The LDS Church Corporation is currently involved in many many lawsuits. One such is a RICO case, where the church is being accused of behavior more similar to an organized crime network, like the mafia, than a religious institution.
What is RICO?
A RICO case refers to charges brought under the Racketeer Influenced and Corrupt Organizations Act (RICO), a federal law created to combat organized crime. Under RICO, groups can be prosecuted if they participate in a pattern of racketeering activity connected to an enterprise. Racketeering activities are broadly defined and can include crimes like bribery, fraud, money laundering, embezzlement, and even certain violent crimes.
To establish a RICO case, prosecutors must show 1) An enterprise exists, which could be any group acting together for a common purpose. 2) A pattern of racketeering activity involving at least two related criminal acts within a 10-year period. 3) Connection between the illegal acts and the enterprise. RICO cases can be powerful because they allow for severe penalties, such as asset forfeiture, treble damages (triple the actual damages in civil cases), and long prison sentences, making it a key tool for dismantling criminal networks or corrupt organizations.
Gaddy vs LDS Corp
The Gaddy v. LDS Corporation case is a class action lawsuit filed by Laura Gaddy in 2019 against the Church of Jesus Christ of Latter-day Saints, which alleges that the church knowingly misled its members. Gaddy claims that the church presented foundational religious teachings as historical facts despite allegedly knowing they were false. The core arguments in the suit include that the church concealed or distorted historical records related to Joseph Smith, the Book of Abraham, and the First Vision. The suit seeks damages for financial contributions made by members, claiming these were induced by misleading information.
The church and its lawyers have countered by asserting its own First Amendment rights to free religious expression, arguing that courts should not interfere in matters of religious belief. While religious institutions are protected from legal challenges based on their doctrines (due to freedom of religion), fraud claims can sometimes proceed if plaintiffs can show the institution did not sincerely believe its own teachings or knowingly misled members for financial gain. This touches on a crucial point in U.S. law, and the case’s future depends largely on whether the courts will allow it to proceed in light of these legal principles.
We’ll start with 23-4110 Gaddy versus Corporation of the president of the Church of Jesus Christ.
Kay Burningham, Representation of Gaddy: May it please the court, my name is Kay Burningham, and I represent the appellants who are plaintiffs in the underlying action Laura Gaddy, Lyle Small, and Leanne Harris. The case is a putative class action case we have not yet moved for certification because we wanted to get the constitutional issues well defined first and it’s against a corporation. We have appealed the dismissal of the RICO claim that has been alleged in two separate types of areas: number one is a misrepresentation of facts concerning LDS history. I don’t have the time and I will talk about the “brown stone in the hat” issue for purposes of today’s oral argument because there are too many to to reference. The second one is with regard to misrepresentations on how tithing was used once tithing was collected.
I noticed on the exterior of the courthouse there’s a Latin phrase and I won’t attempt to pronounce that in Latin, but it it states in English that “to no one shall we deny justice nor shall we discriminate in the application thereof,” and I would just ask the court if they could keep that in mind. Because we are just a group of individuals and we are former members of the LDS church who are suing the church. Not all of all the members of the church, and that’s a much smaller group that was incorrectly stated, I believe, in the appellee’s briefs. But it’s just the former members, we realize that there may be many members who don’t think that the issues we’ve addressed are significant, but to the ones that we are representing, those were very key issues. Our argument is, number one, that the church autonomy doctrine does not apply, because if you go back and read the Watson case that was the origin of Church autonomy or ecclesiastical difference, two things had to be shown before the threshold of application of church autonomy was met: number one, that the church and its members can believe anything they want and they can practice any kind of religion or preach or do any act that they like as long as it wasn’t against public morals, number two, is that the reason for that is that there’s an assumption that people who join a church do so with their implied consent and they know what they’re doing.
Judge: Why does it matter whether the church leadership believes the church doctrine?
Burningham: Because the Brethren have said many many times in general conference, which is twice-yearly attended by the plaintiffs in this case, every year, twice a year, that we will not lead you astray. Their doctrine is correlated and only certain things are taught at the local level or at the high level. They have admonished the members not to read the internet, not to check outside sources. In 2010, a Deseret News article came out and it said don’t you use proper sources.
Judge: Well, let me ask it a different way then, because we’re not really getting what I’m asking, okay? If the church leaders do believe it, do you lose your lawsuit? Do you lose your lawsuit?
Burningham: Yes.
Judge: I would have thought that even if the lead leaders of the church believed it, there could still be a possibility for fraud from omissions which is to say, even if the church is true, there’s still room for a civil RICO, but your first answer says no.
Burningham: Let me qualify that your honor, if I may. There was a circular argument that the church leaders are not sincere therefore what they taught, they don’t believe, and therefore the case is worth nothing. But because the church leaders have concealed all these artifacts, stones, documents, primary sources, for over a hundred years that argument doesn’t fly. So the church, even though certain people don’t believe it, they’re charged with knowing about the contents of their archives. Just as President Nelson a couple of years ago revealed in the reenactment of the video, this is how Joseph Smith dictated the Book of Mormon as he placed a brownstone or a stone in a hat put his head in the Hat and the gold plates were covered usually. That’s an admission as far as we believe, that what they taught for decades was not true and that they didn’t believe it because they had the stone in their vault since 1907.
