They Took Ten Percent. Then They Built a Mall.

The Church of Jesus Christ of Latter-Day Saints is one of the wealthiest religious institutions on the planet. It operates a mandatory tithing system, requiring members to donate up to ten percent of their annual income to the Church to maintain full membership status, including access to temples. For millions of believers, that tithe is not a suggestion. It is a condition of spiritual standing.

Three former members, Laura Gaddy, Lyle D. Small, and Leanne R. Harris, spent much of their lives inside that system. When they eventually discovered what they believed were lies about where their money actually went, they did something most people never do: they fought back. In 2019, Gaddy filed a class action lawsuit, later joined by Small and Harris, that would grow into a 203-page, 555-paragraph complaint packed with tables, charts, artwork, and translation comparisons.

Their central accusation on the money: the Church publicly promised tithing funds would go to religious purposes and humanitarian aid, then quietly funneled those same dollars into City Creek Mall, a for-profit commercial development; Ensign Peak Advisors, a financial investment firm; and Beneficial Life Insurance Company. The plaintiffs say they “would not have paid tithing had they known” the truth about where the money actually went.

The Specific Lies They Allegedly Told

The complaint does not rely on vague accusations. The plaintiffs cited specific, named statements. Former Church president Gordon B. Hinckley allegedly stated directly that tithing funds were not being used to build City Creek Mall. Two additional statements, one printed in Ensign Magazine and another in the Deseret News, reportedly made the same claim. And a Church representative reportedly told a Bloomberg Businessweek journalist the line that has since become the most quoted passage from this entire case: that “not one penny of tithing goes to the Church’s for-profit endeavors.”

The plaintiffs also alleged omissions, meaning the Church stayed silent about funding Ensign Peak Advisors with tithing dollars and about using member donations to bail out Beneficial Life Insurance Company. Under their theory, silence on those facts was just as fraudulent as an outright lie. The complaint argued these repeated misstatements, delivered through mail and electronic wires, constituted a “pattern of racketeering activity” under the federal RICO statute, the same law used to prosecute organized crime.

The Church denied wrongdoing throughout and successfully argued for dismissal at every stage. Both the district court and the federal appeals court agreed the case should never reach a jury.

The Non-Financial Ledger: What Money Can’t Measure

Tithing inside the LDS Church is not simply a financial transaction. It is the entry fee to the most sacred spaces in the religion. Members who do not pay their full ten percent can be denied a “temple recommend,” the document that grants access to LDS temples where the most significant spiritual ceremonies occur, including marriages. Withholding your ten percent can mean being barred from your own child’s wedding. That is the stakes.

For Laura Gaddy, Lyle Small, and Leanne Harris, the betrayal arrived in two waves. The first was the discovery of what they believed were false histories taught to them since childhood as absolute truth. The second, and the one that drives the financial fraud claim, was the realization that the money they had given in faith, month after month and year after year across much of their adult lives, may have been quietly redirected into a retail shopping complex and an investment portfolio. The complaint describes people who paid tithes not just out of devotion but because they were told, in print, in named publications, by the president of their church, that the money went to religious and humanitarian work. It did not go to a mall.

The scale of the emotional damage is difficult to quantify, which is precisely why the lawsuit attempted to put a number on it at all. Members of high-control religious communities frequently describe their faith as the entire scaffolding of their identity: their social networks, their family relationships, their sense of purpose and morality. When that scaffolding turns out to have been partly funded by lies about a for-profit shopping center, the collapse is not just spiritual. It is social, familial, and psychological. Former members who leave the LDS Church often describe a grief process that mirrors the loss of a family member.

The three plaintiffs did not ask for sympathy from the courts. They asked for accountability under the same federal law that brought down mafia bosses and crooked corporations. What they received instead was a ruling that religious institutions occupy a legal dimension where fraud law bends and sometimes breaks. The message sent to every current tithing member of the LDS Church is this: the organization that holds your spiritual standing and a percentage of your income operates in a legal zone where the normal rules of consumer protection and honest dealing are substantially weakened. The people who donated in good faith were left with no legal remedy and no refund.

