Kosher Certification Agency Sues Airline For Unauthorized Use Of Trademarked Symbol

Suit was filed last week in a New Jersey federal district court by Kof-K, a kosher certification agency, against JetBlue Airways claiming that the airline used the agency's certification symbol without authorization on a pre-packaged in-flight artichoke snack.  The complaint (full text) in Kosher Supervision Service, Inc. v. JetBlue Airways Corp., (D NJ, filed 6/23/2022), alleges trademark infringement and other trademark violations,  unfair competition and consumer fraud. As reported by The Observer, Kof-K does not contend that the snack was not kosher. It merely contends that it had not certified it as such.

Charity Fraud Claims May Proceed Against Christian Apologetics Ministry

In Carrier v. Ravi Zacharias International Ministries, Inc., (ND GA, May 13, 2022), a Georgia federal district court allowed plaintiffs to move ahead with some of their charity fraud claims against RZIM, a Christian apologetics ministry, and the estate of its founder Ravi Zacharias. Plaintiffs claims include ones of unjust enrichment and violation of the state's Fair Business Practice Act. The court describes plaintiffs' claims:

They allege that the Defendants “bilked hundreds of millions of dollars from well-meaning contributors who believed RZIM and Zacharias to be faith-filled Christian leaders,” when “[i]n fact, Zacharias was a prolific sexual predator who used his ministry and RZIM funds to perpetrate sexual and spiritual abuse against women.”... 

Responding to defendants' assertion of the ecclesiastical abstention doctrine as a defense, the court said in part:

The Court will exercise jurisdiction over the Plaintiffs’ claims to the extent they are predicated on misuse-of-funds allegations but not faith-based allegations. At bottom, the faith-based allegations ask the Court to examine the theology and customs of Christianity and Christian apologetics to determine whether Zacharias and RZIM fulfilled the religion’s (and the Plaintiffs’) moral standards. The Court would have to make inherently ecclesiastical determinations as part of this inquiry, such as what it means to be a “faith-filled, moral, and upstanding Christian leader” ..., and whether Zacharias’s alleged sexual misconduct is “diametrically opposed to the teachings of Christianity.”... It is not the role of federal courts to answer these kinds of questions “because that would require defining the very core of what the religious body as a whole believes.”... 

On the other hand, the Court believes that the Plaintiffs’ misuse-of funds allegations do not pose the same First Amendment concerns. Those allegations, and the claims associated with them, raise what amounts to a secular factual question: whether the Defendants solicited funds for one purpose (i.e., Christian evangelism) but instead used those funds for another purpose (i.e., to perpetrate and cover up sexual abuse). That dispute “concerns the [D]efendants’ actions, not their beliefs,” and can be decided according to state statutes and common law principles. 

California Sues Health Care Sharing Ministry For Fraud

California's Attorney General announced yesterday that the state has filed a false statements and fraudulent business practices civil lawsuit against a company purporting to operate as a Health Care Sharing Ministry. The complaint (full text) in State of California v. Aliera Companies, Inc., (CA Super., filed 1/12/2022), alleges in part:

Aliera created and marketed its health insurance products as “health care sharing ministry” (HCSM) plans. HCSMs are nonprofit corporations historically comprised of members of a particular religious community, who contribute money to a shared pool with the understanding that the money would pay for catastrophic or surprise healthcare costs pursuant to the members’ shared religious tenets....

... Aliera ...  advertised that members’ monthly payments would go towards the healthcare costs of other members. To the contrary, Aliera retained as much as 84% of every member payment, leaving around 16 cents of every dollar for member expenses. Aliera arbitrarily rejected member requests for payment of healthcare costs in order to continue retaining these member payments for itself and the individual defendants.

Fourteen states and the District of Columbia, have initiated actions against Aliera for its sale and operation of its purported HCSM plans. This includes the California Department of Insurance, which issued a cease and desist order on or about March 8, 2020.