Judge: When you say not true then we are heading into deep religious waters there.
Burningham: But their state of mind was not true. They did not believe what they represented.
Judge: Why does it matter if they believe it? In other words, here’s my point, even if everything about the church is true, the plaintiffs still may not have joined the church, may not have contributed their time and money. If they would have known about the seer stone, or if they would have known about the translation of the book of Abraham, or other items, even if it’s true, but you’re kind of fighting me on that.
Burningham: I guess I don’t understand your question.
Judge: Okay, well, I’ll let you continue.
Burningham: I’m just saying that misrepresenting one’s state of mind is a misrepresentation of fact. If we say that these are the correlated true facts about the church and the history, and they’re not, that’s fraud.
Judge: Well, let me ask you from from the opposite side. I suspect that most religious leaders have doubts on occasion. So if that’s the case, then you can always avoid the religious doctrine or the legal doctrine involving religious matters by saying, ‘well, at this time that church leader didn’t actually believe it,’ right? Even though they may have overcome their disbelief for a variety of reasons. But does it mean that if religious leaders ever have doubts about their faith then the doctrine that protects them from court examination of doctrine is eviscerated?
Burningham: No, but I think facts are different than beliefs and I think certainly part of the faith process is deciding, ‘do I really believe that Jesus was resurrected or not?’ and you have to come to some sort of ‘maybe I do, maybe I don’t,’ ‘do I believe in God? I’m not sure, I’m an agnostic.’ But when we have facts, and we have evidence of a fact that happened, which is different than belief, which is empirically provable, my argument is that, and maybe I’m extending this a little bit, or the underlying implication in ballot, is that you need to sincerely believe those facts to take them out of the the fraud elements. Fraud is a misrepresentation of fact and that’s what we have here. All these artifacts, and the stone, let’s go with the stone, had been in the church’s possession for over a hundred years. So they they knew or were charged with the knowledge that the stone was there and yet they commission artists, the only artwork that they ever displayed was Joseph Smith translating from open gold plates, with no seer stone in sight, so this is the issue. There has to be, I would think, there has to be a line drawn between fact and belief.
Judge: Well nobody has repudiated the Golden Plates have they?
Burningham: Nobody knows what happened, no. This is not about the Golden Plates.
Judge: Well but you’re saying, I just want to make sure you’re not saying in fact was a seer stone and that gold plate stuff never happened and that’s not a religious-
Burningham: No we’re not saying that, we’re saying that exactly what the prophet admitted, and he said ‘we know’ not just ‘this is my opinion and my belief’ but in his reenactment it is, ‘we know that Joseph Smith put the stone in the hat and the plates were covered usually.’ That process is radically different when you join the church you’re taught that and when my clients joined the church were taught that there were these gold plates and they were inscribed by ancient Hebrew prophets to give wisdom to the latter days, and now with this different process that the president has admitted that really casts a lot of doubt. It’s an admission, and they’ve done that with other things, like the book of Abraham, and Joseph Smith having many, many wives as well. This is different than any church because: number one, there may be churches that negligently didn’t disclose things about their religion, or have different beliefs, that’s fine, we’re not saying that that RICO would cover that type of thing. But we believe and we’ve alleged that they intentionally made this correlation committee in order to conceal all this evidence against what really happened because the narrative…
Judge: I think we get your, read your briefs too. Let me ask you specifically about your claim regarding the use of tithing funds. I think you I think the complaint acknowledges that to belong to the church you had to tithe.
Burningham: To get the full benefits of the church. You could belong to the church, but you wouldn’t be able to, for instance, go into the temple and be married for time and eternity without swearing that you’re a full tithe payer. So to get the full benefit, you had to be a full-tithe payer.
Judge: My impression was that the plaintiffs who claimed they wouldn’t have tithed if they knew that the money for the real estate development was coming from the sources it was coming from, they would not have tithed, right? Would they have left the church?
Burningham: Yeah! Many, many would, many would.
Judge: There’s no allegation in the complaint-
Burningham: Well, I there’s an allegation that says they would not have tithed or they would have reduced the amount of tithing they paid and that the combination of both using tithing and this is principal because, as per David Nelson’s affidavit from 1997 they used about 1 to 2 billion dollars of a 6 to 8 billion dollar annual tithing income and just dumped it into EPA into Ensign Peak Advisors. So we have a few people who say, well, I don’t know if I really believe the core tenants of the church, then the tithing thing wouldn’t have bothered me so much, and we have other people and my plaintiffs are saying no both of these things really would be reason to pause. Especially if we knew about the tithing, we might have researched more and not trusted our leaders, gone beyond-
Judge: That’s not an injury. The injury you’re alleging is an economic injury.
Burningham: Yes, that’s right.
Judge: That you paid the tithing.
Burningham: That’s right. Just saying that we might have researched more and left the church altogether if we would have known that they weren’t straight with us about the tithing, and the tithing is mostly material omissions. I do believe that.
Judge: But the plantiffs say they would have taken the risk to their souls essentially by not tithing if they had been told.
Burningham: Yes. They would have. I can find that during appellee’s argument if you want me to, but they wouldn’t have joined the church or tithed if they knew what they know now, and what was revealed in 2019.