Legal Receipts: The Quotes That Should Have Gone to a Jury

“Not one penny of tithing goes to the Church’s for-profit endeavors.” — Statement by a Church representative to a Bloomberg Businessweek journalist, cited verbatim in the plaintiffs’ second amended complaint (App’x Vol. III at 113), as reproduced in the Tenth Circuit’s August 26, 2025 ruling.

“Plaintiffs allege that despite these statements, the Church used tithing funds to construct City Creek Mall, finance Ensign Peak Advisors, and bail out Beneficial Life Insurance Company.” — Judge Phillips, concurring opinion, Gaddy v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints, 10th Circuit, August 26, 2025.

“The Church falsely assures that tithing funds are used only for ‘Church expenses and humanitarian aid’ and not other purposes, such as developing a for-profit commercial mall.” — The majority opinion’s description of Plaintiffs’ first amended complaint allegations, App’x Vol. I at 127, as quoted in the Tenth Circuit ruling.

“Plaintiffs’ theory is that they ‘would not have paid tithing had [they] known’ the Church’s true uses of those funds.” — Tenth Circuit majority opinion, directly quoting App’x Vol. III at 146, 149, 150, describing the plaintiffs’ core harm theory.

“Nowhere in their 203-page operative complaint do Plaintiffs allege that, after hearing a particular statement that the Church would not use tithing funds for commercial activities, Plaintiffs affirmatively decided to continue making tithing payments that they would not have otherwise paid.” — Tenth Circuit majority opinion, explaining the specific technical defect that ended the lawsuit, August 26, 2025.

Societal Impact Mapping

Economic Inequality: When the Poor Pay for the Portfolio

Tithing inside the LDS Church is calculated as up to ten percent of a member’s income, not their surplus. A member earning $30,000 a year is expected to contribute $3,000 (roughly six weeks of groceries for a family of four). A billionaire contributes at the same rate but from a position of absolute financial security. The burden of a mandatory ten percent falls hardest on the people who can least afford it, the working-class and low-income believers who represent a massive share of the global LDS membership.

The plaintiffs’ complaint alleged that a portion of those contributions, collected from everyday families across decades, were channeled into Ensign Peak Advisors, a financial investment firm. Investment firms exist to generate returns, to grow wealth. The specific allegation is that ordinary member donations were used as seed capital or operating support for a wealth-generation vehicle that members never agreed to fund and were never told about. That is a wealth transfer: from working people who thought they were funding humanitarian aid and religious operations, upward into an institutional investment portfolio.

The plaintiffs also alleged that tithing was used to bail out Beneficial Life Insurance Company. Insurance bailouts are not humanitarian aid. They are the kind of corporate rescue operation that members would recognize immediately from the 2008 financial crisis, where public money propped up failing private institutions. The allegation here is functionally identical: member donations, given in religious faith, used to rescue a failing private company. And because courts dismissed the case before discovery, the full picture of how much money moved and where it went was never established on the public record.

Public Health: The Spiritual Cost Is a Health Cost

The clinical literature on religious trauma is extensive. People who leave high-control religious organizations, especially those that condition social belonging and family access on financial and behavioral compliance, show elevated rates of anxiety, depression, and complex PTSD-like symptoms. The LDS system, where a temple recommend and full community standing depend on tithing compliance, creates a mechanism of financial and social coercion that researchers in this space classify as a high-control dynamic.

The three named plaintiffs in this case describe years of sincere belief followed by a shattering discovery. That pattern, of profound investment followed by abrupt disillusionment rooted in institutional deception, is precisely what mental health professionals describe as the core injury in religious trauma syndrome. Courts dismissed the financial claims, but no court can dismiss the psychological reality of three people, and potentially thousands of class members, who organized their identities, families, and finances around an institution they now believe systematically deceived them.

The plaintiffs’ second amended complaint was 203 pages long. People do not write 203 pages about something they have emotionally processed and moved past. That document is evidence of something that refuses to resolve. The lawsuit was a demand for institutional acknowledgment. Every dismissal denied them that acknowledgment and, by extension, a piece of the healing that accountability makes possible.

