Update on Huntsman Lawsuit: Ninth Circuit Reverses Trial Court

[longview]

2 hours ago, Analytics said:

“A loss ratio is a profitability metric used by insurance companies. It represents the present value of claims divided by the present value of premiums.

Is that the only metric? What about legally required reserves? How is that calculated? Would it be based on the probability of the number of claims being made in a year?

2 hours ago, Analytics said:

I got the distinct sense that the attorney who was deposing me was irritated by the way I over-emphasized that in these calculations, principal and interest are intermingled. In my world the point is obvious.

Of course it is intermingled. Same thing for Ensign Peak Advisors. After the Church makes full use of the year's tithing proceeds, there usually some tithing left over that is wisely invested for a "rainy day." There have been many times when the Church was in debt due to adverse swings in the economy.

The total funds managed by EPA represents a RESERVE for the Church. A part which is invested in "for profit businesses" that will provide better returns. Which was sufficient to support the City Creek Project. The reserve needs to grow larger because the Lord is hastening His Work and it is prophesied that more severe challenges will come to the world in coming years.

[smac97]

On 1/31/2025 at 3:47 PM, let’s roll said:

Thanks SMAC for your summary of the opinion.  Is there language in the majority opinion that any of the judges thought the CAD was not applicable, rather than not needed to resolve the case?

Yes.  From page 3 (the synopsis, so not technically part of the opinion) :

Quote

Finally, the en banc court held that the church autonomy doctrine had no bearing in this case because nothing in the court’s analysis of Huntsman’s fraud claims delved into matters of Church doctrine or policy.  

Here's the actual bit from the primery opinion (p. 18) :

Quote

Finally, the church autonomy doctrine has no bearing here.6  That doctrine protects First Amendment values by prohibiting courts from resolving “controversies over religious doctrine and practice.”  Presbyterian Church in U.S. v. Mary Elizabeth Blue Hull Mem’l Presbyterian Church, 393 U.S. 440, 449 (1969).  Because nothing in our analysis of Huntsman’s fraud claims delves into matters of Church doctrine or policy, our decision in this case does not run afoul of the church autonomy doctrine. 
...
6 Throughout this appeal, the Church has maintained the position that this Court can, and should, hold only that the fraud claim fails to state a claim on the merits. 

I'll need to go back and review the Church's briefs to see if they ever referenced the Church Autonomy Doctrine (it's been a while since I looked at that).  It was raised in amicus briefs, I believe.

On 1/31/2025 at 3:47 PM, let’s roll said:

As you know, it is not unusual for judges to decide a case on a single dispositive issue (here, the lack of any facts that would support a finding of fraud) and choose not to address any other legal or factual issues, believing that doing so is both a waste of judicial resources and an unnecessary application of the facts to existing case law which some may deem a gratuitous expansion or contraction of a doctrine such as the CAD.

Yes.  That would be pertinent given the above footnote.  If the Church never asked for dismissal based on CAD, should the 9th Circuit have considered application of CAD anyway?

On 1/31/2025 at 3:47 PM, let’s roll said:

In other words, are those who didn’t join the concurring opinion just being minimalistic, or is there some indication in the majority opinion that the some would have balked at dismissing the case using the CAD?

If footnote 6 is accurate (and I'm assuming it is), then the 9th Circuit followed the Church's lead.

Perhaps the Church preferred to defeat Huntsman's claims on the merits, on the facts, rather than based on CAD.  Interestingly, the Church's briefs in the MDL lawsuit specifically cite CAD as an argument.

Thanks,

-Smac

[Analytics]

1 hour ago, longview said:

Is that the only metric? What about legally required reserves? How is that calculated? Would it be based on the probability of the number of claims being made in a year?

In insurance accounting, "reserves" are actually a liability on the balance sheet, not an asset. The actuaries will calculate reserves so that that amount of money, plus future premiums, accumulated with interest, will be enough to pay future claims and operating expenses under moderately adverse experience. And yes, those are all based on the probability of future claims, among other things (including interest). Insurance companies assets are just cash and bonds, perhaps with a little bit of equity and real estate sprinkled in. The difference between assets and liabilities (i.e. the difference between assets and reserves) is the company's "surplus." There are minimum levels on the surplus as well.

With all of these things, there is no distinction between principal and interest, and it would be nonsensical to say this or that claim or expense was paid with interest rather than principal. You could say you want operating expenses to be less than investment income, but it doesn't make technical sense to say that a given payment is specifically funded with either principal or interest. 