Judge: Judge Shelby ruled that the allegations on the tithing were not particular enough for rule nine and fraud and you contrast the allegations in this case with say, James Huntsman, who’s very precise on how much he paid for tithing, as well as relying on the five statements that are identified. Your plaintiffs are not as precise, is that right?
Burningham: I don’t think that’s true your honor, actually-
Judge: Do they say how much tithing-?
Burningham: No we don’t say that, because we don’t have to plead the amount of damages. Although I can tell you right now but but we have specifics starting in 1963, when the church begins fostering belief that tithing proceeds are separate from the money-making, or the profit-bearing subsidiaries of the church. We have 1997, when EPA was created. We have back in 2003, when the classic ‘no tithing was used for City Creek’ and that was not explained. Then that was repeated in Desert News and Ensign magazines and online, and Laura Gaddy, we have a specific allegation that her husband she had her friend say, ‘Oh, did you know they’re using tithing to build the mall?’ She had her husband look it up, and in these two publications it said, ‘no, no tithing was used in City Creek’ in 2003 and 2007. Also they didn’t they didn’t indicate that beneficial life was bailed out by the use of tithing.
Judge: Isn’t isn’t all the church’s money tithing?
Burningham: Yes and they admit as much. That it’s all one, they put it all in one big hedge fund to use-
Judge: Well then why are the plaintiffs surprised that the money came from tithing, if that’s the only source?
Burningham: Because that’s not the only source. The LDS church has many subsidiaries that are profit-making subsidiaries.
Judge: Investing tithing.
Burningham: Well, no. Deseret News from selling books Bonville international corporation from broadcasting, not just conferences, not just LDS things, but other companies and other things and they’ve always been told that these are profit-making subsidiaries. This is not the spiritual aspect or the tithing that’s being used. Then in 2018, there’s some graphics in the Ensign, just before they resigned that say this is what we used tithing for and nowhere does it disclose that we invest principal into commercial activities.
Judge: Your time has expired. Mr. Jordan?
David J. Jordan, representative of the Church: Good morning, your owners. May I please the court on David Jordan here on behalf of the Church of Jesus Christ of Latter day Saints. The appellants are asking this court to reverse and remand to the District Court for a jury trial on whether Joseph Smith, the church’s founding prophet, saw one member of the Godhead or two in a vision in 1820. And whether God inspired him to translate the Book of Mormon from plates engraved by ancient prophets using the stone known as the Urim and Thummim, or instead using an opaque seer stone.
Judge: Okay, let me let me have you pause there, because that’s what you that’s what I need help with. How does our case and the allegations in our case involve resolving internal church disputes, requiring adjudication of questions of religious doctrine? In other words, you say that plaintiffs are asking us to say which version of the vision is the true one. But in fact, what they’re saying is there were two versions. We don’t care which one is true. If we would have known that there were two, we would have headed for the exit. So I don’t see how we’re resolving any religious doctrine. We don’t care which one it is.
Jordan: It does involve the resolution of church doctrine because in effect what they’re asking for is a heresy trial. It’s a determination of what is the orthodox belief, as if there were some monolithic understanding of every detail of church history by every leader of the church or every church member from 1820 to today, and as the Court said in Watson v Jones, the law knows no orthodoxy.
Judge: Well, whichever is true, we’re not concerned about. The plaintiffs aren’t bringing that to us. But what they are bringing to us is that a seer stone was used, which, if that were disputed, I would understand. Okay, now we’re getting into religious waters, but it sounds as though the church agrees that a seer stone was used, and that was something that was not revealed for decades. And the plaintiffs say, ‘if only someone would have told us that it was a seer stone instead of gold plates, at least for some of it, we would have walked’. And I don’t know why the seer stone would have been concealed except for that. So that’s what I need help with.
Jordan: Isn’t that a bizarre thing to say? They say specifically, ‘we don’t dispute that the Book of Mormon is true. We don’t dispute that it was translated by the gift and power of God. We dispute whether it was translated using the Urim and Thummim, a clear stone or an opaque stone.’ That almost sounds silly. Churches have the right to define, develop, and evolve their own history. The inconsistency that she’s pointing out, I would like to make clear, alleged in the complaint, is the use of a seer stone versus a piece of art. A painting painted by some early member of the church depicting Joseph Smith sitting at a table looking at gold plates. Well, who’s to say he didn’t? Who knows what happened in 1820? Or whether he sat at a table and looked at gold plates. She’s asking the court to intrude on the miraculous, on matters of faith. Church history is full of references to the seer stone. The church history is full of references to the Urim and Thummim. It’s full of references to Joseph Smith studying the gold plates and how, 200 years later, we’re supposed to decide exactly by what process God-
Judge: Nobody’s asking that. That is not their argument, that they’re asking the court to say was it the seer stone or was it the gold plates, which clearly we can’t do. Their argument is: you all have your beliefs and keep them and we respect that, but don’t join us in without telling us key information, like there was a seer stone. I don’t think they’re here to prove the untruth or the truth of the LDS Church. They’re saying, ‘if we had only known these facts, which weren’t revealed, we wouldn’t have participated, and you all do as you please.
