from the Church's balance sheet and place them onto EPA's balance sheet. If accomplishing that wasn't the motive, what was?

If anybody has any alternate theories I'd be glad to listen.

6 minutes ago, webbles said:

I am not a tax lawyer, so I only can depend on what others say.  And that website (as well as others) quote multiple people (who I assume are tax lawyers) and they pretty much all agree that the EPA would be considered an integrated auxiliary.  So maybe there is something that you are missing.

Maybe I'm missing something. Sure. But did any of these experts consider the IRS's actual requirements for being an integrated auxiliary like I did? 

All I know is that according to the IRS's website, EPA doesn't qualify as an integrated auxiliary.

Part of the issue here is that this is a unique situation--other U.S. churches don't accumulate so much money and certainly don't do so in a distinct 501(c)(3) that never pays any money for charitable purposes, so these experts may not have considered all of the peculiar details.

Further, the top leaders of the Church have historically been extremely secretive about this--not even the quorum of the 12 apostles were authorized to know the details of EPA's balance sheet. Because of that, the experts at the Church who could have warned them about this potential tax issue probably didn't know enough to raise a red flag.

 

[smac97]

2 hours ago, Analytics said:

Strictly speaking, in all likelihood none of the Church's money is donated tithes and none of it is interest. The only way the money itself could be construed as one of those things is if the Church has a special account called the "tithing" account and another special account called the "interest" account. But nobody sets up their balance sheet that way. When I pay my internet bill, I have no way of proving that the specific $65 dollars I spent comes from my day job, my pizza delivery job, or the investment income I made. All the money in the account is fungible. 

Oh, brother.

2 hours ago, Analytics said:

Since money is fungible, the Church's claim that it used investment earnings and not principle to pay for the mall is a nonserious, unprovable claim.

Yep.  Heads, the critics win, tails, the Church loses.

And so it goes.

2 hours ago, Analytics said:

But as a general economic principle, the idea that "interest follows the money" means interest on tithing is still classified as tithing just as much as it means the interest on my money is still my money.

Again, show me the case law.  Otherwise, you're just making this stuff up.

2 hours ago, Analytics said:

Quote

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.

Since I never claimed any such thing, why should I try to explain it to you?

You've descended into unserious provocateur territory.  I'll leave it to you.

2 hours ago, Analytics said:

And what's up with this $4 million example you keep bringing up?

It illustrates the apparent inanity of your position, which is to conflate tithed donations with earnings from investments of those tithed donations.

A tithe is an unconditional gift from a donor (a tithepaying member of the Church) to a donee (the Church).

Tithing is not profits generated from the Church investing a portion of tithed funds in, say, Gamestop stock and then latter selling it, thereby realizing a profit:

Quote

Mormon church likely made $14 million from selling GameStop shares.

According to second-quarter 2021 filings with the SEC, the fund disposed of 46,000 shares of GameStop that it bought in the fourth quarter of 2020. From the time Ensign bought shares in the video game company until it sold them, GameStop stock soared by about 900 percent. Depending on when shares were sold could mean that the fund earned anywhere from $9 million to $14 million.

 

Ensign also sold off about 13 percent of its Tesla stock. It still holds 561,000 shares in the electric-vehicle company, worth about $382 million, reports Market Insider.

If we postulate that 100% of the money the Church invested in GameStop came from tithed funds, then the "$9 million to $14 million" in purported profit/interest realized from that investment counts as . . . not tithing.  The IRS does not count it as a charitable contribution.  No rational person would.  The only people who insist on such silliness are critics who are blinded by their animus against the Church, even if it requires them to spin inanities out of thin air, such as "interest earned on tithing money is still tithing money."  And they'll say such silly things to prop up Huntsman's oh-so-mediocre lawsuit.  And since they have no financial or personal stake in the outcome of that suit.

2 hours ago, Analytics said:

Is Huntsman claiming he paid a paltry $1 million in tithing but is suing for $5 million because that $1 million grew with interest to $5 million? If that's the case, I'd think your tight legal interpretation of "the interest follows the principle" applies directly.

Huntsman's attorneys misused the "interest follows principal" doctrine.  As have you.  A few times now.

2 hours ago, Analytics said:

But that's a different issue than whether the Church can prove its claim that it can distinguish "tithing dollars" and "interest dollars" in its investment portfolio and that when EPA distributed money for the mall and Beneficial Life, it did in fact use the latter and not the former. 

According to you, distinguishing doesn't matter because "interest earned on tithing money is still tithing money."

The IRS doesn't think that.  I don't think the courts think that (I haven't found any case law establishing that, and the crickets are a' chirping as to your efforts to find anything).

2 hours ago, Analytics said:

No, you have not cited case law that says "interest follows principal" doesn't pertain to time value.

Yes, I have.

Meanwhile, you have not cited any case law that says "interest follows principal" does pertain to time value.  It's your argument, dude.  It's your obligation to substantiate it in the first instance.  In legal parlance, you need to make a prima facie case.  You haven't done that yet.

2 hours ago, Analytics said:

The fact that it applies to ownership does not imply that it doesn't also pertain to time value. 

Fine.  Show me the case law that says this doctrine applies to time value.  As I said, I'll wait.  

I may well be wrong here.  I'm open to that.  But it's your argument to establish.  Go ahead.

2 hours ago, Analytics said:

In any case, I'm talking about broad economic principles. Not case law.

Ah.  So no citation will be forthcoming.  Sorta saw that coming.