Poway Synagogue Rabbi Sentenced To 14 Months In Custody For Fraud

The U.S. Attorney's Office for the Southern District of California announced that yesterday a California federal district judge sentenced Rabbi Yisroel Goldstein -- rabbi of Chabad of Poway during a much-publicized shooting in 2019-- to 14 months in custody for his part in a multi-million dollar fraud scheme.  Goldstein plead guilty to fraud charges in 2019. (See prior posting.) He was also ordered to pay $2.8 million in restitution.  According to the U.S. Attorney's Office:

[W]hile Rabbi Goldstein was director of the Poway synagogue, he received at least $6.2 million in phony contributions to the Chabad and affiliated charities and secretly refunded up to 90 percent of the donations to the “donors.” After Rabbi Goldstein provided these donors with fake receipts, they illegally claimed huge tax deductions for these nonexistent donations, and the rabbi kept about 10 percent ... for himself....

Rabbi Goldstein also admitted that he defrauded three different Fortune 500 companies by tricking them into matching supposed charitable donations of their employees....

Rabbi Goldstein ... also helped his brother ... conceal approximately $700,000 in income by allowing him to use Chabad bank accounts to deposit his income, thereby hiding it from the IRS.  As his cut, Rabbi Goldstein kept 10 percent.... 

... Goldstein and another defendant ... used false information and fabricated invoices and other records to pretend to be eligible for emergency funds, grants or donations, and private loans [from FEMA and the state of California].

According to The Forward's report on the sentencing, prosecutors had recommended a much more lenient sentence-- 8 months of home confinement and 4 years probation.

Fraud and Emotional Distress Claims Against Archdiocese Are Dismissed

In Dux v. Bugarin, (MI App., Dec. 21, 2021), a Michigan state appellate court dismissed an intentional infliction of emotional distress (IIED) claim and a fraud claim growing out of the Archdiocese of Detroit's removal of an accused Catholic priest supported by plaintiffs. The court describes plaintiffs' claims:

In their IIED count, plaintiffs claimed defendants’ statement that the allegations of sexual abuse were credible was an “extreme and outrageous act.” In their fraud count, plaintiffs alleged the Archdiocese asked its parishioners, including plaintiffs, to donate money to the Catholic Services Appeal (CSA). Plaintiffs alleged the Archdiocese represented the donations would be used for church ministry and would not be used to settle claims “of any nature” against the Archdiocese.

Dismissing the IIED claim under the ecclesiastical abstention doctrine, the court said in part:

The trial court properly dismissed plaintiffs’ IIED claim because resolution of that claim would require the trial court to delve into matters of ecclesiastical policy concerning how the Archdiocese investigates and evaluates claims of sexual abuse made against its clergy.... [A]ny inquiry into the means and methods by which the Archdiocese evaluates such claims would require the trial court to inquire into ecclesiastical matters forbidden under the First Amendment.

Dismissing plaintiffs' fraud claims, the court said that one of the fraud claims-- that they were defrauded by the statement that donations would be used for the church "ministry"-- would require courts to impermissibly inquire into internal church matters. It would need to decide whether "ministry" includes investigation into sex abuse claims and providing treatment for victims. Turning to a second fraud claim, the court said in part:

Turning then to whether plaintiffs otherwise stated a claim for fraud on the basis of the statement that CSA donations would not be used to settle claims against the Archdiocese, plaintiffs’ claim is premised on the theory that the Archdiocese had a duty to disclose the information about the true purpose of the donations.

“Michigan courts have recognized that silence cannot constitute actionable fraud unless it occurred under circumstances where there was a legal duty of disclosure.”

Court Denies Motion Under RFRA And 1st Amendment To Dismiss Indictments

In United States v. Morales, (SD CA, Dec. 13, 2021), a California federal district court denied a motion to dismiss indictments against three defendants who claimed that the indictments violated their rights under RFRA and the Free Exercise Clause. Among the charges were that defendants induced Imperial Valley Ministry participants to surrender SNAP benefits to the Ministries and that they dispatched IVM participants to panhandle. The court said in part:

The Court finds too attenuated a link between the Government’s prosecution of Defendants for forced labor, document servitude, and benefits fraud and Defendants’ purported religious activities of evangelizing, fundraising, donating to the church, and general operation of IVM programs for there to be a substantial burden, as there remain viable alternative avenues for Defendants to conduct their specified religious activities....