Jordan: Well, what I would say to that your honor is this. What they’re asking the court to prescribe is the manner in which the church teaches its doctrine, what things you should emphasize, what things you should, particularly point out to members of the church, or to prospective members of the church, when you’re teaching the gospel of Jesus Christ to them in the history of the church. To say, well, what you need to do as a church, what courts are telling you you must do as a church, is put particular emphasis on the method by which the Book of Mormon was translated and, any disputes about that or anything that hasn’t been given emphasis in the past. That is an intrusion on a deeply rooted religious matter.
Judge: Is there any limit to that principle? Which is to say, can a church conceal anything, even if it thinks, ‘wow, we’re going to lose half our membership on this, we better put it in a vault somewhere’ is there any limit on what a church can conceal and not be subject to civil RICO?
Jordan: I think there is no limit at all on what it church is required to teach or not teach, emphasize or not emphasize. I think that would be a deep intrusion into what you described as deep religious waters.
Judge: Let me switch to the other part of their claim. Do you agree that religious doctrine, that’s what I’ll call it, does not apply to their claim that the church misled them about how tithing funds would be used because they were told- Do you agree that they, that the plaintiffs, can bring a RICO claim based on misstatements regarding how tithing funds would be used? In particular, whether principal funds would go directly to the real estate development by the temple?
Jordan: I do I do not agree. First of all, I think Judge Shelby is right about his application of 9B to their RICO claims.
Judge: Well, let me ask you about that. He said the allegations of reliance were not, there’s nothing in 9B about reliance. 9B does not cover reliance. It says you have to state with particularity the circumstances constituting fraud or mistake right and the circumstance-
Jordan: Of course, reliance is an element of fraud-
Judge: No, it’s not. That not what 9b covers.
Jordan: All right.
Judge: You might have an argument under Iqbal Twobmly, but you don’t have an argument under 9b.
Jordan: All right. I certainly won’t dispute that with your honor, but let me go to the heart of your question. The statement that they reference is one made in a sermon by the then church Prophet Gordon B. Hinckley in 2003, in which he said that tithing funds would not be used for the development of City Creek, and then he said instead of tithing funds we will use revenues from commercial enterprises owned by the church and earnings on on invested reserve funds.
Judge: That’s not there. I think you have a pretty good argument with with respect to that statement, but they also reference other statements endorsed by the church and their publications, which said that principal was not used, etc, and in fact it was used. That’s their allegation.
Jordan: Well, No. In fact, they do not allege that principle was used and not earnings or interest, nor could they, that’s the dispute in the Huntsman matter. It boils down to this, it ultimately comes to a definition of tithing, which is also a deeply rooted religious matter. Let me explain it in this way, tithing as the church defines it, and the church has the right to define it, under the autonomy doctrine. Tithing means the donation, it’s the sacrificial free will offering of a member. It’s not earnings on bond coupons, it’s not stock dividends. Tithing is what you give. So when President Hinckley distinguishes between tithing and earnings on invested funds, he’s making a distinction, if you will, between principle and interest. They cannot allege, and they do not allege, unlike James Huntsman, that tithing in the sense of their donations, were used to build City Creek. I will point out-
Judge: Isn’t there an affidavit to the contrary in the record?
Jordan: No-
Judge: Explain why that affidavit doesn’t contradict what you’re saying.
Jordan: Okay, that’s an affidavit at page 106 of volume four of the record. What it says is that this man attended a meeting, he’s also a disaffected former member in which an executive of Ensign Peak, a funds management company employed by the church, said, ‘we think of everything as tithing’, we think of everything as the ‘widows mite.’ Well, that’s simply an expression of a view of an executive, not a church ecclesiastical leader, that everything whether it’s the original tithing donation, or whether it’s but earnings on it.
Judge: He goes further than that. He he alleges that the use of principle was hidden by having the money go to this other entity which then put it into the real estate development. But you don’t-
Jordan: I don’t see it that way at all.
Judge: No, it is. You may not see it that way, but couldn’t one draw a reasonable inference to that effect? You could dispute this at trial or maybe with further affidavits on summary judgment, but at this stage of the proceeding, hasn’t the complaint alleged enough with this attached affidavit to suggest there’s evidence that money from tithing was essentially, maybe through a couple channels, but was directly used for commercial development, and contrary to what church official church statements had said.
Jordan: I think that’s, I don’t think that’s consistent with the record. Tithing is the donation. Tithing is not earnings on the donation, that’s what President Hinckley said was used, and there is no allegation in this record there is no allegation in this second amended complaint about tithing itself having been used as opposed to earnings on tithing.
Judge: Well, I can look at it again. I thought that is alleged in that affidavit and I didn’t feel that your brief responded to that fully, so that’s why I wanted to pursue that here.
Jordan: What they try to do is what Mr Huntsman tries to do, and conflate the two, and say well it’s all tithing, but it’s not all tithing, as President Hinckley’s statement makes clear. I’m now intruding on Mr Sher’s time.
Judge: We’ll give him his three minutes.
Jordan: Any other questions for me, your honor?
Judge: Thank you, council.
Jordan: Thank you.