It would be interesting to watch you tapdance in front of a federal judge while presenting the stuff you've presented in this thread.  Just imagine...

Quote

 

Judge!  Tithing is an unconditional gift from a donor to a donee!  But if and when the donee invests that money and generates a profit from that investment, that profit is also an unconditional gift from the donor to the donee!  

What's that?  Well, no, I don't have any case law to support that assertion.  I'm talking about broad economic principles.  Not case law.  So don't ask me to support my legal argument with, you know, evidence or relevant and binding legal authorities.  

Also, it doesn't matter that the donor had no role to play in the investment.  Interest earned on tithing money is still tithing money!  Again, no, I don't have any case law to support that assertion.  I'm talking about broad economic principles.  Not case law.

It also doesn't matter that the donor cannot claim those profits as a charitable donation, or that the IRS would never allow a donor to count the donee's interest generated from investing the donated funds as a part of the donor's charitable donation.  Again, no, I don't have any case law to support that assertion.  I'm talking about broad economic principles.  Not case law.

There is no legal difference between a charitable donation and interest generated from subsequent investment of that donation.  Interest follows principal!  This somehow relates to 'time value' of money!  And no, I have no case law to support that.  I'm talking about broad economic principles.  Not case law.  

 

Again, I'm open to correction.  I haven't heavily researched these issues.  But it looks like you've really talked yourself into a corner.

Some years ago I represented a defendant, a bank, who was being sued by a young homeowner ("Mr. Smith") who was advancing a pretty farfetched legal theory.  I filed a motion to dismiss, and thereafter the judge scheduled a hearing.  She took the bench and things went basically like this (I'm going off of memory, not a transcript) :

• Court: Mr. Macdonald, I know this is your motion, and that you normally should get to speak first.  But I'm going to depart from that and let the plaintiff speak first.  Okay?
• Me: Okay.
• Court: Now, Mr. Smith, I have read your Complaint, and Mr. Macdonald's Motion to Dismiss, and your response to it, and his reply to your response.  I've read everything in anticipation of this hearing.  I just want to make sure I understand your argument, okay?
• Mr. Smith: Okay.
• Court: You bought your house using a loan from Mr. Macdonald's client, correct?
• Mr. Smith: Yes.
• Court: And you have discharged this loan in bankruptcy, correct?
• Mr. Smith: Yes.
• Court: And a big part of the agreement you had with the bank for the loan was that you would give your house as security, as collateral, for repayment of the loan, right?
• Mr. Smith: Right.
• Court: But now you are saying that you should be able to keep the house, even though you have defaulted on the loan, and even though you have discharged the loan in bankruptcy, correct?
• Mr. Smith: Yes.
• Court: And your legal argument is essentially that the loan was not a real loan because no gold or actual cash changed hands, there were just wire transfers of money from one party to another.  So the loan was not legitimate.  Is that basically it?
• Mr. Smith: Yes.
• Court: And you want me to strip the mortgage, the deed of trust, from the title to the house, such that you will own the house free and clear of the loan, which loan you say is not "real."  Correct?
• Mr. Smith: Pretty much.
• Court: Okay.  I feel that I have it.  I am going to now give you time to explain your legal reasoning to me.  But I will tell you this now: If you think that you can take out a $400,000 loan to buy a house, and then default on that loan, and also discharge that loan in bankruptcy, and then *also* keep your house free and clear of the loan, well, you are going to be disappointed.  Go ahead.

At that point I pretty much settled back in my chair and let Mr. Smith have his day in court.  As you can imagine, it did not go well for Mr. Smith.  

I will emphasize here that throughout the proceedings I was pretty stoic.  I did not smile.  I did not smirk.  I did not do anything except listen quietly.  Mr. Smith was advancing a pretty farfetched and unreasonable series of assertions and arguments that I had heard dozens of times before (the gist of it is called the "Vapor Money Theory" - see here).  By that point I had come to understand that a lot of the folks trying these legal theories were acting less on reasoned argument and more on . . . desperation.  On high emotion.  They wanted to keep their homes, but they lacked a legal leg to stand on.  So they ended up presenting unworkable and unreasoned arguments like the above stuff.

I came to realize that these people were, generally speaking, otherwise decent and upright and intelligent, and that they were presenting these specious arguments not based on rank dishonesty and malice, but because they had purchased their homes and wanted to keep them.  As I said above, there was a lot of high emotion involved.  I recall Mrs. Smith was quietly crying as she sat there in the courtroom, listening to her husband make impassioned, but what she could see were ultimately-to-be futile, arguments.

I felt badly for this young couple.  They bought their home at the top of the market, then the market crashed and they were upside down in a big way.  There was no way to salvage the situation.  But while I felt some real empathy and compassion for this couple, those sentiments did not extend to the point where I went along with the legally tenuous claims they were making.

To some extent, I have similar thoughts about Huntsman.  I feel badly for him.  I think he's acting out - lashing out - because he is angry.  High emotion.  I feel badly that he is estranged from us, and I hope that he returns some day.  But that does not mean that I need to go along with his legal arguments, which in my view are going to be ultimately unworkable, as are your attempts to cheer him on from the sidelines with legally off-the-wall stuff like "interest earned on tithing money is still tithing money."  

