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

[Stormin' Mormon]

13 minutes ago, Bob Crockett said:

I realize that Pres. Hinckley said that tithing funds were not being used for the mall when, in fact the funds used were increases on funds which were originally tithing funds.  Everyone I've explained this to, basically, has a problem with this.  But the "increase" comes after professional management, not contributed funds.   

What makes tithing sacred is that it is consecrated, set apart, sacrificed, made holy through the exercise of agency by someone who believed.   

Interest accrued on that sacrifice is not the result of anyone's faith, sacrifice, or devotion. 

Tithing is sacred.  Interest is not.  The difference is the act of agency that makes it so. 

Edited August 20, 2021 by Stormin' Mormon

[Danzo]

1 hour ago, Analytics said:

In summary, the Church promulgates the belief among its members and apologists that the church keeps its "sacred tithing funds" and investments in separate places.

You think that this belief is true and that they do this through funded accounting.

In contrast, Lars Nielsen thinks no semblance of this belief is true.

You dismiss Lars's judgment on the matter because despite his intelligence, education, and insider knowledge, he still isn't smart enough or educated enough to understand the accounting mechanisms the church is using to keep tithing and interest separate. 

 

25 minutes ago, Calm said:

My memory says Lars was a medical worker and retired to work on the document and David said no comment except for my brother does not speak for me…but don’t trust my memory because I don’t.

I guess the author didn't even work for EPA.

[Bob Crockett]

6 minutes ago, Stormin' Mormon said:

What makes tithing sacred is that it is consecrated, set apart, sacrificed, made holy through the exercise of agency by someone who believed.   

Interest accrued on that sacrifice is not the result of anyone's faith, sacrifice, or devotion. 

Tithing is sacred.  Interest is not.  The difference is the act of agency that makes it so. 

It is way more than interest.  It is an increase obtained after professional money management. 

[Analytics]

20 minutes ago, Bob Crockett said:

Well, I do know this about non-profit law.

Donating the money to the Church is, by definition, donating to a religion.  That is enough; a religion is considered an eleemosynary institution.  In other words, if all EPA does is receive and transmit money back and forth to the Church, that is enough. "Any enterprise can be operated as a 501(c)(3) nonprofit if its stated purpose is 'religious, charitable, scientific, testing for public safety, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals.'" Spencer v. World Vision, Inc., 619 F.3d 1109, 1130 (9th Cir. 2010). In other words, a religion is, strictly speaking, not a charity but it ranks as the same for purposes of IRS non-profit law.

Ensign Peak Advisors is, indeed a section 501(c)(3) organization according to IRS records.  Thus, it complies with the law if its only outflows and inflow are with a religion.  What the religion does with the money is not EPA's concern, but religious use of the funds may not strictly meet the definition of a charitable use.  Of course, if the religion abuses its constitutional protections (it has been held that a religion which engages in more than 50% of activities which are not rightly protected by the constitution) it can lose its tax-exempt status but not its First Amendment protections.

 

The ambiguous part of this is that 501(c)(3)s come in two flavors. They are either public charities or they are private foundations. 501(c)(3) public charities and 501(c)(3) private foundations receive different tax treatment.

Which is EPA?

Your last point is an interesting one. How do you measure a church's activities to calculate whether 50% of them are protected? Let's assume EPA really is an integrated auxiliary of the Church. Consider this hypothetical simplified income statement:

Revenue
Tithing:                            $7 Billion
Investment Income:        $7 Billion
Other Business Income: $1 Billion
Total Revenue:                $15 Billion

Expenses
Running Church              $5 Billion

Net Income                         $10 Billion

Those numbers are made up but could be close to the ballpark. If the Church were taking in $15 billion a year and using 33% of the revenue to run the Church and using the other 67% to build its commercial asset portfolio, would that indicate that 67% of its activities are not tax exempt?

 

 

 

[Analytics]

43 minutes ago, JustAnAustralian said:

Where does it put forward this belief? I don't recall ever being taught about the bank account structuring of the church or associated organisations.

 

40 minutes ago, webbles said:

Does the Church really promulgate that?  I can only think of statements that say "no tithing was used for this" or "no tithing was used for that".  I don't recall any statement that says that tithing fund is kept in a completely separate bank account from any other money.

The basic point is that when they say "no tithing was used for this" they are implying that they have a mechanism for keeping "tithing" money separate from non-tithing money. 

[Bob Crockett]

44 minutes ago, Analytics said:

The ambiguous part of this is that 501(c)(3)s come in two flavors. They are either public charities or they are private foundations. 501(c)(3) public charities and 501(c)(3) private foundations receive different tax treatment.

Which is EPA?

Your last point is an interesting one. How do you measure a church's activities to calculate whether 50% of them are protected? Let's assume EPA really is an integrated auxiliary of the Church. Consider this hypothetical simplified income statement:

Revenue
Tithing:                            $7 Billion
Investment Income:        $7 Billion
Other Business Income: $1 Billion
Total Revenue:                $15 Billion

Expenses
Running Church              $5 Billion

Net Income                         $10 Billion

Those numbers are made up but could be close to the ballpark. If the Church were taking in $15 billion a year and using 33% of the revenue to run the Church and using the other 67% to build its commercial asset portfolio, would that indicate that 67% of its activities are not tax exempt?

 

 

 

I think your argument has run its course. The 50 percent argument is based on total activity. Not one year.  And increasing an endowment is not a non-exempt activity. 

I am aware of only one religion being stripped of its tax exempt status.  A tiny church in Pasadena which devoted most of its existence to opposing the Gulf War.  

[webbles]

3 hours ago, Analytics said:

 

The basic point is that when they say "no tithing was used for this" they are implying that they have a mechanism for keeping "tithing" money separate from non-tithing money. 

And "fund-based" accounting that others have mentioned would keep the tithing and non-tithing separate.

[Calm]

Another summary of what Lars Nielsen provided, possibly with David’s help, possibly not…I might start reading from the end of the thread as I am still less than halfway though.