Gene Sherr: Good morning your honor, all three of your honors, I’m Gene Sherr (sp?) and I’m delighted to be here representing the National Association of Evangelicals which is the largest umbrella network of Evangelical churches in the United States, as well as the General Conference of 7th Day Adventist, and the Jewish Coalition for Religious Liberty. If the appellant’s allegation stated a cognizable civil RICO claim, nearly every religious organization would frequently face such claims from disaffected members and the related stigma of being accused of being a criminal enterprise. For example, you could have some Catholics claiming that their Church defrauded them because they made contributions based on allegedly insincere statements, or insufficiently reported statements by the pope indicating that God may be okay with same-sex relationships, only to be told something different later. Under plainist theory, these and many other fraud claims would not only turn on theological issues but would also turn in part under their theory on a factual issue that is what does or did the Pope actually believe about a particular issue. If plaintiff’s theory were correct, disaffected Catholics could routinely assert such claims and thereby subject the Catholic Church to the substantial burdens and costs of discovery and litigation, at least through summary judgment.
Judge: How does your example deal with concealment? I don’t follow that.
Sherr: Well, that particular example doesn’t, but you could imagine other situations where the pope or the Catholic church is alleged to have suppressed evidence about a particular matter. Like the Shroud of Turin, or any other number of information about facts that people could claim were improperly suppressed and which if they had known those facts they would have acted differently.
Judge: Your example is a hypothetical. The one that you’re giving, the shroud of Turin, that’s not what we’re talking about here, with-
Sherr: Sir, no, that’s true. It’s not. There’s not a one-to-one correspondence, but people accuse religious bodies all the time of hiding information of various kinds, and if that were the basis, especially when it’s information that deals with a religious issue, if that kind of a claim were allowed to proceed as a RICO claim, you would be opening the floodgates to those kinds of claims. I think the right way to respond to those kinds of claims, is the way this court did in the Bryce case, where it articulated the test of whether the matter at issue is purely secular. So even if it’s just partly religious, that’s enough to put it in the church autonomy doctrine category.
Judge: Well, didn’t Justice Jackson, I think it was a concurrence say that it would be different if a religious leader said, this money’s going to be used to build a church and instead it’s used for personal expenses, you know, a plane or whatever of the religious leader. Do you think that’s protected by the doctrine?
Sherr: Well, I think, it would depend on exactly what the statement was. If it was in part religious, then then under Bryce, it would not be actually-
Judge: I’ll ask you about the specifics here. Now your predecessor, at the podium, said that this is not alleged in the complaint and that’s something to be explored further, but if church leaders had said tithing funds will not directly be used in a commercial project, although if we have excess tithing we can invest it, and that income can be used for commercial projects, but in this case, tithing funds were funneled directly to the commercial project that would not be covered by this doctrine, would it?
Sherr: I think, is covered by the church autonomy doctrine, yes. Because tithing is an inherently religious concept, and so under the Bryce standard, it can’t be purely secular. Now if the church had said, just hypothetically, if the church had said something like ‘no church funds of any kind will be used in this project’, that statement by itself could be considered to be purely secular, but when the church statement at issue is ‘no tithing funds will be used’ that’s inherently a religious matter. People have different-
Judge: It seems to me, there there ought to be a distinction between the religious matter of you need to tithe to be admitted to the sanctuary and your soul depends on it, or things like that, but to say what the money is going to be used for and then use it otherwise, that seems to fit within at least Justice Jackson’s concurrence. Maybe we said something in Bryce that goes beyond that, but how is that dangerous to religious freedom to say to churches, ‘you have to tell your parishioners the truth about how your money is going to be used’?
Sherr: Well, I think this conversation illustrates the danger, your honor. Because for people of faith, people who believe in the biblical concept of tithing, that is an inherently religious matter. So even just to identify what constitutes tithing funds versus non-tithing funds, that that’s a religious question. So if you file a complaint based on a religious leader’s statement about how tithing funds will be used, you are necessarily raising a religious matter. It’s not purely secular as Bryce requires.
Judge: So, in Justice Jackson’s example, if the minister had said, ‘tithe, give 10% of your income to this church, and it’ll go for a new church,’ and then the minister uses it to buy a personal item, then that would be protected, but if he didn’t put it in terms of tithing, then it wouldn’t be protected. But if you put it in terms of tithing it would be protected under the doctrine. Are you making that distinction?
Sherr: Well, I think, if the Minister says ‘I want you to donate, I want you to donate a certain amount of money, and I’m going to use it for one purpose,’ and then uses it for a completely different purpose, and makes the request in a way that doesn’t invoke religious concepts then that would arguably be actionable. But I think as soon as the statement that is alleged to be actionable inherently invokes religion, in some way or religious concepts, I think that fits within the Bryce distinction, or that falls outside of the Bryce requirement that the matter be purely secular as opposed to a mixture of secular and religious.
Now, in their briefs, the plaintiff’s principal response to this point seems to be that because RICO is a generally applicable law its application to the church falls within the differential rule adopted by the Supreme Court in Employment Division versus Smith. That its application is governed only by a rational basis, but the Supreme Court’s decision in Hosanna Taber squarely rejected that argument and held that under the First Amendment whenever any law directly intrudes upon a church’s decisions about how to understand and implement its own doctrine, then government action must give way and based on that principle, the District Court’s decision should be affirmed.
Judge: I’m going to give you five minutes, I think that’ll be enough, we’ll see.