If you want to take a peek into my brain, here is a 16-page cheat sheet on the theory of interest, along with some actuarial mathematics. The very first row shows the "accumulation formula" which mathematically mixes up interest and principal into a single accumulated value. The reason this mathematics works is that whether a specific dollar of assets came from principal or came from interest is irrelevant. Neither the accounting system nor the actuarial models that represent it keep track of those things.

Because of all this, it would be reasonable for such a person to assume that when Hinckley said, "no tithing money will be used," he meant to imply no tithing money would be used, neither directly nor indirectly. And that is in fact the way many Latter-day Saints (e.g. Pahoran, Kim Pearson, James Huntsman), interpreted his comments at the time. 

I'm not implying that Hinckley was lying, much less that the Church is guilty of fraud. I'm merely trying to prevent gaslighting about how many members interpreted these assurances before the whistleblower report clarified what was going on.

[smac97]

From The National Review: En Banc Ninth Circuit Divides Sharply on Church-Autonomy Doctrine

Quote

On a first read, I don’t find Friedland’s summary-judgment analysis especially convincing, and I have to wonder whether it was driven (consciously or not) by a desire to avoid teeing up the case to be decided by the Supreme Court on church-autonomy grounds.

Perhaps.  Or else the Church didn't ask for relief based on CAD (see commentary re: footnote 6 in the opinion, above).  Perhaps it was the Church, not the Ninth Circuit, that wanted to "avoid teeing up the case to be decided by the Supreme Court on church-autonomy grounds."

Then again, maybe not, as the Church is citing CAD in the MDL lawsuit before Judge Shelby.

Thanks,

-Smac

[smac97]

This MSN article discusses the possible impact of Huntsman on the MDL lawsuit pending before Judge Shelby in Utah.  An excerpt:

Quote

The church’s victory in the 9th Circuit, which covers the nine westernmost U.S. states, could have a powerful influence over two other tithing-related cases now in the 10th Circuit, which includes Utah, said Jeremy Rosen, managing partner for the San Francisco office of Horvitz & Levy, which filed an amicus brief on behalf of charitable organizations that supported the church.

“Ninth Circuit opinions are not binding in the 10th Circuit, but I would think that they would have, especially from an en banc panel, a persuasive effect,” Rosen said. He added, “I think if the 10th Circuit were to do anything other than rule in favor of the church, especially in light now of this 9th Circuit opinion, there would be a bullet train to the Supreme Court and then a reversal.”

This Washington Times article includes what may be the only published reaction so far from Mr. Huntsman:

Quote

Mr. Huntsman, who cited a church teaching document saying that tithes would be used for “the work of the Lord,” said he has not yet decided whether to appeal the ruling to the U.S. Supreme Court

“Still assessing,” he told the Salt Lake Tribune in a text.

And from The Deseret News: Evangelicals, Jews, Adventists, others grateful judges supported church autonomy in Latter-day Saint tithing case

Quote

The eyes of much of American religion were focused on the lawsuit James Huntsman filed seeking the return of $5 million in tithing he donated to The Church of Jesus Christ of Latter-day Saints.

Faith organizations, including specific religious groups, colleges and universities, as well as charities, didn’t just await a verdict, they had filed their opinions and arguments with the judges who would decide the case in half a dozen friend-of-the-court briefs supporting the positions of the Latter-day Saints.

As it happened, the 9th Circuit did not technically render this decision based on "religious liberty" grounds (though I think the concurring opinions will likely have some play in future litigation), but rather on the grounds that the Church was accurate and honest in its statements about City Creek.  I'll still count this as a decisive win for the Church.

Quote

The faith-based groups, representing tens of millions of religious Americans from Baptists to Methodists and Lutherans and Jewish coalitions, were grateful that the judges closed the door on the idea that donors could claw back donations.

They also were grateful that many of the judges supported the church autonomy doctrine, a long-standing legal precedent that says governments and courts should steer clear of wading into church affairs such as how leaders choose to use donations.

Here’s what they said the ruling means for their faiths and organizations, followed by an explanation of the church autonomy doctrine.

11 major religions

Gene Schaerr represented a group of 11 major religious denominations, from Jewish groups to Protestants and Scientologists.

“We are delighted both at the outcome and also delighted at the concurring opinion written by Judge (Daniel) Bress that we think did a wonderful job of laying out the constitutional church autonomy doctrine and how it applies to this kind of factual situation, and we view it as a complete victory for the church and for religious liberty generally,” he said.

Schaerr said the ruling by the 9th Circuit, which covers the westernmost nine states from Arizona to Hawaii and Montana to Alaska, could help settle two other lawsuits against the Church of Jesus Christ related to tithing. Those cases are pending in courts in the 10th Circuit, which includes Utah.