Thanks,

-Smac

EDIT TO ADD:

I just found a case from the Indiana Court of Appeals:

Quote

It is well settled that interest follows principal, or as the maxim has been often stated, “interest goes with the principal as the fruit with the tree.” Reese v. Reese, 696 N.E.2d 460, 463 (Ind.Ct.App.1998) (quoting Northern Indiana Pub. Serv. Co. v. Citizens Action Coalition of Ind., Inc., 548 N.E.2d 153, 159 (Ind.1989)), trans. denied. In the absence of an express agreement to the contrary, this rule controls.  Interest represents the time value of money. Reese, 696 N.E.2d at 463. Interest is compensation to a property owner for the loss of the use of his property. Id.

And this (also from Indiana) :

Quote

In a straight civil judgment, post-judgment interest and the time value of money bear such a straightforward relationship that courts are led to deploy adages like “interest goes with the principal as the fruit with the tree.” Reese v. Reese, 696 N.E.2d 460, 463 (Ind. Ct. App. 1998). By contrast, judicial decrees that assign debts, personal property, and real estate represent a more complex allocation of economic values. To these are added orders that reflect social objectives, such as enabling children and the leading custodian to continue living in the marital residence.

and this (federal court in Pennsylvania) :

Quote

After all, money has time value and use value, and interest is simply money paid for the use of other money. Indeed, a money lender's forbearance of interest is equivalent to his paying additional money to a borrower.

And this (bankruptcy court in Illinois) :

Quote

At the heart of the interest rate issue is the concept of “present value,” or the “time value of money.” In re Fisher, 29 B.R. 542, 543 (Bankr.D.Kan.1983). Specifically, a dollar received today is worth more than a dollar to be received in the future because money in hand can be immediately reinvested, thereby earning more money. Id.; Kidd, 315 F.3d at 677.

So yes, "interest" can have a relation to "time value," but I still don't think the "interest follows principal" doctrine applies in any way helpful to Huntsman.  It pertains to ownership of accrued interest, with ownership going to the owner of the funds.

Here, the Church is the owner of the donated-and-thereafter-invested funds, and hence is also the owner of any profit/interest generated from the investment.  This seems to have nothing to do with conflating interest with principal, as the two are still distinct from each other, even though owned by the same party.  This also seems to have nothing to do with Huntsman's allegations of fraud.  

Edited August 18, 2021 by smac97

[Amulek]

1 hour ago, Analytics said:

Strictly speaking, in all likelihood none of the Church's money is donated tithes and none of it is interest. The only way the money itself could be construed as one of those things is if the Church has a special account called the "tithing" account and another special account called the "interest" account. But nobody sets up their balance sheet that way.

Yes they do. It's called fund based accounting and has been discussed in this very thread (see, e.g., @Danzo's comments beginning on Page 5, here).

 

[mgy401]

1 hour ago, HappyJackWagon said:

Holy crap. That would be a lot of money set aside to take fund potential sx abuse cases against the church. So...potentially the "rainy day" could simply be sx abuses victims claims against the church.

Personally I don't think there  would be that many claims but I guess it's possible. If the church viewed this as even a possibility I would think it would be taking stronger steps towards child protection. It puts Sam Young's criticism of the church's child protection policies in a different light. He could have been helping the church save billions in expenses. But he got X'd for that so I'm guessing the church doesn't really think that is a possibility or a purpose for the $100 Billion + rainy day fund

I don’t think that’s an accurate characterization of the reasons Young was excommunicated.  And it’s worth noting that the gravamen of his criticisms was that bishops shouldn’t talking to minors at all about whether they were compliant with the law of chastity (kids can’t trust their Mormon bishops, the theory goes; such discussions are better left to paragons of virtue and open-mindedness such as Leah Kinyon).  

Let’s have no illusions here:  Young was part of a movement whose preferred policies would leave Mormon kids more emotionally isolated, sexually available, and generally vulnerable to exploitation; not less.  

Edited August 18, 2021 by mgy401

[Analytics]

7 minutes ago, Amulek said:

Yes they do. It's called fund based accounting and has been discussed in this very thread (see, e.g., @Danzo's comments beginning on Page 5, here).

 

I stand corrected. Does Ensign Peak Advisors use fund based accounting, and do they have a "tithing" fund and a "investment income" fund? 

Edited August 18, 2021 by Analytics

[HappyJackWagon]

11 minutes ago, mgy401 said:

I don’t think that’s an accurate characterization of the reasons Young was excommunicated.  And it’s worth noting that the gravamen of his criticisms was that bishops shouldn’t talking to minors at all about whether they were compliant with the law of chastity (kids can’t trust their Mormon bishops, the theory goes; such discussions are better left to paragons of virtue and open-mindedness such as Leah Kinyon).  

Let’s have no illusions here:  Young was part of a movement whose preferred policies would leave Mormon kids more emotionally isolated, sexually available, and generally vulnerable to exploitation; not less.  

Um...no.

We can disagree about that. It's ok.

My wife and I both are required to take child protection training for various reasons. It is stressed MULTIPLE times that a child or youth should NEVER be alone with an adult behind closed doors. They specifically include school, coaches, clergy as NON-exceptions to this rule. Of course clergy is an exception in the church. IMO that is a mistake and could lead to additional lawsuits that could drain the church's impressive $100 billion + war chest.

BTW- that was a Huge part of Sam Young's complaint against the church and he wasn't wrong. 