Burningham: OK, thank you. First, I’ll address Mr. Jordan’s points, your honor. We did absolutely, as your honor pointed out, what was in the early part of the second amended complaint alleged that by referencing exhibit five of Mr. David Nielen, who was an employee, not just a disaffected member, of Ensign Peak Advisors, where he says that the president of Ensign Peak Advisors, Roger Clark, is the one that said ‘we consider it all tithing and that we have to be careful because we don’t want them to know what it’s used for’ meaning the commercial investments. That is a quote, and that’s in his affidavit, that’s actually a paraphrase, but it’s in his affidavit that they didn’t want the members to know what the tithing was used for.
The problem here is that when President Hinckley in 2003 at April conference says that we’re going to use ‘investment income from reserves,’ they don’t say from tithing reserves, it’s very vague, and it doesn’t reference tithing. Two of my three clients are female, and this was said at a priesthood meeting, where only men were allowed to attend. and it they claim it was later published in the Ensign, but-
Judge: So the whole statement was made so that the women wouldn’t have even heard the statement that ‘we’re not going to use tithing for commercial uses’. That wasn’t heard by the women either.
Burningham: That’s right. They heard in general conference in April of I believe it’s 2003, that President Hinckley said ‘no tithing will be used for City Creek Mall’ and-
Judge: And it wasn’t quote when it was made at that later event President Hinkley’s proviso, that we can use investment income.
Burningham: Actually, it was two times in the 1990s, your honor, when President Hinckley used the earned interest on invested reserves. That was in two times in the 1990s at priesthood meetings, where women weren’t allowed. Then it was about 10 years later, in 2003 or 4, where he said at General Conference, where my clients attended and heard or read it that no tithing was used for City Creek and did not define what investment of reserve income he used.
Judge: Did he use that term income on invested Reserve?
Burningham: I think he did, but he didn’t define it. So again, we go back to my clients had the idea, because it was fostered by the local ward leaders, that the church, because it has these profit-making subsidiaries, that it was from the profit-making side of the church. There’s the profit-making side that’s under the corporation of the Bishopric, and then there’s the spiritual side, under the corporation of the president, and so these are pretty much separate entities, and we come to find out in 2019, that all the funds are co-mingled. We did allege that contrary to what Mr. Jordan said.
If I just may get to the Crux of the matter. We understand that Ballard prohibits the interpretation of doctrine. We cannot overstep into the inner workings of the church to interpret doctrine. We’re not saying that God, you know, inspired Joseph Smith. We’re just saying we can’t litigate that, in accordance with Ballard. But we are saying, we are challenging the application of doctrine. They have not identified exactly what religious freedom they’re trying to protect. It sounds to me like they’re trying to protect fraudulent activities by concealing things that are very important material facts, material artifacts, from members. The First Amendment doesn’t protect that, under either religious clause, in our opinion, and that’s our argument.
The other thing, as to Mr. Sher, is that none of these other churches that he’s talking about. He made a reference to the Shroud of Turin, well, maybe they do have it and it wasn’t disclosed. We don’t know, but they haven’t admitted as much. There’s no admission, and there’s no indication that there was a committee formed to propagate what’s basically untruths. Just as Boyd K. Packer said ‘We have to tell the truth, but we don’t have to tell the whole truth’ and that was back in the 80s, and he was an apostle for the church, and that’s in our second amended complaint.
That’s their whole – they go along with that. They believe that, and even Mr. Jordan said that he believes that religion should be able to conceal anything, intentionally conceal anything. I don’t think that’s the First Amendment law. I think that is where reliance comes into play. Material omissions are a substitute for reliance here, because the material omission in cases of material omissions, reliance is inferred, and that’s what we’ve done in the RICO case.
I think I’m over my time.
Judge: Well, I also think you’ve discussed all the issues that came up. So thank you very much.
Burningham: Thank you.
Judge: Thank you council. The case is submitted. The council are excused.
Case 23-4110: Gaddy, et al. v. Corp. of the President of the Church of Jesus, et al.
The U.S. Court of Appeals, Tenth Circuit, September 23, 2024, Courtroom IV
Oral Argument Recording: https://www.ca10.uscourts.gov/sites/ca10/files/oralarguments/23-4110.mp3
An essential part of the case is the statements from the church and its leaders that no tithing was used for City Creek Center. Here’s such a statement from Gordon B. Hinckley.
From the whistleblower account from Ensign Peak Advisors employer David Nielsen, stated that in fact the principal and earnings of tithing funds were all comingled and they were all considered to be tithing.
He also clearly showed that the only things the Ensign Peak Advisors managed funds were ever used for, were bailing out the church-owned for-profit insurance company, Beneficial Financial Group, and purchasing and developing the City Creek Center.