See below for more on the church autonomy doctrine and a full list of the faiths represented by Schaerr.

Faith-based colleges and universities

BYU attorneys co-authored a brief representing more than 350 Catholic, evangelical and Latter-day Saint schools. The group included the Association of Catholic Colleges and Universities, the Council of Christian Colleges and Universities, and BYU, BYU-Hawaii and BYU-Idaho.

The CCCU won another case in the 9th Circuit in August. That victory in what was called the Hunter case ended a lawsuit that sought to gut the religious exemption Congress included in Title IX.

“I am so pleased to see the 9th Circuit ruling the way they did on this and as they did on the Hunter case. It signals the continued protection of our religious liberty and it’s so important to see that work. To see that happening in the 9th Circuit is just incredible,” said David Hoag, the new president of the Council of Christian Colleges and Universities.

Faith-based charities

The lawyer representing four nonprofit organizations said Friday’s ruling was important for charities.

“It is standard nonprofit practice to set aside reserves from donated funds, and to invest those reserves to fund future charitable purposes or as a hedge against hard economic times,” John A. Taylor said. “The 9th Circuit’s en banc decision confirms that when charities describe their finances using standard nonprofit industry terms such as ‘reserves’ and ‘earnings of reserve funds’ — as the church did here — they should not have to speak with the precision of a Big 4 auditing firm or face potential fraud liability.”

Taylor also said the ruling is noteworthy “because every nonprofit that makes fundraising promises could be accused of using terms that are imprecise or insufficiently defined, as Mr. Huntsman alleged here.”

“By affirming the dismissal of Mr. Huntsman’s claims, the 9th Circuit has furthered the important humanitarian work of nonprofit organizations like my clients by not endorsing novel fraud theories that would inhibit their future fundraising efforts,” he said.

The Becket Fund for Religious Liberty

The Becket Fund, one of nation’s most influential religious liberty organizations, also filed what is known as an amicus brief in the case. The brief focused on the church autonomy doctrine and the right of churches to govern their internal affairs without government intrusion.

The brief argued that determining how tithing is used is an inherently religious question and that the courts can’t be in the business of second-guessing how churches make those decisions.

“First, I would just say it was a pretty remarkable ruling to have 11 judges rule for the church, and hold that President (Gordon B.)Hinckley, when he told members how tithing would be used, he absolutely spoke the truth,” said Eric Baxter, who co-authored Becket’s brief. “With all the noise that’s been made about this case, it’s pretty remarkable to have 11 judges confirm the truth of the church’s statements.”

Baxter noted that six of the 11 judges chose to rule for the church without using the church autonomy doctrine.

“But having five judges note that would have been another way for the church to win, I think is significant,” Baxter said, “and sends a message that other courts should be paying attention to.”

What is the church autonomy doctrine?

The attorney who represented the church during the hearing of the en banc panel of 9th Circuit Court judges, Paul Clement, told the judges they could reject Huntsman’s claims on either the merits of his arguments or because of the church autonomy doctrine.

The judges split the baby, six signing on to an opinion based on the merits and five signing opinions based on the doctrine that courts should not interfere in church affairs.

“Although plaintiff’s claims can be rejected even as he styles them, which is the approach the majority takes, we should not indulge in the illusion that this is merely a secular lawsuit about civil fraud,” four judges wrote in a concurring opinion. “Under the First Amendment, the plaintiff’s challenge to the church’s understanding of tithing is not susceptible to resolution in a court of law, lest the judiciary wrest control from religious authorities over matters of theological concern.”

A fifth judge wrote a solo opinion that rejected the either/or idea. Judge Patrick Bumatay took 30 of the 63 pages of opinions issued Friday to say the case should have been dismissed solely because the court didn’t belong in the church’s affairs at all.

“Our authority is limited. Temporal. With no say over what is eternal,” he wrote. “Given that the Constitution demands that we not enter the sphere of religious faith, the majority vastly oversteps our authority by reaching the merits.”

Schaerr said the Friday’s ruling could have an impact on two other tithing cases, one pending at the 10th Circuit Court of Appeals and the other in U.S. District Court in Utah, which is part of the 10th Circuit.

“All three of these cases are essentially challenges to the church’s ability to determine for itself how it uses its its own resources,” Schaerr said, “and there’s probably no more important issue of church government than how a religious body chooses to use its own resources. I think these five judges are absolutely right that it’s just not possible, consistent with the First Amendment, for these kinds of claims to be litigated in court at all.”