New Orleans Archdiocese Settles False Claims Act Lawsuit

The Department of Justice announced this week that in a settlement of a False Claims Act lawsuit that was originally brought by a whistleblower, the Catholic Archdiocese of New Orleans has agreed to pay the federal government more than $1 million in damages. (Full text of Settlement Agreement).  The whistleblower will receive nearly $200,000. The lawsuit alleges that the Archdiocese knowingly submitted false claims to FEMA for repair or replacement of facilities damaged by Hurricane Katrina. This included damage to a nonexistent central air conditioning unit and misstatement of the sized of a facility. The settlement was approved last month by the U.S. Bankruptcy Court handling the Archdiocese's bankruptcy reorganization. National Catholic Register reports on the settlement.

Huntsman's Fraud Claim Against Mormon Church Dismissed

In Huntsman v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints, (CD CA, Sept. 10, 2021), a California federal district court dismissed a fraud suit brought by James Huntsman against the LDS Church. Huntsman, a prominent LDS Church member, alleged that the Church falsely claimed that no tithing funds would be used in its development of commercial real estate in Salt Lake City. Huntsman claims this was false because the Church used earnings on invested tithing funds for the project. First the court held that the church autonomy doctrine does not require dismissal of the case because the dispute is purely secular. It does not involve an analysis of Church policy or doctrine. However, the court concluded that no reasonable juror could conclude that defendant made a misrepresentation. The President of the Church, while stating that no tithing funds would be used, added that earnings of invested reserve funds will be used. The court also rejected a fraud claim relating to a second project. A Notice of Appeal of the decision to the 9th Circuit has been filed.

Fraud Claim Against Catholic Diocese Dismissed Under Ecclesiastical Abstention Doctrine

In Doe v. Roman Catholic Diocese of Dallas, (TX App, Aug. 11, 2021), a Texas state appellate court held that the ecclesiastical abstention doctrine requires dismissal of a suit alleging that a Catholic diocese committed fraud when it failed to follow its own internal policies for responding to clergy sex-abuse claims after plaintiff reported that he had been sexually abused by a Diocesan priest. The court said in part:

[A] court would have to evaluate whether ... the Dallas Diocese implemented its policy under the canonical meanings of "minor," "sexual abuse," and "vulnerable adult." This would necessitate a secular investigation into the Dallas Diocese's understanding of those terms.... Such an inquiry would cause a court to evaluate whether the Dallas Diocese properly applied canon law and "interlineate its own views" of canonical terms....

Furthermore, in the context of a religious organization's choices in investigating and regulating its formal leaders and people ordained for religious duties, "any investigation would necessarily put to question the internal decision making of a church judicatory body."...

Most Misrepresentation Claims Against LDS Church Dismissed; RICO Claim Survives

In Gaddy v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints, (D UT, July 28, 2021), a Utah federal district court dismissed most of the claims in an amended complaint by a former LDS Church member alleging that several basic teachings of the Church involve misrepresentations. The court previously dismissed plaintiff's original complaint. (See prior posting.) In passing on her amended complaint, the court said in part:

Gaddy's new factual allegations relating to the locations of events described in the Book of Mormon and the founding prophet Joseph Smith's marriages directly implicate the Church's core religious teachings.... [S]he seeks to attack the veracity of the Church's teachings about the Book of Mormon and its doctrines by challenging the accuracy of certain facts contained in the text. As this court previously explained, a plaintiff may not, for example, challenge in a court of law religious beliefs that Noah built an ark, loaded it with his family and representative animals of the world, and was thereby saved from world-engulfing floods. Neither may a plaintiff circumvent this restriction by merely attacking religious accounts concerning the locations where Noah built the ark or where the ark came to rest....

Gaddy is correct that courts are required to evaluate the sincerity of religious beliefs.... However, courts engage in this inquiry of those seeking religious accommodation or exception to a rule or law of general application ... for the purpose of ensuring the government accommodate only genuine religious beliefs that are sincerely held.