![If people knew that the church had a hundred billion dollars, and they weren't putting it to any use, they would be less inclined to continue donating to the church. A lot of members of the Mormon church have been clamoring to get their tithing back. People are upset about this, they know that the ethics are not Christ's ethics. [The church has] billions of dollars in Apple, and in fossil fuel burning companies, and energy companies. All of these vehicles, you wouldn't think, are what churches would invest in. So that rattled people, and then the lack of activity in doing something that that money is designed to be used for. Nothing religious educational or charitable. Small community congregationalist type churches shouldn't be subjected to a severe burden of reporting. But giga churches have to. There are mega churches in this country, maybe there are a few in Canada too, but in this country, there is one giga church, and it's the Mormon Church. - Lars Nielsen, Whistleblower - The Fifth Estate, October 27, 2022 | wasmormon.org](https://i0.wp.com/wasmormon.org/wp-content/uploads/2024/04/canada-5th-estate-Lars-Nielsen-church-has-hundred-billion-dollars-not-putting-it-to-any-use-nothing-religious-educational-or-charitable-giga-church-should-be-required-to-report-finances.jpg?resize=640%2C640&ssl=1)
Another point the case makes is that the church has knowingly taught the untrue narrative that Joseph Smith translated the Book of Mormon with the Urim and Thummim. The narrative has only recently shifted to the historically accurate detail that Joseph used his own seer stone, which he placed in a hat and dictated the text of the scripture. The claim is that the church knew this was the history, and taught otherwise, for people to more easily believe the false narrative rather than the true one.
David J. Jordan
This case challenges the legal boundaries of religious freedom and accountability in the context of institutional transparency and member rights. During the counter-argument from the church, their lawyer, David J. Jordan, a member in good standing and having served in high leadership positions in the church made some surprising claims. The Church shares that David J. Jordan served as the Mission President of the England London Mission, as well as “a stake president in a married student stake and is a former regional welfare chairman, stake president and counselor, high councilor, bishop and missionary in the Brazil Rio de Janeiro Mission.”
The case makes the claim that the church has purposefully been dishonest about church history and the Book of Mormon translation process specifically. David J. Jordan claims this “is an intrusion on a deeply rooted religious matter.” When the judge asked for clarification and if there are any limits to this religious freedom to bend the history to suit its needs, he states, “There is no limit at all on what a church is required to teach or not teach, emphasize or not emphasize.”
Even the Salt Lake Tribune is covering this case and specifically questions the claim from the church representative, Mr. David Jordan:
‘Facts’ vs. ‘beliefs’
Monday’s hearing brought up a fascinating turn in Mormon history, when Phillips questioned church lawyer David Jordan on conflicting accounts about the Book of Mormon being translated by founding prophet Joseph Smith from gold plates — or through visions from a brown “seer stone” in a hat.
Gaddy’s Salt Lake City lawyer, Kay Burningham, argued that the co-plaintiffs would have reassessed their beliefs, membership and tithing had they known of varying accounts of church history that were withheld from members, for fear, according to an affidavit, that some would stop donating.
Those “material omissions,” Burningham stated, are integral to proving fraud under federal racketeering laws — without implicating issues of faith.
“Facts,” Burningham said, “are different than beliefs.”
“Fraud is a misrepresentation of fact, and that’s what we have here,” she said. “And all these artifacts and what’s called the stone have been in the church’s possession for over 100 years, and they knew, or were charged with the knowledge, that the stone was there.”
Jordan sought to counter that point later, when pressed by Phillips. “Isn’t that a bizarre thing to say?” the church’s lead lawyer said of the plaintiffs.
“They say specifically, ‘We don’t dispute that the Book of Mormon is true. We don’t dispute that it was translated by the gift and power of God. We dispute whether it was translated using the Urim and Thummim, a clear stone or an opaque stone.
“That almost sounds silly,” he continued. “Churches have the right to define, develop and evolve their own history. … Who knows what happened in 1820 or whether he sat at a table and looked at gold plates?”
Gaddy was asking the court “to intrude on the miraculous,” he said, “on matters of faith.”
Jordan said at another point that the plaintiffs were, in effect, asking for “a heresy trial” into religious teachings.
“It’s a determination of what is the orthodox belief,” Jordan said, “as if there were some monolithic understanding of every detail of church history by every leader of the church or every church member from 1820 to today.”
‘Deep religious waters’
Phillips seemed to turn part of that line of argument aside.
“Nobody’s asking that,” the judge said. “Their argument is, you all have your beliefs and keep them, and we respect that, but don’t join us in without telling us key information, like there was a seer stone.
“I don’t think [the plaintiffs] are here to prove the untruth or the untruth of LDS Church,” Phillips said. “They’re saying, ‘If we had only known these facts, which weren’t revealed, we wouldn’t have participated, and you all do as you please.’”
To that, Jordan said that requiring the church to reveal certain elements of its own beliefs to members amounted to “asking the court to prescribe the manner in which the church teaches its doctrine … to put particular emphasis on the method by which the Book of Mormon was translated, and any disputes about that, or anything that hasn’t been given emphasis in the past.”
“That,” said Jordan, “is an intrusion on a deeply rooted religious matter.”
“Is there any limit to that principle?” Phillips asked. “Can a church conceal anything, even if it thinks, ‘Wow, we’re going to lose half our membership on this. We better put it in a vault somewhere.’ Is there any limit on what a church can conceal and not be subject to civil RICO [racketeering laws.]”
Replied Jordan: “There is no limit at all on what a church is required to teach or not teach, emphasize or not emphasize. I think that would be a deep intrusion into what you described as ‘deep religious waters.’”