[mgy401]

If Huntsman is arguing that the Church should pay him, not only the original donation, but the return it yielded on the invested portion of the donation—

—Isn’t that kind of like me giving @smac97 a scrap of walnut, and he makes it into a jewelry box, and then I say “hey, that’s a nice jewelry box you’ve made for yourself.  I actually could have done that myself, and I didn’t know you were going to do that in the precise way that you did it, so now you have to give it back”?  If the claimant wants the box instead of just another [walnut scrap], is there any kind of inquiry to be made about whether the claimant actually has the requisite skill and resources to turn a walnut plank into a jewelry box?

It seems to me that we aren’t really talking about the “time value” of Huntsman’s alleged donations; but the opportunity costs thereof.

Edited August 18, 2021 by mgy401

[Tacenda]

8 minutes ago, mgy401 said:

If Huntsman is arguing that the Church should pay him, not only the original donation, but the return it yielded on the invested portion of the donation—

—Isn’t that kind of like me giving @smac97 a scrap of walnut, and he makes it into a jewelry box, and then I say “hey, that’s a nice jewelry box you’ve made for yourself.  I actually could have done that myself, and I didn’t know you were going to do that in the precise way that you did it, so now you have to give it back”?  If the claimant wants the box instead of just another box, is there any kind of inquiry to be made about whether the claimant actually has the requisite skill and resources to turn a walnut plank into a jewelry box?

It seems to me that we aren’t really talking about the “time value” of Huntsman’s alleged donations; but the opportunity costs thereof.

Or similar situation...my husband's brother went to his father and asked for a loan to buy property in Bluffdale, Utah for $5000 an acre and bought several. He then sold all the acres years later for around a million dollars. His brothers were a little miffed though. 

Edited August 18, 2021 by Tacenda

[smac97]

8 minutes ago, mgy401 said:

If Huntsman is arguing that the Church should pay him, not only the original donation, but the return it yielded on the invested portion of the donation—

I'm not sure he's asking for that.  Rather, it is Analytics who is trying to shore up Huntsman's legal argument by conflating tithes with subsequently-generated revenue from investments of tithes.  

If Huntsman asked for both his donations and interest, he'd be laughed out of court, so it's a bit odd to see Analytics trying to use this reasoning.

8 minutes ago, mgy401 said:

—Isn’t that kind of like me giving @smac97 a scrap of walnut, and he makes it into a jewelry box, and then I say “hey, that’s a nice jewelry box you’ve made for yourself.  I actually could have done that myself, and I didn’t know you were going to do that in the precise way that you did it, so now you have to give it back”?  If the claimant wants the box instead of just another box, is there any kind of inquiry to be made about whether the claimant actually has the requisite skill and resources to turn a walnut plank into a jewelry box?

It seems to me that we aren’t really talking about the “time value” of Huntsman’s alleged donations; but the opportunity costs thereof.

In the end, we're talking about whether tithed funds from a donor are legally distinguishable from interest generated by the donee investing those funds.  I think there is.  Analytics has elsewhere admitted that there is, but he still wants to conflate them because Church-is-bad! or something.

Thanks,

-Smac

[Stormin' Mormon]

On 8/16/2021 at 1:50 PM, Analytics said:

In theory, money has "time value." $1.00 today is equal to $1.05 in a year.

 

Quote

At the heart of the interest rate issue is the concept of “present value,” or the “time value of money.” In re Fisher, 29 B.R. 542, 543 (Bankr.D.Kan.1983). Specifically, a dollar received today is worth more than a dollar to be received in the future because money in hand can be immediately reinvested, thereby earning more money. Id.; Kidd, 315 F.3d at 677.

Huh. 

[smac97]

1 hour ago, Analytics said:

Perhaps. But if you wanted to withdraw $50 of the original paycheck and leave the interest in your account, how would you go about doing that?

Um, have more than one account?  One to hold principal, the other to hold accrued interest/profits?

1 hour ago, Analytics said:

Anyway, if you set up a first-in-last-out principle for identifying dollars, you could distinguish dollars in the way you do. But the fact remains that tithing dollars were used to create interest dollars that were used to fund the mall, which means tithing dollars were used to fund the mall.

Nope.  I'm pretty sure no court would buy what you are trying to sell here.

Thanks,

-Smac

[Analytics]

13 minutes ago, smac97 said:

Oh, brother.

Yep.  Heads, the critics win, tails, the Church loses.

All I'm arguing here is one narrow point. On the issue of whether this case ought to be dismissed because the church used "interest money" for these expenses and didn't use "tithing money," Huntsman's attorneys have the better argument. That's it.

If the judge disagrees with me, he'll dismiss the case. If he dismisses it and cites this "interest money" vs. "tithing money" dichotomy as part of his reasoning, then kudos to you for being right and shame on me for being wrong. I think I'm right on this point and I rest my case. We'll see what the judge says.  

Would you like to make a friendly wager on the issue? If the judge dismisses the case and cites the Church's interest money vs. tithing money as part of his rationale, I'll give $1,000 to LDS Charities. If he doesn't dismiss it or doesn't cite this specific argument as part of his rationale, you'll have to give $100 to the Humane Society of Utah. Ten-to-one odds, with the proceeds going to a good cause regardless. Deal?  

13 minutes ago, smac97 said:

The IRS doesn't think that.  I don't think the courts think that (I haven't found any case law establishing that, and the crickets are a' chirping as to your efforts to find anything).

You have seriously misunderstood me and can't tell the difference between what I've actually said and your strawman accusations.

13 minutes ago, smac97 said:

...I will emphasize here that throughout the proceedings I was pretty stoic.  I did not smile.  I did not smirk.