The full list of faiths that joined one friend-of-the-court brief supporting the Latter-day Saints

• Agudath Israel of America (“Agudath Israel”), a 100-year-old nonprofit Orthodox Jewish umbrella organization
• The Christian and Missionary Alliance, a U.S. evangelical Christian denomination
• The Ethics and Religious Liberty Commission, the moral concerns and public policy entity of the Southern Baptist Convention, the nation’s largest Protestant denomination
• The California Southern Baptist Convention
• The General Conference of Seventh-day Adventists, the national administrative body for the Seventh-day Adventist Church
• The General Council on Finance and Administration of The United Methodist Church, the administrative arm of The United Methodist Church
• The International Church of the Foursquare Gospel, with congregations in nearly 150 countries
• The Jewish Coalition for Religious Liberty, an incorporated group of rabbis, lawyers and professionals who practice Judaism and are committed to defending religious liberty
• The Lutheran Church—Missouri Synod, a national Lutheran denomination headquartered in St. Louis, Missouri
• The Church of Scientology International
• The Union of Orthodox Jewish Congregations of America

Good stuff, this.

Thanks,

-Smac

[Danzo]

5 hours ago, Analytics said:

Last week, I found myself the center of attention in a zoom call that lasted over 8 hours. On the call were four attorneys representing a large insurance company, four formidable attorneys from the plaintiffs' bar, a videographer, a court reporter, and me. I was being deposed as an expert witness in a billion-dollar class action lawsuit. 

One of the questions I was asked was, “What is a loss ratio?"

I don’t have the transcript back yet, but I remember the basics of my answer. I said something to the effect of:

“A loss ratio is a profitability metric used by insurance companies. It represents the present value of claims divided by the present value of premiums. The premiums and claims can be actuarial estimates for a policy or block of policies at the time of issue, or actual premiums and claims after a block of policies have run out, or an intermediate value that combines past actual values with updated forecasts. For example, if a company says the loss ratio is 70% for a particular block, it means that 70% of premiums are used to fund claims, with the remaining 30% of premiums being used for commissions, administrative expenses, risk margin, and profit. Of course when we say 70% of premiums are used to fund claims we mean 70% of premiums, accumulated with interest, are used to fund claims. In actuarial mathematics, we always apply accumulation or discount functions to cash flows such as premiums and claims, and never do so in a way that distinguishes between principal and interest; if somebody says 70% of premiums were used to fund claims, everyone would assume that meant 70% of premiums, accumulated with interest, were used to fund claims."

I got the distinct sense that the attorney who was deposing me was irritated by the way I over-emphasized that in these calculations, principal and interest are intermingled. In my world the point is obvious.

I suspect much of the confusion involves using different accounting systems. 

In funds based accounting (Used by governments and non profits), Interest is separate from principle. 

This is important in determining weather the money is restricted.

I serve on a local city council.  In our budget. investment earnings (interest, dividends, ect)  is unrestricted and goes into the general fund, even when the earnings come from a restricted fund.  (road tax money can only be used for roads, by law, but the interest from road tax money invested goes to the general fund and can be used without restriction). 

[Analytics]

On 2/3/2025 at 2:26 PM, Danzo said:

I suspect much of the confusion involves using different accounting systems. 

In funds based accounting (Used by governments and non profits), Interest is separate from principle. 

This is important in determining weather the money is restricted.

I serve on a local city council.  In our budget. investment earnings (interest, dividends, ect)  is unrestricted and goes into the general fund, even when the earnings come from a restricted fund.  (road tax money can only be used for roads, by law, but the interest from road tax money invested goes to the general fund and can be used without restriction). 

The Church could use a fund-based accounting system where tithing dollars remain untouched in one fund while investment earnings are spent from another. But I’m confident it doesn’t operate that way.

Hinckley’s statement was not a rigorous accounting claim but an informal heuristic: since spending was only a fraction of one year’s investment income, he assumed it came from investment earnings rather than the original tithing principal.

From my perspective, this reasoning is vague and ultimately irrelevant. But for whatever reason, it resonated with Hinckley and satisfied the judges.

Had I been on the panel, I would have joined the unanimous majority but written separately. My concurrence would emphasize that Hinckley’s assurances were too imprecise to be meaningfully true or false—meaning no fraud was committed.

[Stormin' Mormon]

45 minutes ago, Analytics said:

The Church could use a fund-based accounting system where tithing dollars remain untouched in one fund while investment earnings are spent from another. But I’m confident it doesn’t operate that way.

 

I may have asked this before, but why are you so confident that the Church doesn't use fund based accounting?  I mean, just about every single church in America uses it, so why would the LDS church be different?  

[Anonymous Mormon]

On 2/5/2025 at 7:27 AM, Stormin' Mormon said:

I may have asked this before, but why are you so confident that the Church doesn't use fund based accounting?  I mean, just about every single church in America uses it, so why would the LDS church be different?  