Salt Lake Tribune, Joseph Smith, his seer stone and Book of Mormon translation come up in federal court hearing on tithing lawsuit – At the 10th Circuit, LDS Church lawyers push back against fraud case, accuse plaintiffs of seeking a “heresy trial.” Sep. 25, 2024
https://www.sltrib.com/religion/2024/09/25/lds-tithing-church-lawyers-push/
The claim from attorney David J. Jordan defends the LDS Church’s right to selectively teach or withhold information. His assertion that there are “no limits” on what a church must disclose reflects an overly strong interpretation of First Amendment protections for religious organizations. This perspective is unethical for several reasons:
- Transparency and Informed Consent: The lack of a moral obligation to disclose foundational historical information is problematic, especially for religious institutions that ask members to make significant life choices and financial commitments. Members invest their time, money, and trust in their faith with the expectation that they are informed. Concealment, especially if it involves aspects that might lead to disillusionment or fundamental doubts, undermines the trust that is crucial to a healthy relationship between members and their religious institution.
- Power Dynamics and Vulnerability: Churches hold a unique position of influence over their followers, including spiritual guidance and moral authority. When an organization with such influence has the freedom to withhold unsettling information, it exploits the trust of the membership. For example, members continue financially supporting the institution and even make life-altering choices under assumptions that could easily be different if they were fully informed. This raises concerns about exploiting vulnerability, a critical issue for any institution, especially one that claims moral authority.
- Historical Responsibility and Accountability: The comparison of a religious institution to another organization is useful here. Corporations, for example, are legally required to disclose risks and material facts to their stakeholders. Religious organizations, however, are protected by freedom of belief. The question of whether a church should be obligated to share foundational facts when they are known to be materially relevant to members’ beliefs may remain open legally but is easily settled when considering ethics. The idea that “no limits” exist on what can be concealed is morally reprehensible, given the institution’s role in shaping beliefs and practices.
- Immoral “No Limits” Doctrine: Allowing religious organizations to conceal information without accountability creates a slippery slope, where institutions could selectively present or conceal doctrines, history, and/or revelations for purposes of preservation, recruitment, or retention, rather than solely for spiritual reasons. This approach erodes public trust and shows the organization’s manipulation practices, particularly when members can only discover such information through external sources and the church forbids the members from even looking at outside sources.
While the church’s statement aligns with a legal view protecting religious freedom, it raises concerns about transparency, accountability, and informed consent. For any who value full disclosure, it questions the integrity of institutional trust and the moral responsibility of religious organizations to communicate openly with their followers. The church wants both the benefits of religious status and the protections of corporate law, creating a double standard. On one hand, it seeks tax exemptions, religious freedoms, and limited public accountability granted to religious institutions, claiming the right to govern doctrine, practice, and financial operations without interference. Yet, in legal cases, it sometimes defends itself as a corporation rather than a purely religious entity, invoking protections under corporate law to limit liability and shield its assets (even illegally) and practices from scrutiny. This selective use of religious versus corporate identity allows the church to avoid transparency standards that corporations are required to follow while also maintaining legal defenses against allegations of misleading or deceptive practices. This dual approach is in the spotlight as members and the public increasingly scrutinize the financial and operational practices of the organization.
What do you think? Are there, or should there be any limits on how a church represents itself? Is all of church history, even factual information, up for interpretation and omission? The church makes this case legally, but simultaneously shows they are at least attempting to be more transparent by publishing more correct Gospel Topic Essays (even if quietly). Did the Gospel Topic Essays change how you thought about church history? Where did you learn about the essays? Is the church changing the historical narrative? Is there any informed consent in the Mormon church? Should there be? What are your thoughts? Have you suffered from cognitive dissonance or has your shelf collapsed? Consider joining in the discussion and sharing your Mormon deconstruction story at wasmormon.org.
More reading:
- LDS Church’s Misstated Filings to SEC Approved by First Presidency
- The Problems with Joseph Smith and Peep Stone Translations
- Donated Tithing Funds vs Earnings on Invested Tithing
- Mixing Tithing Funds and Investments Maybe Legal But Doesn’t Mean Its Right
- Development of Mormon Tithing – From Meager Origins to Ensign Peak Billions
- Let’s Go Shopping – City Creek Center and Tithing
- Whistleblowing On the Mormon 100 Billion “Rainy-Day Fund”
- Whistleblower News Prompts Vacant Responses from LDS Corp
- 60 Minutes Transcript: Whistleblower David Nielsen Speaks Out After Reporting the Mormon Church to IRS in 2019
- https://www.ca10.uscourts.gov/oralargument/search-results?combine=Gaddy&field_oa_judges_value=&field_oa_parties_value=&field_oa_hearing_date_value%5Bmin%5D%5Bdate%5D=&field_oa_hearing_date_value%5Bmax%5D%5Bdate%5D=&combine_1=
- https://www.becketlaw.org/case/gaddy-v-corporation-of-the-president-of-the-church-of-jesus-christ-of-latter-day-saints/
- https://www.sltrib.com/religion/2024/09/25/lds-tithing-church-lawyers-push/
- https://www.reddit.com/r/exmormon/comments/1fpfndl/gaddy_vsthe_corporation_of_the_president_of_the/
- https://www.mormonwiki.com/David_J._Jordan
- https://dockets.justia.com/docket/circuit-courts/ca10/23-4110
- https://www.thechurchnews.com/2012/3/17/23225782/new-mission-presidents-81/
- https://www.instagram.com/analyzing.mormonism/reel/DAR6UQzN0NF/