A former member of the Church of Jesus Christ of Latter-day Saints has filed a federal lawsuit alleging the church misled its members about the management of a massive investment fund, potentially violating U.S. securities laws. The suit, filed in U.S. District Court in Utah, claims the church failed to disclose the existence of a $100 billion portfolio managed by its investment arm, Ensign Peak Advisors, while soliciting tithes and offerings from members.
Allegations of Deception
The plaintiff, who left the church in 2020, asserts that church leaders made false statements by omission, failing to inform members that their donations were being stockpiled in a for-profit investment fund rather than used for charitable or religious purposes. The lawsuit argues that this constitutes securities fraud under the Securities Exchange Act of 1934, as the church effectively sold members a financial interest in its operations without proper disclosure.
According to the complaint, the LDS Church accumulated the fund over decades, with contributions from millions of members who were told their tithes supported the church's religious and charitable missions. The suit claims that the church's silence about the fund's existence and size misled members into believing their donations were needed for current operations, not long-term investing.
Church's Response
The LDS Church has not yet filed a formal response, but in previous statements regarding the fund, church officials have defended the investment strategy as prudent stewardship. A church spokesperson previously stated that the fund is intended to ensure financial stability and support the church's mission during economic downturns. The church has also noted that it complies with all applicable laws and regulations.
However, the lawsuit contends that the church's failure to disclose the fund's existence violated both federal securities laws and the church's own fiduciary duties to its members. It seeks class-action status and unspecified damages, including restitution of tithing contributions made by members.
Impact and Implications
If successful, the lawsuit could force the LDS Church to reveal more details about its financial holdings and practices. It also raises broader questions about the legal obligations of religious organizations to disclose financial information to donors. Legal experts suggest that the case could set a precedent for how religious nonprofits are treated under securities laws.
The lawsuit is the latest in a series of challenges to the LDS Church's financial practices. In 2019, a whistleblower complaint filed with the IRS alleged that the church's investment fund violated tax-exempt rules. The IRS investigation is ongoing.