This rationale is inapplicable here because the church autonomy doctrine is not an accommodation.... Rather, it is a "fundamental right of churches to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine."

The court however did allow plaintiff to move ahead with her civil RICO claim based on alleged misrepresentations about the way in which tithed funds would be spent:

Here, Gaddy does not challenge the Church's tithing doctrine or teachings related to it.... Gaddy instead points to specific factual statements allegedly made by the Church ... concerning the Church's use of tithing funds and alleges those statements are false. The inquiry required to adjudicate this claim does not implicate religious principles of the Church or the truth of the Church's beliefs concerning the doctrine of tithing. This claim further does not require the court to determine whether the Church or its members were acting in accord with what they perceived to be the commandments of their faith. Gaddy has instead challenged secular representations....

Suit On Misrepresentations In Settling Clergy Sex Abuse Claims Is Dismissed

 In Caldwell v. Archdiocese of New York, (SD NY, May 19, 2021), individuals who released their childhood sexual abuse claims as part of the Archdiocese's ’ Independent Reconciliation and Compensation Programs brought a class action claiming misrepresentations in procuring the releases. They claimed misrepresentations regarding the fairness of the settlements, the independence of the plan administrators, as well as failure to advise claimants of the prospects for enactment of the New York Child Victims Act.  The court dismissed the claims because plaintiffs failed to plead them with particularity as required by Federal Rules of Civil Procedure, Rule 9(b).  They also failed to show a special relationship that would give rise to a duty to disclose information about the Child Victims Act and failed to show that they were induced to refrain from carrying out their own investigation.

Muslim Group Sues Facebook For Consumer Fraud Because of Online Hate Speech

The non-profit organization Muslim Advocates filed suit yesterday in District of Columbia Superior Court against Facebook and its executives alleging that their failure to take down anti-Muslim posts, while claiming to do so, is fraudulent and violates the D.C. Consumer Protection Procedures Act.  The complaint (full text) in Muslim Advocates v. Zuckerberg, (DC Super. Ct., filed 4/8/2021) alleges in part:

Every day, ordinary people are bombarded with harmful content in violation of Facebook’s own policies on hate speech, bullying, harassment, dangerous organizations, and violence. Hateful, anti-Muslim attacks are especially pervasive on Facebook. 

Yet Facebook refuses to “remove” this content or “take it down,” as its executives repeatedly promised that they and the company would do when they learn of such content. Instead, in an effort to convince Congress, civil rights groups, and the public that their product is safe, Facebook’s officials have consistently misrepresented the company’s actual practices when it comes to enforcing Facebook’s own its own standards and policies to keep Facebook free of hate speech and other harmful content....

Facebook has been used, among other things, to orchestrate the Rohingya genocide in Myanmar, mass murders of Muslims in India, and riots and murders in Sri Lanka that targeted Muslims for death. Anti-Muslim hate groups and hate speech run rampant on Facebook with anti-Muslim posts, ads, private groups, and other content.....

Washington Post reports on the lawsuit.

Prominent Ex-Mormon Sues Church For Fraud In The Use Of Members' Tithes

Suit was filed this week in a California federal district court against the Mormon church by a prominent former member who had contributed millions of dollars to it alleging fraud in the solicitation of contributions from members. The complaint (full text) in Huntsman v. Corporation of the President of the Church of Jesus Christ of Latter Day Saints, (CD CA, filed 3/22/2021), alleges: 

For decades, in a fraudulent effort to elicit the donation of tithing funds from Mr. Huntsman and other devout Church members, the LDS Corporation repeatedly and publicly lied about the intended use of those funds, promising that they would be used for purely non-commercial purposes consistent with the Church’s stated priorities – namely, to fund missionary work, member indoctrination, temple work, and other educational and charitable activities. Behind the scenes, however, rather than using tithing funds for the promised purposes, the LDS Corporation secretly lined its own pockets by using the funds to develop a multi-billion dollar commercial real estate and insurance empire that had nothing to do with charity.

According to an RNS report on the lawsuit, plaintiff is a filmmaker, the son of a prominent philanthropist and the brother of a former governor of Utah.