I would be a terrible lawyer. I'd have a huge grin on my face watching that spectacle.

13 minutes ago, smac97 said:

To some extent, I have similar thoughts about Huntsman.  I feel badly for him.  I think he's acting out - lashing out - because he is angry.  High emotion.  I feel badly that he is estranged from us, and I hope that he returns some day.  But that does not mean that I need to go along with his legal arguments, which in my view are going to be ultimately unworkable, as are your attempts to cheer him on from the sidelines with legally off-the-wall stuff like "interest earned on tithing money is still tithing money."  

As I've said a few times, you've raised some good points about why Huntsman should lose in court. If I were on the jury and had to make a verdict based upon what I know now, I'd almost certainly side with the Church, and I'd probably make Huntsman pay for the Church's legal fees. The case is dumb. As you've clearly and convincingly explained, he gave the money to the Church, and it now belongs to the Church. I agree. 100%. Likewise, when he gave the money to the Church, he gave it based on his faith, not on a couple of vague statements Hinckley made about how tithing money is used. When the Church "saves money for a rainy day" what it is also doing is capitalizing its own business empire and purchasing stocks. That has been obvious to me for decades, and with James Huntsman's background and education, it simply must have been obvious to him as well. His claim that he was surprised by all of this and is a victim of fraud just isn't credible. Not to me. 

In a sense I feel sorry for him, but I'm glad his eyes are now open. I'm fine with him having his day in court, but of course he is going to lose. I hope he chalks up his lost tithing to "stupidity tax" and gets on with his life.

Having said all that, I still think that on the narrow issue of whether the case ought to be dismissed because the Church financed the mall with "investment income" rather than "tithing money", Huntsman's attorneys make the better argument. And I'd be happy to explain why to a federal judge. 

And I still think based on basic reading comprehension skills that footnote 11 is simply an example of what they are not arguing about. Snarky? Yes. Something a judge would frown about? Perhaps. A misstep? I'll take your word on it. A religious argument that they are asking the judge to rule on? Of course not. 

[smac97]

1 hour ago, webbles said:

Since the Times article found a lot of the Church's assets and that later researches (before the whistleblower) found the EPA assets and tied them to the church, I don't think the speculation is very well founded.  But since no one knows the real reason why EPA was created, I guess we can only speculate.

I am not a tax lawyer, so I only can depend on what others say.  And that website (as well as others) quote multiple people (who I assume are tax lawyers) and they pretty much all agree that the EPA would be considered an integrated auxiliary.  So maybe there is something that you are missing.

From this article:

Quote

Sam Brunson, a professor of nonprofit tax law at Chicago's Loyola University who is a member of the LDS church, said under Ensign's Articles of Incorporation, "it is both a supporting organization," which means it has to make charitable donations "commensurate in scope" to its funds, and an "integrated auxiliary" which means it might not have to. An integrated auxiliary organization can legally sidestep paying taxes by being a non-profit.

"My guess is that the IRS will probably do nothing" and even if it does, "chances are very small we will find out," he said.

More directly from Brunson here:

Quote

Quick note here: when we’re talking about potential tax violations, we’re not really talking about the institutional church. Rather, we’re talking about Ensign Peak Advisers, a separate tax-exempt entity. As best as I can tell, Ensign Peak Advisers is an investment fund/adviser that the church uses to invest its additional money. And, according to the whistleblower, while money goes into Ensign Peak, it doesn’t come out. Rather, it’s invested and continues to grow.[fn1]

And this is potentially a tax problem. Ensign Peak Advisers is a “supporting organization” and an “integrated auxiliary.” To qualify for a tax exemption, it (probably) has to meet the requirements of section 501(c)(3) of the Code independently. And, uncontroversially, managing a securities portfolio isn’t one of the tax-exempt purposes listed in section 501(c)(3).

But. In 1964, the IRS released a ruling[fn2] holding that a corporation whose sole activity was to engage in a noncharitable business could qualify as tax-exempt. In the ruling, the IRS looked at a corporation that earned most of its money from renting out a building it owned and maintained. The corporation was organized for charitable purposes, and executed those charitable purposes by making grants and contributions to other charitable organizations. To qualify, the IRS said, it had to ensure that its grants were “commensurate in scope with its financial resources.”

The IRS also blessed an arrangement where a tax-exempt hospital set up and funded a trust to pay out malpractice claims. Its sole purpose was to hold money and pay out the claims, and if its assets dropped below a certain point, the hospital had to make more contributions in. The IRS determined that, by serving as a repository of funds that the hospital could use to further its exempt mission, the trust qualified for an exemption. In that case, there was no discussion of commensurate-in-scope, and no discussion of the trust actually making payments.[fn3]

And what does “commensurate in scope” mean? That’s a good question. And the answer is, nobody knows, precisely. In 1981, the IRS said that the commensurate-in-scope standard is very fact-specific. In that case, the IRS was looking at an organization whose claimed charitable purpose was to donate all of the net proceeds of an annual charitable fundraiser to a charity that it chose. The IRS decided that a blanket ruling that doing so met the commensurate-in-scope rule was inappropriate; even if this particular organization qualified, that didn’t mean that every organization that held a fundraiser and sent the net proceeds to a charity met the commensurate-in-scope standard for tax exemption.[fn4]

It’s worth noting that the fact that there is even a question is kind of unique to this setup. If the church were to do its investing in-house, there probably wouldn’t be any question about exemption, because the church’s exemption rests on its religious mission. Similarly, if the church invested in a normal outside investment fund (as opposed to a tax-exempt one), there wouldn’t be any tax issue. Public charities can (and do) invest in outside investment funds, and they can leave their invested money there indefinitely. A normal investment fund doesn’t have to have any kind of charitable purpose because it’s not charitable.