Quote

 

Here is another way to summarize that Letter to an IRS Director document.  He has no evidence beyond conjecture or guessing for any of the following:

• How much tithing the church collects annually
• How much tithing the church stores and invests
• The amounts of for-profit and non-profit funds managed by Ensign
• How much money Ensign has used for various endeavors
• From which accounts the funds for Beneficial and City Creek came
• Taxes paid on these two prior funding events
• How much the church has total in investments

The 74 pages were not 74 pages of documents. Exhibits (some church documents, some constructions of David and others done by Lars, as well as a random exhibit of an AntiBank note) start on page 41 with a spreadsheet done by David, it is not an official church document.  Exhibit C shows Ensign Peak is NOT the sole dispenser of funds for the Church, so even if those were the only two payouts, it says nothing of the total amount of funds the Church has and released or most important, used for charitable purposes.  Requiring an investment arm of the Church to act as a humanitarian organization itself because it cares for some of the donations sent to the Church as if it has no ties to the Church seems illogical to me and if I understand Danzo and others, is a misunderstanding of the legal relationship of Ensign to the Church as a whole.

Exhibit D is a church document that lists several examples of withdrawals.  What is weird is 3 out of the 6 are not actual withdrawals apparently, so why would they be listed?  Maybe because it had been anticipated previously there would be a need and they were proving infon funding wasn’t needed in the end, those projects came in on budget.  If those were the only withdrawals, why wasn’t the title of the section “withdrawals” instead of “examples of withdrawals”?  Perhaps because other withdrawals were of smaller amounts or were more complicated issues and they didn’t want to waste time on discussing at that time. 
 

Page 72, Exhibit S1 is a tax form that identifies Ensign as a subsidiary in an affiliated group or parent-subsidiary controlled group.  So not a company that should be treated independently of what else is going on in other subsidiaries it would seem in regards to whether it meets the religious, educational, or charitable purpose of its existence as stated in the articles of incorporation. Primary “unrelated business activity” is “investments in partnerships”.
 

Much of the expose’s content was Lars’ (who is listed as a health care consultant by WP) narrative, analysis, and commentary.  He states on page 4 that he wrote the entire thing and composed every exhibit (can’t copy/paste the PDF, so you got my paraphrasing, sorry).  I am guessing he thinks his document satisfied the question 8 on the application for award form.  I have big doubts on that myself, especially after Washington Post stated he had no documents supporting the allegation.

Quote

While accumulating this wealth, Ensign has not directly funded any religious, educational or charitable activities in 22 years, the complaint said. No documents are provided to support this claim, which is attributed to information David Nielsen gleaned from working at the company.

The IRS form for those curious:  https://www.irs.gov/pub/irs-pdf/f211.pdf

 Iirc, Lars would footnote something in his document as a support for his current claim and I would look and find it was just him speculating or making the claim with no actual foundation.  His background was medical, not financial…I can’t imagine why David would want him helping write the document, my opinion at the time was Lars took it upon himself.  What whistleblower trying to be taken billions of dollars seriously would throw in as one of the first impressions he gets to make to the IRS a reference to a completely irrelevant antiMormon tract? (Lars said on Mormonstories iirc that the title,  “Letter to an IRS Director”, was meant as as direct reference to “Letter to a CES Director”).  When the actual IRS officer who opens the mail in Ogden got it, I bet he rolled his eyes at the “to a IRS director” (not even “the IRS Director”, makes it sound more like a self important, but clueless “to whom it may concern”) label.  Lee Martin is the current top man in the whistleblowing department and does indeed have the title director***….and I bet he isn’t the one opening the mail and reading the forms and descriptions and documents.
 

 As the Washington Post noted from the beginning, the documents Lars had did not provide support for his claims.  He had some slides from an orientation presentation that showed divisions of labor and a flow chart of what church holding was where in the hierarchy and what was their purpose, which I found interesting, but Lars wrote stuff on some of the church papers and then acted as if this too was direct from the church in the analysis.

I don’t see much value for Huntsman in using any of Lars’ work to prove anything, because church documents provided showed just a few things like organizational hierarchy.  Perhaps David has more to say now and more documents than the ones his brother used for his own creation….but from what has been shared here (the Ensign people viewed the funds as tithing), it sounds more or less irrelevant.
 

 And since he is reporting his impression, he may be wrong.  Especially since church leaders appear to have made the distinction for years that tithing is what is received from members. Why would those at Ensign see it differently? Rather than viewing all the money as tithing, they could have said these are sacred funds…because they were seen not as tithing, but belonging to the Lord.

https://www.mormondialogue.org/topic/72484-whistleblower-on-church-finances/?do=findComment&comment=1209947708

Was David Nielsen’s disposition posted somewhere or did we just get a few comments from it? I have fallen asleep a few times reading this thread the past few days and I might have missed somethings that are significant and am wondering if his entire testimony is  one of them.

PS:  I reserve the right to radically change the above if my memory has played me false, but 25 pages into the thread my memory has been accurate and the review has triggered some thoughts I want to say now, so I am currently assuming the not yet confirmed or denied memories are as accurate as my confirmed ones.

If this hasn’t been posted yet, here is Lars’ magnum opus to refresh your memory if you want.

https://www.dropbox.com/s/31jklb5399iwy3e/Letter to an IRS Director.pdf?dl=0

Added from my personal research tonight…

***https://www.irs.gov/pub/newsroom/marketing/internet/irs-organization-chart.pdf

https://www.irs.gov/compliance/whistleblower-office

Quote

Individuals must use IRS Form 211, Application for Award for Original Information PDF, and ensure that it contains the following:

A description of the alleged tax noncompliance, including a written narrative explaining the issue(s).

Information to support the narrative, such as copies of books and records, ledger sheets, receipts, bank records, contracts, emails, and the location of assets.

A description of documents or supporting evidence not in the whistleblower's possession or control, and their location.

