10th Circuit affirms dismissal of Mormon church tithing fraud class action as too late

(CN) — Donors of the Church of Jesus Christ of Latter-day Saints who accused it of fraud in a class action should have filed their claims earlier following widespread media coverage of the church's use of donor funds, a 10th Circuit panel ruled Monday.

The class members say the Mormon church misled them into believing their donations were used for charitable funds when they were actually put toward a slush fund for noncharitable expenses, particularly the development of a shopping mall. They accused the church of fraud and unjust enrichment.

The three-judge panel affirmed a federal judge's April 2025 ruling that the class members filed their claims about eight months after the statute of limitations passed.

The church's use of charitable donations made national news following a December 2019 whistleblower report to the Internal Revenue Service. The panel ruled the plaintiffs should have paid closer attention.

"The issue is not whether plaintiffs saw or should have seen any particular article," U.S. Circuit Judge Harris Hartz wrote in a unanimous opinion. "Rather, the national scope and quantity of sources illustrate that the whistleblower report was widely known and very likely appeared in multiple other news sources and in public conversation in general. But the news of that day will still echo in follow-up news pieces and in discussion among members of the public interested in a particular issue."

In contrast, other plaintiffs brought claims against the church within the statute of limitations, the George W. Bush appointee wrote.

"The courts cannot blind themselves to the realities of modern life," he continued. "The strong public interest in repose that is reflected in statutes of limitations should not be thwarted by highly unlikely vicissitudes. That is the very purpose of having an objective (as well as a subjective) test for a discovery exception in a statute of limitations. … Here, Plaintiffs should have known of the whistleblower report, and reasonable people would have understood its implications for potential fraud claims."

The plaintiffs in the case, mostly former church members living outside Utah, say they learned of the issue only after a 60 Minutes report in May 2023. They argued their claims should be allowed to continue against the church because they did not know the clock was ticking after the whistleblower report.

But the panel rejected this.

"The facts from which the district court concluded that plaintiffs should have discovered their claim — the date of publication of the whistleblower report and related news coverage — are either alleged in the complaint or are undisputed facts that can be considered in resolving a motion to dismiss," Hartz wrote. "If nothing else, the whistleblower report would have excited the attention of anyone in plaintiffs' position."

The whistleblower report came from a former employee of Ensign Peak Advisors, a nonprofit investment firm the church created, who claimed the church was underreporting the value of its assets and directing its charitable tithes into commercial ventures. In their complaint, the plaintiffs say Ensign concealed the church's property value by shuffling it through various shell companies. They say the church spent $1.4 billion in donated funds on the City Creek Mall in Salt Lake City, Utah.

The U.S. Securities and Exchange Commission fined the church in 2023. It agreed to pay $5 million, though it did not admit to wrongdoing.

Ensign now manages a portfolio of more than $100 billion, the panel noted.

The panel did not decide whether the church had defrauded the class members but instead ruled the plaintiffs waited too long to bring their claims.

U.S. Circuit Judges Gregory Phillips and Nancy Moritz, both Barack Obama appointees, joined Hartz in the opinion.

Attorneys from either side did not respond to requests for comment.