The “Cost of a Life” Metric

The Legal Shield: Why “God’s House” Gets a Different Rule Book

The legal doctrine that ultimately protected the LDS Church is called the “church autonomy doctrine.” It is rooted in the First Amendment and gives religious institutions the right to govern their own affairs, including matters of faith, doctrine, and internal governance, free from government interference. Courts have interpreted this to mean that a secular court cannot adjudicate the “truth or falsity of religious beliefs,” full stop.

The court applied this doctrine to the first half of the lawsuit, the claims about false religious history, and ruled it entirely off-limits. A court, the opinion states, “can no more determine whether Joseph Smith translated with God’s help gold plates than it can opine on whether Jesus Christ walked on water or Muhammad communed with the archangel Gabriel.” On that point, the legal reasoning is at least coherent. Courts should not adjudicate theology.

The second half of the lawsuit, the money claims, is where things get genuinely enraging. The court did not rule that the Church was innocent of misdirecting tithing funds. The court ruled that the plaintiffs failed to adequately plead the legal connection between the alleged lies and their specific financial harm. In other words, the case died on a technical pleading standard, not on the facts. The plaintiffs wrote that they “would not have paid tithing had they known.” The court said that was not specific enough. They needed to name a specific statement they heard, describe the exact moment they decided to keep paying because of that statement, and explain precisely what payments they would not have made otherwise.

The Ninth Circuit Said the Same Thing at the Same Time

This was not an isolated ruling. The Ninth Circuit, covering the western United States, issued a parallel ruling in a related case called Huntsman v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints, decided by the full en banc panel in 2025. That case involved many of the same alleged misstatements about tithing, the same City Creek Mall claims, the same Ensign Peak and Beneficial Life allegations. The Ninth Circuit’s majority ruled that the statements did not amount to “knowingly false representations of fact” sufficient to support a fraud claim. Two different circuits. Two different legal theories. The same outcome: the Church walks.

One concurring judge in the Tenth Circuit case, however, broke from the majority on the church autonomy question. Judge Phillips wrote separately to argue that the money claims are purely secular matters and the church autonomy doctrine should not apply to them at all. The allegation that a church lied about where it spent money, he argued, does not require a court to evaluate any theological question. It requires a court to look at bank records and press statements. That is accounting, not theology. His view did not prevail, but it is on the record.

What Now?

The Church’s legal representatives were Foley & Lardner LLP. Religious liberty amicus briefs supporting the Church were filed by the General Conference of Seventh-Day Adventists, the National Association of Evangelicals, the Jewish Coalition for Religious Liberty, and the Becket Fund for Religious Liberty. These are not fringe organizations. They represent a coordinated institutional infrastructure built to defend religious organizations from exactly the kind of financial accountability claims this case raised.

Watchlist: Who Has Jurisdiction

• IRS / Treasury Department: Religious organizations file Form 990 or claim full exemption. Alleged use of tax-exempt donations for commercial investment activity is within IRS investigative jurisdiction.
• SEC: Ensign Peak Advisors is an investment management firm. Investment funds managing over $100 million are subject to SEC reporting requirements. Ensign Peak has previously faced SEC scrutiny.
• State Attorneys General (Utah, others): State-level consumer protection and charitable trust laws may provide avenues that federal RICO does not.
• Congress: The church autonomy doctrine is a judicially created doctrine. Legislators could, in theory, pass narrowly tailored laws requiring financial transparency for tithing-collecting institutions above a certain asset threshold.
• DOJ: The RICO statute is a criminal law enforced by the Department of Justice. A civil case failing does not preclude a criminal investigation if evidence of organized financial fraud were ever established.

What You Can Actually Do Right Now

Former members and researchers have built extensive mutual aid networks around religious trauma recovery; organizations like the Mormon Stories Foundation and Recovery from Religion provide peer support outside institutional structures. If you are a current tithe-paying member, you have the legal right to ask your congregation leadership for a written accounting of how local and general tithing funds are allocated. Document the response. Share it publicly. Collective financial transparency campaigns, organized at the congregation level, cost nothing and create accountability pressure that no courtroom dismissal can silence. The legal system failed these three plaintiffs. Organizing does not need the legal system’s permission to succeed.