An explanation of how and when the whistleblower became aware of the information that forms the basis of the claim.

A complete description of the whistleblower's present or former relationship (if any) to the subject of the claim (for example, family member, acquaintance, client, employee, accountant, lawyer, bookkeeper, customer).

The whistleblower's original signature on the declaration under penalty of perjury (a representative cannot sign Form 211 for the whistleblower) and the date of signature.

Individuals must then mail the Form 211 with supporting documentation to:

Internal Revenue Service
Whistleblower Office – ICE
1973 N Rulon White Blvd.
M/S 4110
Ogden, UT 84404

 

Edited August 20, 2021 by Calm

[JustAnAustralian]

1 hour ago, Calm said:

Was David Nielsen’s disposition posted somewhere or did we just get a few comments from it?

No deposition, just a declaration https://storage.courtlistener.com/recap/gov.uscourts.cacd.814559/gov.uscourts.cacd.814559.37.0.pdf

[Calm]

On what is tithing…I like this post form the older thread:

https://www.mormondialogue.org/topic/72484-whistleblower-on-church-finances/?do=findComment&comment=1209957418

Quote

 

 

There is tithing and there is money consecrated to the Lord.  Tithing is what people sacrifice, no one is sacrificing by paying interest...that is a financial business transaction.  It doesn't make the interest received any less sacred than the tithing imo as it is the Lord's.

Thank you.  I was going to emerge from my years-long lurk to make this very point.  Tithing is not a dollar, but an act.  It is an act of will, of intention, of faith, and of sacrifice.  A dollar that is tithed to the Lord is one that has first come to the hands of a believer, and then that believer has passed the dollar to the Lord in a pro-active and willful act of faith.  Dollars that come to the church through a passive, automatic process do not pass through hands of faith, and do not come to the church via sacrifice and will.  Those passive, automatic funds still belong to the Lord, they are still consecrated.  But to call them tithing cheapens the act and sacrifice of the believer

 

Edited August 20, 2021 by Calm

[Calm]

Working backwards coming across info I forgot as discussed less.

https://www.thetelegraph.com/news/article/Twins-worked-together-on-whistleblower-complaint-14982002.php

Quote

Years before he helped his brother draft the complaint, Lars left the church after struggling to reconcile the religious tenets he learned as a youth with his increasingly science-based worldview. His break from the church was a central issue in a protracted divorce from his wife, who, along with the couple's three children, remains a member, court filings show. Lars had married into the elite of the church: His ex-wife, whom he met at Harvard University, is related to senior figures in the church and its businesses….

The brothers disagreed over whether to immediately make public the complaint to the IRS about Ensign Peak Advisors, the church investment arm for which David had worked for nine years until September, Lars said.

David said no.

Lars said yes, eventually sharing the filing and some supporting documents with The Post.

Lars said that since that disagreement, David has not returned his calls.

David declined to be interviewed for this story and in a statement said Lars is not authorized to speak for him.

"Any public disclosure of information that has been in my possession was unauthorized by me," he wrote. "Repeated attempts to dissuade my brother, Lars Nielsen, from making public disclosures have been ignored."

David was apparently wanted to continue to work at Ensign Peak even though his wife and kids were out of the Church, he simply planned on cutting back his attendance at church while keeping his job.  So either he was okay with the immorality/unethical/illegal  behaviour he saw when he worked there or he didn’t view anything as wrong while he was there and then something changed his view after he left.

Quote

Soon after joining Ensign, David became troubled by what he learned about its operations, the IRS whistleblower complaint says.

Lars claims David was troubled early on, but he worked there for 9 years and wanted to keep working there, so doesn’t sound like he was too troubled to me.
 

https://www.mormondialogue.org/topic/72484-whistleblower-on-church-finances/?do=findComment&comment=1209952232

Quote

On July 23, David went to his managers at Ensign with a dilemma, he recounted later in a resignation letter. His wife and children had stopped attending church in 2015, and he intended to scale back his attendance, too, according to the letter. But he did not want to abandon his career at the company.

Could they come to an accommodation?

The managers said they could not, according to David's recounting. To continue working at Ensign, David would need to give a "positive confirmation" that he would remain committed enough to ensure the renewal of his "temple recommend," a church credential that affirms a member's adherence to church doctrine and practices.

David decided to leave his job, 

Also mentioned is Lars had an MBA, so does have some related background at least.  There was also a very possible personal reason he wanted to attack the financial side of the Church:

Quote

In 2005, Lars married Rebecca Edwards, the daughter of Robert Edwards, an attorney who served as general counsel for Deseret Management, a holding company for the church's for-profit businesses.

Lars's ex-wife is also a cousin of Henry Eyring, one of the church's most senior officials and, at its founding, a trustee of Ensign Peak Advisors.

 

Quote

Lars said David only recently told him about his concerns regarding church money.

So we don’t really have any insights of David’s that came up while he worked there save the one email chain….for 9 years of work.  Everything else will have been colored by the experience of choosing to resign rather than continue to be active or to be terminated when he lost his recommend and then getting let go immediately (as would be wise because of the harm a disgruntled employee can do on their way out) as well as discussing everything in detail allegedly with a rather anti twin brother.  And at that time besides the email in the appendix, we had nothing original from David.

So what more do we know now about David’s version?

Quote

The twins' plan throughout was to go public as soon as possible, Lars said.

But that changed, Lars said, after David started to get legal advice that included letting lawyers handle any release.

With some lawyers suggesting the church could go after David financially, he decided he needed to accept their rules, Lars said. "David didn't want to lose his house. His big concern was his family."

If Lars was willing to risk his brother losing his house, if he was willing to be alienated from his twin brother and his brother’s family, seems like the guy has a huge need to get at the Church and it would be very likely this slanted his perception and his choices of presentation.

As evidence he might be less than accurate:

Quote

David remains a church member who attends services and pays tithes, his twin said. 