@Analytics - I have been waiting to see your answer to StorminMormon's question. Why are you confident the church doesn't use fund base accounting?

 

On 2/5/2025 at 6:40 AM, Analytics said:

Had I been on the panel, I would have joined the unanimous majority but written separately. My concurrence would emphasize that Hinckley’s assurances were too imprecise to be meaningfully true or false—meaning no fraud was committed.

If the church does use fund based accounting, would it change your view of President Hinckley's statement? 

[Analytics]

On 2/5/2025 at 8:27 AM, Stormin' Mormon said:

I may have asked this before, but why are you so confident that the Church doesn't use fund based accounting?  I mean, just about every single church in America uses it, so why would the LDS church be different?  

3 hours ago, Anonymous Mormon said:

@Analytics - I have been waiting to see your answer to StorminMormon's question. Why are you confident the church doesn't use fund base accounting?

 

If the church does use fund based accounting, would it change your view of President Hinckley's statement? 

According to a footnote on page 8 of the IRS whistleblower report: "COP promulgates the belief among its members and apologists that the church keeps its “sacred tithing funds” and investments in separate places. No semblance of this belief is true. EPA receives tithing surplus regularly (even weekly); the next activity is always to integrate that surplus into the entire investment portfolio, or the “EPA Universe.”

Of course if Nielsen was wrong and there were an explicit “tithing fund” and an explicit “earnings of invested reserve fund” and what Hinckley said was precisely true in an accounting sense, then this would have been incontestable proof that the Church would have used in the Huntsman lawsuit (e.g. "we submit as Exhibit 1 this image of of the Church’s General Ledger where it indicates that for transaction #1343143 there was a debit of $1.2B to account “7720 (Mall Fund)” and an offsetting credit of $1.2B to account ”5001 (Earnings of Invested Reserves Fund).” This is conclusive, irrefutable proof that what Hinckley said was precisely correct--the money came from the “Earnings of Invested Reserves Fund”, exactly as Hinckley stated.”)

But rather than arguing anything like that, the Church’s attorneys argued that the Church had several billion dollars of investment earnings that year and that the expenses for the mall were a fraction of that, ergo the investment earnings covered the mall expenses, ergo it must have been funded by interest rather than principal.

Edited February 7, 2025 by Analytics

[Anonymous Mormon]

1 hour ago, Analytics said:

According to a footnote on page 8 of the IRS whistleblower report: "COP promulgates the belief among its members and apologists that the church keeps its “sacred tithing funds” and investments in separate places. No semblance of this belief is true. EPA receives tithing surplus regularly (even weekly); the next activity is always to integrate that surplus into the entire investment portfolio, or the “EPA Universe.”

Of course if Nielsen was wrong and there were an explicit “tithing fund” and an explicit “earnings of invested reserve fund” and what Hinckley said was precisely true in an accounting sense, then this would have been incontestable proof that the Church would have used in the Huntsman lawsuit (e.g. "we submit as Exhibit 1 this image of of the Church’s General Ledger where it indicates that for transaction #1343143 there was a debit of $1.2B to account “7720 (Mall Fund)” and an offsetting credit of $1.2B to account ”5001 (Earnings of Invested Reserves Fund).” This is conclusive, irrefutable proof that what Hinckley said was precisely correct--the money came from the “Earnings of Invested Reserves Fund”, exactly as Hinckley stated.”)

But rather than arguing anything like that, the Church’s attorneys argued that the Church had several billion dollars of investment earnings that year and that the expenses for the mall were a fraction of that, ergo the investment earnings covered the mall expenses, ergo it must have been funded by interest rather than principal.

Thanks for walking me through your logic on this. What you said makes sense (and I don't have enough grasp of tax law to know if was wrong)

[Danzo]

22 hours ago, Analytics said:

According to a footnote on page 8 of the IRS whistleblower report: "COP promulgates the belief among its members and apologists that the church keeps its “sacred tithing funds” and investments in separate places. No semblance of this belief is true. EPA receives tithing surplus regularly (even weekly); the next activity is always to integrate that surplus into the entire investment portfolio, or the “EPA Universe.”

Of course if Nielsen was wrong and there were an explicit “tithing fund” and an explicit “earnings of invested reserve fund” and what Hinckley said was precisely true in an accounting sense, then this would have been incontestable proof that the Church would have used in the Huntsman lawsuit (e.g. "we submit as Exhibit 1 this image of of the Church’s General Ledger where it indicates that for transaction #1343143 there was a debit of $1.2B to account “7720 (Mall Fund)” and an offsetting credit of $1.2B to account ”5001 (Earnings of Invested Reserves Fund).” This is conclusive, irrefutable proof that what Hinckley said was precisely correct--the money came from the “Earnings of Invested Reserves Fund”, exactly as Hinckley stated.”)