The complaint says:

Mr. Huntsman ... will ... use the recovered funds to benefit organizations and communities whose members have been marginalized by the Church’s teachings and doctrines, including by donating to charities supporting LGBTQ, African-American, and women’s rights.

KUTV News has published a statement from the LDS Church responding to the allegations in which it denies using tithed funds for a commercial development.

West Virginia Supreme Court Exempts Religious Schools and Camps From Deceptive Practices Ban

 In State of West Virginia ex rel. Morrisey v. Diocese of Wheeling-Charleston, (WV Sup. Ct., Nov. 16, 2020), the West Virginia Supreme Court held that the deceptive practices provisions of the state's Consumer Credit and Protection Act cannot be applied to educational and recreational services offered by a religious institution. It concluded that state statutory provisions protecting religious schools and institutions lead to this result.  It also held that 

the entire relationship between Church and State arising from the Attorney General’s application of the Act constitute an excessive entanglement of  Church and State...

According to the court:

[T]he Attorney General claimed that the Diocese had violated the deceptive practices provisions when it knowingly employed admitted and credibly-accused sexual abusers in its schools and camps but neither disclosed that material information to consumers nor warned them of the alleged dangers inherent to the educational and recreational services it provided. The Attorney General also claimed that the Diocese had made material misrepresentations regarding the safety of those services....

Justice Workman filed a dissenting opinion, saying in part:

The majority opinion is transparently result-oriented which explains its logical incoherence and sins of omission. The issue before the Court is one of fairness and honesty in commercial communications to the public---potential purchasers of goods and services. The fundamental question involves matters of unfair or deceptive acts or practices in advertising or selling and in advertising based on false promises. That is all. Nothing else is at issue. This case has absolutely nothing to do with the free exercise or expression of religious thought and nothing to do with regulating religious institutions in the sense of excessive State entanglement....

In conclusion, the majority opinion slams the door shut on enforcement of even the most blatant unfair or deceptive commercial conduct on the grounds that false or misleading advertising was perpetrated by a religious institution.... Ironically, religious institutions have been given an unfair marketplace advantage with respect to their commercial enterprises. 

AP reports on the decision.

Poway Rabbi Pleads Guilty To Fraud Charges

Under a Plea Agreement (full text) in United States v. Goldstein, (SD CA, 7/14/2020), a California rabbi plead guilty to one count of conspiracy to defraud the United States and commit wire fraud. As set out in the Information (full text) filed at the same time as the plea agreement, Rabbi Yisroel Goldstein was charged with a scheme to help at least five other taxpayers evade income taxes and fraudulently received other benefits.  Goldstein would generate receipts for charitable donations, but funnel 90% of the contributions back to donors. Taxpayers would also use the receipts to generate matching contributions from their employers.  He would also assist other in obtaining fraudulent grants or loans, and falsely generate community service records for individuals sentenced to community service.

Rabbi Goldstein obtained public notice in 2019 when an attack on his synagogue in Poway resulted in one death and injuries to others including Goldstein.  Courthouse News Service reports on the case:

U.S. Attorney Robert Brewer said during a press conference Tuesday Goldstein had personally made off with $620,000 in kickback payments for helping five Chabad of Poway donors evade paying personal income taxes....

“There is no doubt Rabbi Yisroel Goldstein was the victim of a horrific hate crime which terrorized him and the Chabad community. That event was a significant mitigating factor in the final plea agreement,” Brewer said....

Brewer said when Goldstein is sentenced later this year, the U.S. Attorney’s Office will recommend probation. He cited Goldstein’s past and ongoing cooperation, community contributions and “exemplary” example as “a significant advocate for peace and the elimination of violence and religious hatred” following the 2019 shooting.

Goldstein will pay $2.5 million in restitution as part of the plea agreement, Brewer said.

Italian Court Upholds Lease Of Historic Abbey to Conservative Catholic Group With American Ties

The Art Newspaper reports that in Italy in a decision published Monday, a 3-judge administrative court rejected an attempt by the Ministry of Culture to revoke a 19-year lease granted to a conservative Catholic organization, Dignitatis Humanae Institute (DHI), for an elaborate 13th century abbey. According to the report:

The lease was awarded as part of an initiative to involve the private sector in the management of abandoned cultural sites in Italy.