This is wrong based on another article I read about earlier in the old thread.  Will try to find it.

Edited August 20, 2021 by Calm

[Calm]

Quinn’s analysis of the situation summarized here:

https://www.mormondialogue.org/topic/72484-whistleblower-on-church-finances/?do=findComment&comment=1209952105

A review of Quinn’s calculations/book:

https://journal.interpreterfoundation.org/through-a-glass-darkly-examining-church-finances/

 

Edited August 20, 2021 by Calm

[Analytics]

13 hours ago, Bob Crockett said:

I think your argument has run its course. The 50 percent argument is based on total activity. Not one year.  And increasing an endowment is not a non-exempt activity. 

I am aware of only one religion being stripped of its tax exempt status.  A tiny church in Pasadena which devoted most of its existence to opposing the Gulf War.  

It's ironic that the IRS will go after a tiny church for promoting pacifism, but a massive real estate investment trust and hedge fund that earns billions of dollars a year from its own investments and billions more from a Church it owns is completely tax exempt.

In any case, I'm not arguing that the Church should lose its tax exempt status. I'm arguing that the IRS should classify EPA as a private foundation and tax it as such.

The issue isn't whether "increasing an endowment is not a non-exempt activity." The issue is can a 501(c)(3), be it a public charity or a private foundation, do nothing other than increase its endowment and do so on a tax free basis without limit?

I'll give the last word to Sam Brunson, a Latter-day Saint law professor at Loyola University Chicago who specializes in tax law:

"Is Ensign Peak Advisers violating the tax law?

"It’s not entirely clear. The Post reporters talked to Phil Hackney for the story, which was a really good move on their part. Phil is a friend, and knows a ton about the law governing tax-exempt organizations. And Phil points out that, if Ensign Peak Advisers has only held and invested money, and never paid any out, that’s probably a bad thing."

Some Thoughts About Ensign Peak Advisers and the Church – By Common Consent, a Mormon Blog

[Analytics]

4 hours ago, JustAnAustralian said:

No deposition, just a declaration https://storage.courtlistener.com/recap/gov.uscourts.cacd.814559/gov.uscourts.cacd.814559.37.0.pdf

Thanks for posting this. David declared: 

"10. Before this March 2013 meeting led by EPA’s President Roger Clarke described above, I and other employees of EPA with whom I spoke were aware of public statements by the Church that no tithing funds would be used for City Creek Mall or other for-profit businesses. When Mr. Clarke made the presentation described above using Exhibit A, I and possibly other EPA employees present asked how the Church’s public statements about no tithing funds being used for City Creek Mall or Beneficial Life could be consistent with Mr. Clarke’s description of how EPA had made “withdrawals” for “City Creek: $1,400mm over 5 years” and “Beneficial Life: $600mm in 2009.” Mr. Clarke responded that two other Church-affiliated entities (Property Reserve, Inc. and Deseret Management Corporation) had received from EPA the $1.4 billion and $600 million, respectively, paid by EPA for City Creek Mall and Beneficial Life, and essentially that, as a result, people would not know EPA was the source of this funding to City Creek Mall and Beneficial Life. Mr. Clarke stated that it was important that people should not know EPA’s role as the source of the funds.

"11. After that March 2013 meeting described above, Mr. Clarke’s presentation and the statements on Exhibit A prompted additional discussions among EPA personnel of whether EPA’s funding of City Creek Mall and Beneficial Life with approximately $2 billion in EPA tithing funds could somehow be reconciled with the Church’s public statements that no tithing funds were used for City Creek Mall or Beneficial Life. Again, all of EPA’s funds were tithing funds and were treated by EPA as tithing funds; every penny was “the widow’s mite.” Based on Mr. Clarke’s statements described above of which I have personal knowledge, it appeared the Church’s public statements were intended to conceal the truth about EPA’s use of tithing funds for City Creek Mall and Beneficial Life."

[Harry T. Clark]

The above statement from David A. Nielson looks troubling and it might force the church to seek a settlement as it looks like tithing was definitely used to fund commercial projects (the mall and the beneficial life bail-out).  Who knows if tithing can be traced to other commercial ventures such as the recent purchases of farm land or commercial buildings?

I really don't see anything wrong with it though.  Throughout church history, church funds were used for commercial enterprises and those church funds originated with the widow's mite.

[Bob Crockett]

37 minutes ago, Analytics said:

It's ironic that the IRS will go after a tiny church for promoting pacifism, but a massive real estate investment trust and hedge fund that earns billions of dollars a year from its own investments and billions more from a Church it owns is completely tax exempt.

In any case, I'm not arguing that the Church should lose its tax exempt status. I'm arguing that the IRS should classify EPA as a private foundation and tax it as such.

The issue isn't whether "increasing an endowment is not a non-exempt activity." The issue is can a 501(c)(3), be it a public charity or a private foundation, do nothing other than increase its endowment and do so on a tax free basis without limit?

I'll give the last word to Sam Brunson, a Latter-day Saint law professor at Loyola University Chicago who specializes in tax law:

"Is Ensign Peak Advisers violating the tax law?

"It’s not entirely clear. The Post reporters talked to Phil Hackney for the story, which was a really good move on their part. Phil is a friend, and knows a ton about the law governing tax-exempt organizations. And Phil points out that, if Ensign Peak Advisers has only held and invested money, and never paid any out, that’s probably a bad thing."

Some Thoughts About Ensign Peak Advisers and the Church – By Common Consent, a Mormon Blog

But EPA does have inflows and outflows as you have admitted. To the Church.  Plenty and sizeable.  The Church itself is a legitimate target of funds under IRC 502c3  You just don't like that.  You think EPA should also be making politically correct donations to charitable causes. But the Church proper does that. This Loyola professor doesn't get it.  He's wrong. 

Look, as a libertarian I think that tax exemptions churches and charities are abhorrent, but I also think that tax levels should be one tenth of current levels, that congress should not be paid, and that the only wars we fight are on American soil. 