But rather than arguing anything like that, the Church’s attorneys argued that the Church had several billion dollars of investment earnings that year and that the expenses for the mall were a fraction of that, ergo the investment earnings covered the mall expenses, ergo it must have been funded by interest rather than principal.

In a funds based accounting system, you don't keep the various funds separated in different checking or investment accounts accounts, the funds segregation is done using the accounting system to keep track of the funds balances.

For example, our city has probably a couple of dozen different funds, but there are only two accounts, a checking account and an investment account that actually hold the money.  

It would be really strange if the church (or any large non profit) actually kept its separate funds in separate bank accounts.  Occasionally I will see a smaller non profit use different bank accounts to segregate their funds, but this usually means that they don't have a good accounting system and are using the separate bank accounts as a substitute. This just makes reconciling the accounts more difficult.  Once I get them on a better accounting system, they give up on the multiple bank account method. 

 

[Analytics]

1 hour ago, Danzo said:

In a funds based accounting system, you don't keep the various funds separated in different checking or investment accounts accounts, the funds segregation is done using the accounting system to keep track of the funds balances.

For example, our city has probably a couple of dozen different funds, but there are only two accounts, a checking account and an investment account that actually hold the money.  

It would be really strange if the church (or any large non profit) actually kept its separate funds in separate bank accounts.  Occasionally I will see a smaller non profit use different bank accounts to segregate their funds, but this usually means that they don't have a good accounting system and are using the separate bank accounts as a substitute. This just makes reconciling the accounts more difficult.  Once I get them on a better accounting system, they give up on the multiple bank account method. 

 

I'm not following you. When I talked about “accounts” in the Church’s general ledger, I was talking about bookkeeping accounts, not bank accounts. How familiar are you with double-entry bookkeeping? 

[Danzo]

The quote does not indicate at all that the church doesn't use a funds based accounting system.

 

On 2/7/2025 at 1:25 PM, Analytics said:

"COP promulgates the belief among its members and apologists that the church keeps its “sacred tithing funds” and investments in separate places. No semblance of this belief is true. EPA receives tithing surplus regularly (even weekly); the next activity is always to integrate that surplus into the entire investment portfolio, or the “EPA Universe.”

 

The accusation seems to be that people in the church think "that the church keeps its “sacred tithing funds” and investments in separate places."   There is no reason not to think that sacred tithing funds would not be in an investment account (or accounts). To not do that would be foolish and not a very good use of the money.

I am not sure why people (who understand accounting) would think that the investments and and tithing would be in separate places, as this is never the practice in any large organization.  There is no reason to physically separate the money and keep one fund in one account and the other fund in another account.   

Best practices is to put money in a highly liquid account (checking, or savings account) based on proximate need.  The money that is expected to be spent soon is put in a checking account.  the money that is not expected to be spent soon should be invested. That way you don't lose the value of the money to inflation and you get a return on the investment. 

To "integrate that surplus into the entire investment portfolio, or the “EPA Universe." would be  exactly what would be expected in an organization that uses a funds based accounting system.  IE money that is not expected to be used soon, is invested, regardless of which fund it belongs to.  Pooling the money from various funds gives more money to invest and opens up investment opportunities that might not be there if the funds were each kept in separate individual accounts. 

That is exactly how it works in the city I live in. That is exactly how it works in most of the non profit organizations that I work with.

Why would anyone expect the church to do differently?  This practice is not evidence that the church doesn't used a funds based accounting system.  This is what would be expected. 

 

Edited February 9, 2025 by Danzo

[Analytics]

2 hours ago, Danzo said:

The quote does not indicate at all that the church doesn't use a funds based accounting system.

The accusation seems to be that people in the church think "that the church keeps its “sacred tithing funds” and investments in separate places."   There is no reason not to think that sacred tithing funds would not be in an investment account (or accounts). To not do that would be foolish and not a very good use of the money.

I am not sure why people (who understand accounting) would think that the investments and and tithing would be in separate places, as this is never the practice in any large organization.  There is no reason to physically separate the money and keep one fund in one account and the other fund in another account.   

The confusion is driven by a couple of things. First, by the Church’s extreme lack of transparency. Second, by the confusing assurances that drove the lawsuit in the first place. The comment, “I want to assure you that ‘tithing’ money won’t be used for the mall project” implies that somehow tithing is too sacred to be used for building malls and should only be deployed to more important things like buying stock in Nvidia and Apple. If that were somehow true, then EPA should know which dollars are tithing and which are investment earnings so that the two categories of money can be invested properly.