The judges concluded that the ministry had failed to act within the prescribed time limit for the annulment of public contracts. The verdict is an embarrassing defeat for the Italian ministry of culture which had argued that the time limit should not apply because the DHI made “false and mendacious” statements in its application for the lease, an allegation which the administrative judges say the ministry failed to provide evidence for.

DHI says that the case against it is politically motivated. DHI is funded by Donald Trump's controversial former chief strategist Steve Bannon. After the decision was released, Italy's Attorney General's Office said it would begin a criminal investigation of  DHI’s founder, Benjamin Harnwell. And the Ministry of Culture says it will appeal the administrative court's decision.

Supposed Church Enjoined From Selling Bleach As Sacrament To Cure COVID-19

On Friday, in United States v. Genesis II Church of Health and Healing, (SD FL, April 17, 2020), a Florida federal district court issued a temporary restraining order against an organization claiming to be a church which was selling a powerful industrial bleach product as a cure for COVID-19 and other serious conditions.  As set out in the government's Complaint (full text) and its Motion for a Temporary Restraining Order (full text) filed April 16, the defendant told the FDA:

We can say cure, heal and treat as a Free Church. Don’t need you [sic] approval or authorization for a Church Sacrament.”... There will be NO corrective actions on our part … You have no authority over us! … Never going to happen.

ARS Technia gives additional background:

Genesis was selling MMS online and describes it as a sacrament. Attempting to purchase the product today leads to an error page that says, "We are currently in prayer!!! During these difficult and trying times, we are in prayer and seeking The LORD's wisdom & guidance. Please pray for us."

Genesis' main website calls the organization "a non-religious church" that aims to "restore health" to the world and which "was formed for the purpose of serving mankind and not for the purpose of worship."

Court Dismisses Claims That Mormon Doctrines Are Fraudulent

In Gaddy v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints, (D UT, March 31, 2020), a Utah federal district court dismissed on 1st Amendment grounds a suit alleging fraud by the LDS Church.  In the suit, a former LDS Church member alleged that several basic teachings of the Church involve misrepresentations.  The court said in part:

Each of these alleged misrepresentations directly implicates the Church’s core beliefs. Because a statement’s falsity is an essential element of fraud claims, adjudicating these claims would require the court to do exactly what the Supreme Court has forbidden—evaluate the truth or falsity of the Church’s religious beliefs. This court can no more determine whether Joseph Smith saw God and Jesus Christ or translated with God’s help gold plates or ancient Egyptian documents, than it can opine on whether Jesus Christ walked on water or Muhammed communed with the archangel Gabriel. The First Amendment prohibits these kinds of inquiries in courts of law.

Courthouse News Service reports on the decision.

9th Circuit: Religious References At Sentencing Hearing Were OK

In United States v. Hong, (9th Cir., March 17, 2020), the U.S. 9th Circuit Court of Appeals held that a district court did not violate defendants' free exercise rights at a sentencing hearing in a fraud case, saying in part:

The district court did not plainly err in describing how the Hongs used religion to carry out their fraudulent scheme, in commenting on video footage showing Grace Hong speaking to a church group, or in mentioning the spiritual harm suffered by the Hongs’ victims. The Hongs point to no binding legal authority precluding a sentencing court from considering the religion of the victims or noting the spiritual impact of an offense on the victims. 

Church Leaders Sentenced To Prison In Scheme To Siphon Off Church Funds

The U.S. Attorney's Office for the District of New Jersey announced this week:

The leader and the main treasurer of the Israelite Church of God in Jesus Christ were sentenced to federal prison today for their respective roles in a scheme in which both men caused the church to pay millions of dollars in personal expenses for the leader that the leader then omitted from his personal tax returns.

The two men had previously pleaded guilty to one count of conspiring to defraud the United States of at least $250,000 in taxes.  Jermaine Grant, the church leader, was sentenced to 18 months in prison. The treasurer, Lincoln Warrington, was sentenced to 12 months and one day.