[smac97]

21 minutes ago, Analytics said:

Thanks for posting this. David declared: 

"10. Before this March 2013 meeting led by EPA’s President Roger Clarke described above, I and other employees of EPA with whom I spoke were aware of public statements by the Church that no tithing funds would be used for City Creek Mall or other for-profit businesses. When Mr. Clarke made the presentation described above using Exhibit A, I and possibly other EPA employees present asked how the Church’s public statements about no tithing funds being used for City Creek Mall or Beneficial Life could be consistent with Mr. Clarke’s description of how EPA had made “withdrawals” for “City Creek: $1,400mm over 5 years” and “Beneficial Life: $600mm in 2009.” Mr. Clarke responded that two other Church-affiliated entities (Property Reserve, Inc. and Deseret Management Corporation) had received from EPA the $1.4 billion and $600 million, respectively, paid by EPA for City Creek Mall and Beneficial Life, and essentially that, as a result, people would not know EPA was the source of this funding to City Creek Mall and Beneficial Life. Mr. Clarke stated that it was important that people should not know EPA’s role as the source of the funds.

"11. After that March 2013 meeting described above, Mr. Clarke’s presentation and the statements on Exhibit A prompted additional discussions among EPA personnel of whether EPA’s funding of City Creek Mall and Beneficial Life with approximately $2 billion in EPA tithing funds could somehow be reconciled with the Church’s public statements that no tithing funds were used for City Creek Mall or Beneficial Life.

The foregoing portions of David's declarations are appropriate.  While the probative value can be challenged, the overall admissibility of these statements is probably legit. 

However, the next bit...

21 minutes ago, Analytics said:

Again, all of EPA’s funds were tithing funds

This is where the declaration goes off the rails a bit.  "All of EPA's funds were tithing funds" is not a statement of fact.  it is a conclusion of law.  David's say-so is not determinative.

21 minutes ago, Analytics said:

and were treated by EPA as tithing funds;

This seems conclusory and speculative.

21 minutes ago, Analytics said:

every penny was “the widow’s mite.”

Also conclusory and speculative.

That the EPA is as careful with interest/profit generated from tithes as it is with the tithed principal does not make interest/profit a "tithe" or charitable contribution.  At least I haven't seen any case law on that point. 

21 minutes ago, Analytics said:

Based on Mr. Clarke’s statements described above of which I have personal knowledge, it appeared the Church’s public statements were intended to conceal the truth about EPA’s use of tithing funds for City Creek Mall and Beneficial Life."

This is also a conclusion of law.  And it's speculative.  

Thanks,

-Smac

[Calm]

5 hours ago, JustAnAustralian said:

No deposition, just a declaration https://storage.courtlistener.com/recap/gov.uscourts.cacd.814559/gov.uscourts.cacd.814559.37.0.pdf

So not really anything new as the slide was in the original documentation published by his brother. 
 

Now what we could find interesting is a statement from Robert Clarke and others if Neilsen’s recollection and interpretation is accurate. I would be surprised if that happens though since lawyers could argue they could call the funds/view them as gummie bears and it wouldn’t make the funds such, so their opinion doesn’t matter. The only thing that matters is how the law views donations and money earned from such investing these donations, whether or not they are the same thing. 

[Amulek]

11 minutes ago, Analytics said:

I'll give the last word to Sam Brunson, a Latter-day Saint law professor at Loyola University Chicago who specializes in tax law:

Well, if you're going to accept Sam's comments as the last word, then does that mean you believe him when is says that, "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." (emphasis added)

 

14 minutes ago, Analytics said:

"Is Ensign Peak Advisers violating the tax law?

"It’s not entirely clear. The Post reporters talked to Phil Hackney for the story, which was a really good move on their part. Phil is a friend, and knows a ton about the law governing tax-exempt organizations. And Phil points out that, if Ensign Peak Advisers has only held and invested money, and never paid any out, that’s probably a bad thing."

I would recommend also taking a look at the following Forbes article with further input from Professor Hackney (emphasis added):

Quote

I [Peter J Reilly] wrote to Professor Hackney citing my article and soliciting his opinion. I wrote:

“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.” 

He responded:

“Yes. I saw your piece. I actually generally agree with what you say. In some sense I think what we are witnessing is the asking and answering of different questions. Reality is the church likely has sufficient technical reasons to pursue the path it has pursued. But what I was being asked was whether the brothers raised legitimate concerns. I think they do and still think so.....

Now, Ensign will almost surely argue that it is an integral part of the church. Furthermore the church pays out lots of money every year from its tithing. If we view total expense in comparison to endowment if there were some payout requirement it would be met. That may be so and because of that the IRS would almost surely never challenge this situation. Nevertheless I do think that as a charitable tax law matter such an endowment that only ever invests money and never pays out raises real questions of the moral ought of the law. And I think that has to be the case even with a church...

I thought when I reviewed the WB complaint it would be a nothing. In a very technical sense I think it is a nothing. But, I still thought and think now that the brothers raised legitimate concerns worthy of raising attention to.....

So if the question is will the church lose its status, the answer is almost surely no. But if the question is whether the brothers raised real and legitimate questions that touch seriously on tax law in its largest sense, the answer is yes.”

Professor Hackney pointed me to Revenue Procedure 96-10 which indicates the sort of auxiliary organizations that share in the blessings of the church’s exemption from filing Form 990. Included is an organization that is exclusively financing, funding the activities of or managing the funds of a church.

That is not definitive, but it indicates that you don’t evaluate Ensign in isolation. And there is really no provision that blows up the exemption of a church because it has saved up too much money.