Of course I agree with you that there is no reason to physically separate tithing dollars from non-tithing dollars. A dollar is a dollar and one would think they are fungible and all equally sacred. But Hinckley’s assurances indicate that the Church doesn’t take this common sense approach.

2 hours ago, Danzo said:

To "integrate that surplus into the entire investment portfolio, or the “EPA Universe." would be  exactly what would be expected in an organization that uses a funds based accounting system.  IE money that is not expected to be used soon, is invested, regardless of which fund it belongs to.  Pooling the money from various funds gives more money to invest and opens up investment opportunities that might not be there if the funds were each kept in separate individual accounts. 

That is exactly how it works in the city I live in. That is exactly how it works in most of the non profit organizations that I work with.

Why would anyone expect the church to do differently?  This practice is not evidence that the church doesn't used a funds based accounting system.  This is what would be expected.

You may very well be right that the church proper uses a fund based accounting system. But as I already said, if there were an explicit “tithing fund” and an explicit “earnings of invested reserve fund” and what Hinckley said was precisely true in an accounting sense, then this would have been incontestable proof that the Church would have used in the Huntsman lawsuit (e.g. "we submit as Exhibit 1 this image of of the Church’s General Ledger where it indicates that for transaction #1343143 there was a debit of $1.2B to account “7720 (Mall Fund)” and an offsetting credit of $1.2B to account ”5001 (Earnings of Invested Reserves Fund).” This is conclusive, irrefutable proof that what Hinckley said was precisely correct--the money came from the “Earnings of Invested Reserves Fund”, exactly as Hinckley stated.”)

But rather than arguing anything like that, the Church’s attorneys argued that the Church had several billion dollars of investment earnings that year and that the expenses for the mall were a fraction of that, ergo the investment earnings covered the mall expenses, ergo it must have been funded by interest rather than principal.

[Anonymous Mormon]

@Analytics

I think your logic is not accurate in deducing that IF the church had used a fund accounting system THEN they would have submitted an exhibit with specific amounts in the funds to show that it wasn't fraud. And I think your very first statement in your last post says why:

1 hour ago, Analytics said:

The confusion is driven by a couple of things. First, by the Church’s extreme lack of transparency.

The church works very hard to not be scrutinized. They have submitted as little evidence as possible that would give those opposed to the church details of church finance that could be used as ammo for future lawsuits and lawfare to take away their tax exempt status. They are intentionally NOT transparent.

I think that they felt like their case was strong WITHOUT submitting specific numbers. This bore out by the fact that all 9 judges agreed with them, without them submitting numbers. So if they could get this ruling without being specific and submitting an exhibit, then I think they would do so, because any information they gave would be used against them (and there is a high probability that was Huntsman and his backer's secondary goal - to require the church to disclose financial information through deposition and other means that would give them ammo to attack the church financially).

Do you see anything in the history of the church's transparency that makes you feel otherwise, that they are anything other than as opaque as possible? Have they ever submitted any detailed accounting information as an exhibit that wasn't 100% required?

And if they would avoid submitting this kind of evidentiary record, then we cannot use your logic to deduce that the reason they didn't is because they don't use a fund accounting system.

 

1 hour ago, Analytics said:

Of course I agree with you that there is no reason to physically separate tithing dollars from non-tithing dollars. A dollar is a dollar and one would think they are fungible and all equally sacred. But Hinckley’s assurances indicate that the Church doesn’t take this common sense approach.

You may very well be right that the church proper uses a fund based accounting system. But as I already said, if there were an explicit “tithing fund” and an explicit “earnings of invested reserve fund” and what Hinckley said was precisely true in an accounting sense, then this would have been incontestable proof that the Church would have used in the Huntsman lawsuit...

 

So IF the church uses a fund based accounting system (which Danzo is saying is THE most common for a non-profit of their type and we have no evidence to assume they don't), then would you agree that what President Hinckley said was 100% true and accurate?

Would it change your feelings towards the church in terms of the merits of this lawsuit (not in terms of the church's financial practice of saving & investing money, which I am sure doesn't change based upon what accounting system they used), compared to what you expressed previously?

 

[Analytics]

16 hours ago, Anonymous Mormon said:

@Analytics

I think your logic is not accurate in deducing that IF the church had used a fund accounting system THEN they would have submitted an exhibit with specific amounts in the funds to show that it wasn't fraud. And I think your very first statement in your last post says why:

The church works very hard to not be scrutinized. They have submitted as little evidence as possible that would give those opposed to the church details of church finance that could be used as ammo for future lawsuits and lawfare to take away their tax exempt status.