The issue here is that we have a tax-exempt investment fund/adviser, the only activities of which seem to be investing. Because that’s not a charitable purpose, it may have to meet the commensurate-in-scope standard to qualify for tax exemption.

Or it may not. Like I said, there’s been very little description of what the commensurate-in-scope standard requires, and even less of what it applies to. Does it apply to a supporting organization (one of the two things Ensign Peak Advisers is)? Probably.

Does it apply to an integrated auxiliary of a church (the other things Ensign Peak Advisers is)? Maybe? There are no judicial or agency pronouncements I’m aware of applying the test to integrated auxiliaries. This is likely the first time this particular question has come up, at least to this degree. And, fwiw, under the Internal Revenue Code, integrated auxiliaries of churches are, like churches, treated differently from other tax-exempt organizations. They’re presumptively not private foundations and they’re not required to file returns. So are they also exempt from the commensurate-in-scope rules? I sincerely don’t know.

I know that many of you came to get an answer to the question whether the church broke the law. The short answer is no, it didn’t. It’s possible, though, that Ensign Peak Advisers doesn’t qualify as tax exempt. The standards are ambiguous, both in substance and in scope, though, so it’s not completely clear that it does or doesn’t qualify.

Thanks,

-Smac

[Danzo]

4 hours ago, Analytics said:

Like all nonprofits, nobody owns Ensign Peak Advisors. Yes, it's controlled by a board of trustees who uncoincidentally are the same people who control the Church. But from a legal and technical perspective, nobody owns Ensign Peak Advisors. 

Ensign Peaks Advisors invests its own funds. When James Huntsman donates money to the Church, the money is no longer his and belongs to the Church. Likewise, when the Church makes donations to Ensign Peak Advisors, the money is no longer the Church's and and belongs to Ensign Peak Advisors.

This gets back to the reason Ensign Peak Advisors was created in the first place. On August 4, 1997, Time magazine published an article called "Mormon Inc." about the Church's commercial and financial empire. Gordon B. Hinckley became extremely concerned about the ramifications of people knowing about how much money the Church had. President Hinckley and his advisors decided the best way for the Church to appear less opulent was for the Church to be less opulent. 

8 weeks after the Time article was published, the non-profit Ensign Peak Advisors was incorporated, and the Church made a charitable donation of several billion dollars to it. When that happened, the money ceased belonging to the Church and commenced belonged to Ensign Peak Advisors. Now every time the Church makes a donation to Ensign Peak Advisors, there is a credit to the Church's balance sheet (making it smaller) and a debit to Ensign Peak Advisor's balance sheet (making it bigger). 

Ensign Peak Advisors is a private foundation.

Who Controlled the funds before it went to Ensign Peak?  The Church

Who Controlled the funds after it went to Ensign Peak? The Church

Any real change in ownership? no

Who is huntman suing? The Church. 

What does huntsman's lawsuit call ensign peak advisors?  The investment arm of the church.

No one is claiming seperation between EPA and the church.  Because they Can't.  

 

By the way, your argumentes fall afoul of the Step doctrine , Economic Substance Doctrine, Form over substance .

No where, is anyone asserting, not even in the pleadings of the lawsuit that there is any meaningful distinction between EPA and the church.

The EPA is the investment arm of the church. The church provides the money, the church controls the money and the church benefits from the money. The church can spend the money any way they want.

That is why EPA is not a private foundation.  There is no meaningful seperation between its assets and the church's assets

 

 

[SeekingUnderstanding]

I wonder if the government used tax dollars to set up an investment fund and then used the proceeds of that investment fund to pay for abortions, how many individuals on this board would be satisfied with the response: “You have nothing to complain about. No tax dollars were used to fund abortions.”

[mgy401]

19 minutes ago, HappyJackWagon said:

Um...no.

We can disagree about that. It's ok.

My wife and I both are required to take child protection training for various reasons. It is stressed MULTIPLE times that a child or youth should NEVER be alone with an adult behind closed doors. They specifically include school, coaches, clergy as NON-exceptions to this rule. Of course clergy is an exception in the church. IMO that is a mistake and could lead to additional lawsuits that could drain the church's impressive $100 billion + war chest.

BTW- that was a Huge part of Sam Young's complaint against the church and he wasn't wrong. 

Thank you for allowing me to disagree with you.

These trainings you mention—do they demand avoiding one-on-one encounters with children by parents, too?

Sometimes ministering, by its very nature, exposes one to accusations of malfeasance—dining with publicans and whatnot.  And sometimes it will set up a dynamic makes abuse easier.  That said, the general trend is that having someone aside from a parent who will openly and frankly reinforce the parent’s teachings, offer accountability, and speak frankly about chastity-related issues, can and frequently does help a teenager to remain chaste and/or bounce back in a healthy way from an LOC violation. 

That is naturally going to irritate people who reject the LOC, don’t see transactionalized sex as medically/economically/psychologically harmful, and thus don’t see any generalized need to help kids to avoid sexual experiences.  But I frankly think $100 billion is an appropriate price for the Church to pay to insulate its kids from the worst of the fallout of the sexual revolution.  (Don’t get me wrong—I’d rather the Church not have to pay it at all!  But if that’s the price, then it’s the price; and I’m glad we have the resources to pay it.)