As to the bit about an integrated auxiliary acting as a piggy bank for an exempt organization, Sam also points to an IRS ruling (Rev. Rul. 78-41) which held that, "By serving as a repository for funds paid in by the [charitable organization], and by making payments at the direction of the [charitable organization...] the trust is operating as an integral part of the [charitable organization]. Of equal importance is the fact that the trust is performing a function that the [charitable organization] could do directly. Accordingly, the organization is operated exclusively for charitable purposes and, thus, is exempt from Federal income tax under section 501(c)(3) of the Code." [Note: I have replaced the word "hospital" with "charitable organization" to make it more clear how this ruling applies generally.]

That last bit is pretty relevant: EPA isn't doing anything that the Church couldn't just do itself (which would unquestionably be tax exempt activity).

If you want to have a broad discussion about 'the moral ought' of the law (as Professor Hackney puts it), that's fine.

But if you want to talk about EPA being in violation of existing tax law, the answer is almost assuredly 'no.'

 

[Analytics]

2 minutes ago, Bob Crockett said:

But EPA does have inflows and outflows as you have admitted. To the Church.  Plenty and sizeable. 

You consider two outflows over a 23 year period to be plenty? Private foundations are required to distribute 5% of their assets to charity every year. On average, the two outflows represent something like 0.17% of its assets per year. You think that is sizable? And those outflows were not to the Church. The two outflows were to the for-profit corporations Property Reserve and Deseret Management Corporation. 

Not plenty. Not sizable. Not to the Church.

2 minutes ago, Bob Crockett said:

The Church itself is a legitimate target of funds under IRC 502c3

I agree.

2 minutes ago, Bob Crockett said:

  You just don't like that. 

You are a terrible mind reader.

2 minutes ago, Bob Crockett said:

You think EPA should also be making politically correct donations to charitable causes.

No, I think if EPA made "plenty and sizeable" donations to charitable causes as recognized by the IRS (including to the Church), it would qualify as an integrated auxiliary and would be in compliance with the tax code. 

2 minutes ago, Bob Crockett said:

But the Church proper does that. This Loyola professor doesn't get it.  He's wrong. 

I have my opinions on this, and I recognize that this is a unique situation that the tax code probably didn't anticipate. I recognize "reasonable minds can disagree," as Smac likes to say.

That said, I don't get the impression that you understand the issue here. Your opinions are based on an idealized image of how you think EPA ought to work, not the way it actually does work. 

2 minutes ago, Bob Crockett said:

Look, as a libertarian I think that tax exemptions churches and charities are abhorrent, but I also think that tax levels should be one tenth of current levels, that congress should not be paid, and that the only wars we fight are on American soil. 

Preach it, brother!

[Analytics]

10 minutes ago, smac97 said:

...This is where the declaration goes off the rails a bit.  "All of EPA's funds were tithing funds" is not a statement of fact.  it is a conclusion of law.  David's say-so is not determinative.

This seems conclusory and speculative.

Also conclusory and speculative.... 

This is also a conclusion of law.  And it's speculative.

The issue isn't whether the statement "all of EPA's funds are tithing funds" is conclusory, speculative, or a conclusion of the law. The issue is whether the Church was being honest with its members when it said that no tithing money was used.

The court can have its own opinion about whether the funds in EPA are rightfully called "tithing funds," I guess. But the real issue is how a reasonable member of the Church would interpret the statement that no tithing funds were used. David's declaration that the employees and leaders at EPA considered all of the money EPA managed to be tithing funds is relevant, as is their belief that it was hard for them to reconcile the Church's public statements with what actually happened.

Maybe the court will conclude that technically no tithing funds were used. But that wouldn't change the fact that the Church's public statements were intended to conceal the truth from the members.

[Harry T. Clark]

4 hours ago, Calm said:

Working backwards coming across info I forgot as discussed less.

https://www.thetelegraph.com/news/article/Twins-worked-together-on-whistleblower-complaint-14982002.php

David was apparently wanted to continue to work at Ensign Peak even though his wife and kids were out of the Church, he simply planned on cutting back his attendance at church while keeping his job.  So either he was okay with the immorality/unethical/illegal  behaviour he saw when he worked there or he didn’t view anything as wrong while he was there and then something changed his view after he left.

Lars claims David was troubled early on, but he worked there for 9 years and wanted to keep working there, so doesn’t sound like he was too troubled to me.
 

https://www.mormondialogue.org/topic/72484-whistleblower-on-church-finances/?do=findComment&comment=1209952232

Also mentioned is Lars had an MBA, so does have some related background at least.  There was also a very possible personal reason he wanted to attack the financial side of the Church:

 

So we don’t really have any insights of David’s that came up while he worked there save the one email chain….for 9 years of work.  Everything else will have been colored by the experience of choosing to resign rather than continue to be active or to be terminated when he lost his recommend and then getting let go immediately (as would be wise because of the harm a disgruntled employee can do on their way out) as well as discussing everything in detail allegedly with a rather anti twin brother.  And at that time besides the email in the appendix, we had nothing original from David.

So what more do we know now about David’s version?

If Lars was willing to risk his brother losing his house, if he was willing to be alienated from his twin brother and his brother’s family, seems like the guy has a huge need to get at the Church and it would be very likely this slanted his perception and his choices of presentation.

As evidence he might be less than accurate:

This is wrong based on another article I read about earlier in the old thread.  Will try to find it.

I don't think motivation has anything to do with whether or not the church was/is in violation with tax law or whether or not the civil rico claim has legs.  Angry ex-spouses sometimes go to the IRS or FBI and blow the whistle so to speak on the nefarious acts of their former spouse.  It doesn't make it false just because someone is angry or has an ax to grind. 

However in this case, there is some smoke and the IRS supposedly looked into the charitable affiliation issue.  EPA contributed to the Mall and bailed out Beneficial Life.  All the more reason to have the church make their finances public to the members.  This can be done on a yearly basis.  Berkshire Hathaway has done fine disclosing its finances and so have other corporations.

[Stormin' Mormon]

5 hours ago, Calm said:

On what is tithing…I like this post form the older thread:

https://www.mormondialogue.org/topic/72484-whistleblower-on-church-finances/?do=findComment&comment=1209957418

 

There it is!  I knew I had posted something on this topic, but couldn't find it in my post history.  I like my older comment better than the one I made yesterday.