By showing literally one page of their general ledger, they could have confirmed that what Hinckley already disclosed was true, and this could have been done without disclosing anything else about their finances.

The idea that what Hinckley said was precisely true but they didn’t want to show the court the conclusive proof that it was true because of privacy doesn’t ring true.

[Analytics]

16 hours ago, Anonymous Mormon said:

@Analytics

IF the church uses a fund based accounting system (which Danzo is saying is THE most common for a non-profit of their type and we have no evidence to assume they don't), then would you agree that what President Hinckley said was 100% true and accurate?

The issue isn’t whether or not the Church uses fund based accounting. The issue is whether there is an account/fund called “interest on reserves” that is separate from the account/fund ”unspent tithing,” and that the mall funding came from one and not the other. 

I believe the financing happened the way they described in court and not the way Danzo said they could have.

[ZealouslyStriving]

https://www.thechurchnews.com/leaders/2025/02/27/church-statement-use-of-tithes-funds-lawsuit-dismissed/?utm_campaign=churchnews-en&utm_content=entry&utm_medium=social_share

 

[Calm]

1 minute ago, ZealouslyStriving said:

https://www.thechurchnews.com/leaders/2025/02/27/church-statement-use-of-tithes-funds-lawsuit-dismissed/?utm_campaign=churchnews-en&utm_content=entry&utm_medium=social_share

 

Quote

The statement acknowledged the rarity of unanimous decisions in such cases and that the judges sent “a clear message.” It also quoted the ruling — “No reasonable juror could conclude that the Church misrepresented the source of funds for the City Creek project.”

 

Anyone know the percentage of unanimous decisions (I am wondering how they are defining “such cases” which will make a difference)?

[ZealouslyStriving]

1 hour ago, Calm said:

Anyone know the percentage of unanimous decisions (I am wondering how they are defining “such cases” which will make a difference)?

According to available data, the percentage of unanimous decisions on the Ninth Circuit Court of Appeals is generally considered to be around 20-25%; however, this figure can fluctuate depending on the specific time period and case types being analyzed. [1, 2, 3]  

Key points to remember: [1, 4, 5]  

 

• Variability: The exact percentage of unanimous decisions can vary depending on the study and methodology used to calculate it. [1, 4, 5]  

• Large Caseload: Due to its large jurisdiction, the Ninth Circuit often handles a high volume of cases, which can influence the percentage of unanimous rulings. [2, 3, 5]  

• Ideological Differences: Like other federal courts, the Ninth Circuit may see a wider range of ideological viewpoints among its judges, potentially leading to more dissenting opinions in certain cases. [1, 2, 5]  

 

 

Generative AI is experimental.

 

[1] https://scholarlycommons.law.northwestern.edu/cgi/viewcontent.cgi?article=1121&context=nulr[2] https://en.wikipedia.org/wiki/United_States_Court_of_Appeals_for_the_Ninth_Circuit[3] https://www.ca9.uscourts.gov/information/ninth-circuit-history/[4] https://chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=2553&context=journal_articles[5] https://www.ca9.uscourts.gov/district/vacancies/judicial-vacancies-and-nominations/

 

[Calm]

Thank you.  If accurate, it would seem the “such cases” the statement is referring to is more specific than all their cases.

Perhaps it’s freedom of religion cases? (AI just listed 3 unanimous cases but I can’t get a percentage or number of total freedom of religion cases)

Edited February 28, 2025 by Calm

[webbles]

The number of en banc cases in the 9th circuit isn't very high.  On page 61 of the 2023 Annual Report (which is the latest report) from the 9th Circuit (https://cdn.ca9.uscourts.gov/datastore/judicial-council/publications/AnnualReport2023.pdf), it shows how many cases petitioned en banc and how many were granted.  In 2023, 650 cases petitioned and only 14 were granted.

I went through all of the en banc cases listed at https://www.ca9.uscourts.gov/en-banc/ that had a decision.  I found 13.  Of those 13, 4 was unanimous.  This doesn't include the Huntsman lawsuit as the page is apparently out of date.

 

 

 

[cujo22]

Says the decision was unanimous but doesn’t that include two judges that already voted the other way in the three-judge decision? Does that mean those two judges changed their minds during the full-panel review?

[webbles]

1 minute ago, cujo22 said:

Says the decision was unanimous but doesn’t that include two judges that already voted the other way in the three-judge decision? Does that mean those two judges changed their minds during the full-panel review?

The three judges in the three-judge decision weren't on the en banc panel.  It was 11 other judges.