[Tacenda]

7 minutes ago, smac97 said:

From this article:

More directly from Brunson here:

Thanks,

-Smac

Morally the tax exempt status of Ensign Peak should be stripped because it's not a charitable organization. We lowly people have to pay taxes. But not these corps. 

[mgy401]

6 minutes ago, SeekingUnderstanding said:

I wonder if the government used tax dollars to set up an investment fund and then used the proceeds of that investment fund to pay for abortions, how many individuals on this board would be satisfied with the response: “You have nothing to complain about. No tax dollars were used to fund abortions.”

Among other differences—the analogy only really works if one thinks that saving jobs in a recession, and paying life insurance claims to widows and orphans, is as morally repugnant as [presumably, elective] abortions are.

Is that what you think?

Edited August 18, 2021 by mgy401

[mgy401]

4 minutes ago, Tacenda said:

Morally the tax exempt status of Ensign Peak should be stripped because it's not a charitable organization. We lowly people have to pay taxes. But not these corps. 

You’ll be paying up to save your local temple from a sheriff’s sale, then?  

Edited August 18, 2021 by mgy401

[webbles]

1 hour ago, Analytics said:

Given that EPA was created less than 2 months after the Times article came out, it would be a heck of a coincidence if the two events weren't related. And the effect of creating EPA was to remove assets from the Church's balance sheet and place them onto EPA's balance sheet. If accomplishing that wasn't the motive, what was?

If anybody has any alternate theories I'd be glad to listen.

In Exhibit K and L of the "Letter to IRS Director" Exhibit K and Exhibit L, it marks the "Ensign Peak Years" as 1995-2012.  So, maybe the church had been working on creating the official EPA organization for a while and that it finally happened coincidentally with the Times article.  Also, I don't see how moving money from the "Investment Department" to EPA is hiding money from anyone.  The numbers in the "Investment Department" were just as hidden as the numbers from the EPA.  So it isn't hiding it anymore than it was before.

1 hour ago, Analytics said:

Maybe I'm missing something. Sure. But did any of these experts consider the IRS's actual requirements for being an integrated auxiliary like I did? 

All I know is that according to the IRS's website, EPA doesn't qualify as an integrated auxiliary.

I would assume that the experts actually did consider the IRS requirements.  I would assume they know those requirements far better than I.  You are basically the only person that seems to think that it isn't an integrated auxiliary.

1 hour ago, Analytics said:

Further, the top leaders of the Church have historically been extremely secretive about this--not even the quorum of the 12 apostles were authorized to know the details of EPA's balance sheet. Because of that, the experts at the Church who could have warned them about this potential tax issue probably didn't know enough to raise a red flag.

We don't really know that.  The story from the whistleblower (found on page 13 in the 'w' footnote) is that President Packer talked to Mr. Clarke and was rebuffed.  Somehow, Richard B. Willes found out about this and then told the whistleblower.  So the whistleblower is, at best, a third-hand witness.  It also doesn't tell us if this policy encompassed the entire quorum of 12 apostles nor does it tell us if this policy encompassed anyone else.  I don't see why experts would be prevented from seeing the EPA's balance sheet.

[smac97]

50 minutes ago, Analytics said:

All I'm arguing here is one narrow point. On the issue of whether this case ought to be dismissed because the church used "interest money" for these expenses and didn't use "tithing money," Huntsman's attorneys have the better argument. That's it.

If the judge disagrees with me, he'll dismiss the case. If he dismisses it and cites this "interest money" vs. "tithing money" dichotomy as part of his reasoning, then kudos to you for being right and shame on me for being wrong. I think I'm right on this point and I rest my case. We'll see what the judge says.  

Would you like to make a friendly wager on the issue? If the judge dismisses the case and cites the Church's interest money vs. tithing money as part of his rationale, I'll give $1,000 to LDS Charities. If he doesn't dismiss it or doesn't cite this specific argument as part of his rationale, you'll have to give $100 to the Humane Society of Utah. Ten-to-one odds, with the proceeds going to a good cause regardless. Deal?  

No thanks.  I'm not a gambling man.  

I'm fine with the court holding the Church's feet to the fire.  I just dislike the sort of special pleading that seems to come up as regarding the Church's actions.  It is vilified for X, even though other parties also doing X are ignored, and even though X seems to be perfectly upright and legal - but for the Church being the one doing it.

50 minutes ago, Analytics said:

As I've said a few times, you've raised some good points about why Huntsman should lose in court. If I were on the jury and had to make a verdict based upon what I know now, I'd almost certainly side with the Church, and I'd probably make Huntsman pay for the Church's legal fees. The case is dumb. As you've clearly and convincingly explained, he gave the money to the Church, and it now belongs to the Church. I agree. 100%. Likewise, when he gave the money to the Church, he gave it based on his faith, not on a couple of vague statements Hinckley made about how tithing money is used.

Agreed.  

Fraud is a very tough row to hoe.  The lawyers must have known the chances of success were very low. That's why I think the Church's characterization of it is apt.  And that's why the tone and tenor of Huntsman's legal pleadings are so histrionic/melodramatic.  As the old lawyer saying goes: "If you have the facts on your side, pound the facts; if you have the law on your side, pound the law; if you have neither the facts nor the law, pound the table."