[HappyJackWagon]

On 8/18/2021 at 3:03 PM, Analytics said:

I'm not sure. Certainly the president of the Church. Probably other members of the first presidency and presiding bishopric. Probably nobody else.

I'm saying Ensign Peak is its own legal entity. The same people who control the Church control Ensign Peak, but the Church itself does not.

The only reason I can think of is because it is trying to appear less wealthy than it is. If it has extra money it donates money to Ensign Peak. If it needs extra money it can have Ensign Peak donate money back to the Church. But if you look at the Church's actual assets, the assets of Ensign Peak is not on the list.

Ensign Peak Advisors is a 501(c)(3) nonprofit, and there is nothing scandalous about the Church giving money to a nonprofit. The Church can do whatever it wants with its money. And there is nothing illegal about Ensign Peak doing nothing other than accumulating investments and occasionally bailing out insurance companies and building malls. However, if Ensign Peak Advisors is really a "private foundation" and not an "integrated auxiliary" or a "private charity," then in order to avoid taxes on its earnings, it must comply with IRS rules of giving away to charitable causes a certain percentage of its value every year. 

   

Thanks for that response.

(If that's true) I'm thinking Bishop's may want to change their spiel when conducting tithing settlements and teaching children where their tithing donations go. I don't recall ever hearing that the majority of funds donated to the church are then in turn donated to another 501C3 for the purpose of accumulating wealth. Saying it that way I can appreciate a little more Huntsman's claim of fraud about where his tithing donations have been used.

Edited August 20, 2021 by HappyJackWagon

[smac97]

1 hour ago, Analytics said:

The issue isn't whether the statement "all of EPA's funds are tithing funds" is conclusory, speculative, or a conclusion of the law.

Actually, that is the issue.  Or something very close to it.

And David's say-so is not determinative of that.

1 hour ago, Analytics said:

The issue is whether the Church was being honest with its members when it said that no tithing money was used.

Not really. 

If we conflate charitable contributions (tithes) with subsequent interest/profit generated from investing those contributions, then - per our critics - the Church was not being "honest" by differentiating tithed funds from interest/provides.

If we do not conflate charitable contributions with subsequent interest/profit generated from investing those contributions, then the Church's statements are reasonable and correct.

Again, you have previously conceded that this issue "is theoretical and part of this is semantics."  I agree with this.  His complaint is predicated on conflating tithes (money donated by members of the Church) with profit/interest (monies generated by EPA investing tithed funds).  While money is no doubt fungible.  I think the character and origins of tithed funds is materially distinguishable from that of profits/investments.  All money held by the Church should, of course, be managed prudently.  I also think that Huntsman's lawsuit is tinklng cymbals and sounding brass.  A hue and cry.  A grievance "full of sound and fury, signifying nothing."

1 hour ago, Analytics said:

The court can have its own opinion about whether the funds in EPA are rightfully called "tithing funds," I guess.

"I guess?"

You quote David Nielsen's say-so as if it is unassailable, etched-in-stone fact, but the court just has "an opinion?"  About a legal question that boils down to "semantics" about whether there is a reasonable distinction between A) charitable donations and B) subsequent interest/profit generated by investing those donations?

1 hour ago, Analytics said:

But the real issue is how a reasonable member of the Church would interpret the statement that no tithing funds were used.

Nope.  The "real issue" is whether there was fraud.  The sine qua non is whether there is a false statement of fact in view.  Here is a summary of the law on that point (for Utah, though I imagine the law in California is more or less identical) :

Quote

To be liable for fraud, a defendant's misrepresentation must be of “presently existing material fact.”  Jones & Trevor Mktg., Inc. v. Lowry, 2010 UT App 113, ¶ 12, 233 P.3d 538 (citation omitted).  This gives rise to three specific characteristics  

• First, the representation must pertain to an objective and quantifiable “fact,” as opposed to non-testable statements such “mere expressions of opinion,” Kinnear v. Prows, 16 P.2d 1094, 1096 (Utah 1932).  Distinguishing “fact” from “opinion” is determined “by the subject matter, . . . the form of the statement, the attendant circumstances, and the knowledge of the parties.”  Condas v. Adams, 388 P.2d 803, 805 (Utah 1964).  Misrepresentations of law or of the legal effects of contracts are also not categorized as fraudulent, Gadd v. Olson, 685 P.2d 1041, 1044 (Utah 1984), nor are statements pertaining to marketing or advertising, commonly referred to as “puffery.”  See McBride v. Jones, 615 P.2d 431, 434 (Utah 1980).
• Second, the representation must pertain to a fact that was “presently existing” at the time the representation was made.  Speculative statements about the future are, like opinions, untestable and therefore do not generally give rise to a fraud claim.  However, when a fraud claim is based on a promise of some sort of future performance, the promise may be treated as concerning a “presently existing” fact if the claimant shows that the promisor, when making the promise, did so with a present intent not to perform and made to induce a party to act in reliance on that promise.  Jones & Trevor Mktg., Inc., 2010 UT App 113, ¶ 12 (citation omitted).
• Third, the representation must pertain to a fact that is “material.”  A fact is “material” only if “the knowledge or ignorance of [it] would naturally influence [a party's] judgment . . . in estimating the degree and character of the risk involved in a transaction.”  Walter v. Stewart, 2003 UT App 86, ¶ 23, 67 P.3d 1042 (second alteration and omission in original) (citation and internal quotation marks omitted).

Differentiating tithes from profit/interest from investing tithes seems . . . pretty reasonable.  And even if there is some point of law that says charitable contributions cannot reasonably be differentiated from profits of investements of those contributions (I'm really curious about whether such a thing exists), the Church's differentiation would seem to be better characterized as a statement "of law," such that it cannot be "categorized as fraudulent."