Huntsman's lawyers are pounding the table.  A lot.

50 minutes ago, Analytics said:

When the Church "saves money for a rainy day" what it is also doing is capitalizing its own business empire and purchasing stocks.

That seems like a substantial mischaracterization.  Nobody is getting rich off the Church.  Those with access to the accumulated wealth of the Church are not living high off the hog.  They are not enriching themselves.  Instead, the finances of the Church have been manages remarkably well, to the point where the Church has, arguably, too much money.  That's a pretty good problem to have.

The Church spends huge amounts of money on philanthropic efforts.  It uses for-profit businesses and investments to subsidize those efforts.  

The critics, however, will never be satisfied.  They will always find fault with the Church, no matter what it does.  This is why I seldom take their criticisms as being in good faith.  I listen, but my ears are pretty jaundiced.

Sam Brunson makes some good points:

Quote

I know that many of you came to get an answer to the question whether the church broke the law. The short answer is no, it didn’t. It’s possible, though, that Ensign Peak Advisers doesn’t qualify as tax exempt. The standards are ambiguous, both in substance and in scope, though, so it’s not completely clear that it does or doesn’t qualify.

As for whether $100 billion is too much for the church to have sitting, unspent: it’s an important thing to think about. It’s a question that the church needs to seriously engage. It’s a question that we, as members of the church and as tithepayers, need to seriously engage. And the question of how large an endowment tax-exempt organizations (including, but not limited to, churches) should have is an important question we, as society and the voting public, need to engage with.

And ultimately, as we engage, we need to understand that there’s not a right and a wrong answer to this. All we have is grey, and we’ll swim in the ambiguity of grey. But as we talk and argue and fight over the amount, maybe we’ll start to engage questions of the relationship of money and religion, of what the purpose of money is for a church, of how we (as stakeholders) want to see the church use the money that we help contribute. We can engage with why we contribute (or why we don’t). Maybe we can become self-reflective, and look at how we use our own assets.

And then maybe we can be more mindful as we make charitable and consumption choices.

If I have any thoughts on how the Church should spend its accumulated wealth, I'll share it with proper channels.  But given the apparent bad faith of the relentlessly faultfinding critics, I am not particularly inclined to give them a place at the table.  They aren't donating money to the Church (or very few of them are, I suspect).  They despise the Church and do not have its best interests at heart, and are instead working and saying things to weaken it and tear it down.  Why on earth should we listen to input from people acting on such despicable motives?

50 minutes ago, Analytics said:

That has been obvious to me for decades, and with James Huntsman's background and education, it simply must have been obvious to him as well. His claim that he was surprised by all of this and is a victim of fraud just isn't credible. Not to me. 

Same here.

50 minutes ago, Analytics said:

In a sense I feel sorry for him, but I'm glad his eyes are now open.

I think his eyes were always open.  Asyou said, his claim of being surprised "just isn't credible."

Conversely, that he is angry at the Church, that he wants a pound of flesh, that he wants to embarrass and injure the reputation of the Church, seems a more likely assessment of his lawsuit.  I find such use of the legal system against religious groups contemptible, even despicable.  

50 minutes ago, Analytics said:

Having said all that, I still think that on the narrow issue of whether the case ought to be dismissed because the Church financed the mall with "investment income" rather than "tithing money", Huntsman's attorneys make the better argument. And I'd be happy to explain why to a federal judge. 

There's a good chance the judge will not reach that issue.  If there are narrower grounds to find that the fraud claim fails (lack of reasonable reliance seems like a good candidate), then the Court may just point to that and dismiss the case.  I hope so.  These sorts of lawsuits are caustic and a waste of the time and attention and money of the parties and the courts.

50 minutes ago, Analytics said:

And I still think based on basic reading comprehension skills that footnote 11 is simply an example of what they are not arguing about. Snarky? Yes. Something a judge would frown about? Perhaps. A misstep? I'll take your word on it. A religious argument that they are asking the judge to rule on? Of course not. 

I think the "misstep" could have been a snarky quotation of scripture.  But I also think the Court may view it as a bit of "letting the mask slip."  If the judge is inclined to have concerns about the lawsuit violating the ecclesiastical abstention doctrine ("a longstanding common law doctrine that guides courts when a case would require the court to decide a religious question"), then he might end up pointing to footnote 11 as substantiating that concern. 

Any lawyer with a lick of sense would know about the abstention doctrine, and would know to not say things to the court that could give rise to reasonable inferences that the lawsuit is an improper attempt "to decide a religious question," or is a vendetta by a former parishioner against his former faith.  The overall melodramatic tone of the court filings come across as emotional / personal.  Either the lawyers are not very good at their job, or else they are letting their (very rich) client have too much influence in what they are saying to the court.  Footnote 11 was particularly boneheaded, but far from the only indicator of impropriety.

I have many times litigated cases where the plaintiff is trying to pursue a fraud claim while trying even harder to deny that he is pursuing a fraud claim.  These claims are very difficult to even get in the door at the front end of the suit, let alone prevail on at the back end of the suit.  Oftentimes the purpose of the suit is (A) to harass and annoy and embarrass, (B) to force the other side to incur legal fees, (C) to create leverage for settlement, (D) for personal notoriety/publicity, or for some combination of these.  McKenna Denson was obviously going for (A), (C) and (D).  Huntsman seems to be going mostly for (A).

Thanks,

-Smac

Edited August 18, 2021 by smac97