And then there's the whole "scienter" thing:

Quote

“[A] mere naked falsehood or misrepresentation is not enough” to properly plead a fraud claim.  Christensen v. Board of Review of Indus. Comm’n, 579 P.2d 335, 338 (Utah 1978) (citation and internal quotation marks omitted).  The claimant must therefore include allegations pertaining to the representor's knowledge or awareness of the falsity of his statement, often termed “scienter,” which is “the mental element of fraud.”  Galloway v. Afco Dev. Corp., 777 P.2d 506, 508 (Utah Ct. App. 1989). 

To adequately plead this element, the claimant must allege “knowledge on the part of a person making representations, at the time they are made, that they are false.”  Christensen, 579 P.2d at 338.  In the alternative, the claimant can allege “that the misrepresentation must be made knowingly or recklessly (as opposed to carelessly or negligently).”  Robinson v. Tripco Inv., Inc., 2000 UT App 200, ¶ 13 n.3, 21 P.3d 219.  For a representation to be “reckless” the representor “would have to know that [she] had insufficient knowledge upon which to base the representation made.”  Rawson v. Conover, 2001 UT 24, ¶ 28, 20 P.3d 876. 

I think I mentioned previously that I was surprised the Church's attorneys did not try a Rule 12 motion to dismiss based on failure to sufficiently plead fraud.  Scienter is, I think, hard to plead with particularity.

And then there's the whole "reasonable reliance" part:

Quote

In order to prevail on a fraud claim, the plaintiff must establish that he was unaware of the falsity of the defendant’s statement, that he actually relied on the statement, and that his reliance on misrepresentation was “reasonable.” 

A party cannot successfully “claim to have been defrauded in reliance on representations on which he had no right to rely.”  Oberg v. Sanders, 184 P.2d 229, 234 (Utah 1947) .  Actual reliance is therefore a critical element of a fraud claim.  DeBry v. Cascade Enters., 879 P.2d 1353, 1358 (Utah 1994).  In determining whether the claimant reasonably relied on the representation, “factors such as the respective age, intelligence, experience, mental condition, and knowledge of each party should be considered, along with their relationship, their access to information, and the materiality of the representations.”  Cheever v. Schramm, 577 P.2d 951, 954 (Utah 1978).

Whether a practitioner should investigate the claimant’s awareness or ignorance of the falsity of the defendant’s statement depends on the specific circumstances of the case.  “[I]n the absence of some warning that something was amiss, [a person alleging fraud] had no duty to investigate.”  Haupt v. Heaps, 2005 UT App 436, ¶ 36, 131 P.3d 252.  Consequently, a claimant is only required to make his own investigation “where, under the circumstances, the facts should make it apparent to one of his knowledge and intelligence, or he has discovered something which should serve as a warning that he is being deceived.”  Conder v. A.L. Williams & Assocs., Inc., 739 P.2d 634, 638 (Utah Ct. App. 1987).

I think it's hard for Huntsman to, in essence, represent to the court that "Yes, I donated tithes to my church for years and years, but then in 2003 the Church made two or three statements about the financing of a mall in Salt Lake, and thereafter I only donated tithes in reliance on those statements."  That just seems . . . untenable.

And then there's the "injury" part:

Quote

“No injury, no tort, is an ingredient of every state's law.”  In re Bridgestone/Firestone, Inc., 288 F.3d 1012, 1017 (7th Cir. 2002).  Consequently, a party claiming fraud “must have suffered a loss as a direct result of his foreseeable, justifiable or expected reliance on the alleged misrepresentations . . . in order to recover on these claims.”  Viernow v. Euripides Dev. Corp., 157 F.3d 785, 797 (10th Cir. 1998).

How has Huntsman been injured?  It seems that the only way he could claim an injury is to point to the handful of 2003-2005 statements and say "Hey, but for those statements about the Church's funding of City Creek I would not have paid tithes, even though I had been paying tithes for a decade before any of those statements were made."

Again, that just does not seem tenable.

Fraud is never presumed, Territorial Sav. & Loan ***'n v. Baird, 781 P.2d 452, 462 (Utah Ct. App. 1989), nor cannot it be based on “mere suspicion or innuendo,” Taylor v. Gasor, Inc., 607 P.2d 293, 294–95 (Utah 1980) (citation and internal quotation marks omitted).  Instead, a claimant must prove all nine prima facie elements by “clear and convincing evidence.”  Embassy Grp., Inc. v. Hatch, 865 P.2d 1366, 1371 (Utah Ct. App. 1993) (citation omitted).  Black's Law Dictionary defines “clear and convincing evidence” as “[e]vidence indicating that the thing to be proved is highly probable or reasonably certain. This is a greater burden than preponderance of the evidence, the standard applied in most civil trials, but less than evidence beyond a reasonable doubt, the norm for criminal trials.”  Black's Law Dictionary 636 (9th ed. 2009).

I am skeptical that Huntsman will be able to accumulate this evidence.

I also suspect that Huntsman knew this before he filed suit.  And his lawyers, if they are worth a darn, would certainly have anticipated this difficulty.

1 hour ago, Analytics said:

David's declaration that the employees and leaders at EPA considered all of the money EPA managed to be tithing funds is relevant,

I'm skeptical that David is a percipient witness about what other people "considered."  If so, his declaration on that point is speculative, and therefore not admissible.

Moreover, what "employees and leaders at EPA considered" may not be relevant, either.  That they subjectively felt that interest is as "sacred" as the principal (tithes) doesn't seem to carry legal weight or significance.

1 hour ago, Analytics said:

as is their belief that it was hard for them to reconcile the Church's public statements with what actually happened.

Again, I'm not sure David can competently and credibly testify about other other people thought/believed.

1 hour ago, Analytics said:

Maybe the court will conclude that technically no tithing funds were used. But that wouldn't change the fact that the Church's public statements were intended to conceal the truth from the members.

This is a "fact," is it?

Thanks,

-Smac

Edited August 20, 2021 by smac97