Two purported cancer charities are to be dissolved, and their leadership is responsible for repaying $75 million in public donations, federal and state officials announced yesterday.
Cancer Fund of America Inc., Cancer Support Services Inc., and their leader, James Reynolds Sr, agreed to settle charges that the two organizations claimed to help cancer patients, but instead were actually "sham charities" that spent the "overwhelming majority" of donations on personal expenses and fundraising.
Donors were told that their contributions, which amounted to $75.8 million from 2008 to 2012, would support cancer patients by providing drugs, groceries, transportation for chemotherapy, counseling, hospice care, and cash, according to the Federal Trade Commission (FTC).
But instead of medical treatment or money, patients received boxes of sample-sized soap, seasonal greeting cards, and Little Debbie Snack Cakes from the Cancer Fund of America, which is located in Tennessee, according to a report published last year in the Tampa Bay Times.
The case against the sham charities was brought by the FTC, all 50 states, and the District of Columbia.
The original complaint, filed by federal and state agencies in May 2015, targeted four nonprofits run by Reynolds and members of his family, which took in more than $187 million from donors.
Cancer Fund of America and Cancer Support Services were responsible for more than $75 million of that total. The other two sham charities settled in May 2015.
According to the complaint, Reynolds and his cronies used the organizations as lucrative employment for family members and friends, and spent consumer donations on cars, trips, luxury cruises, college tuition, gym memberships, jet-ski outings, sporting-event and concert tickets, and dating-site memberships.
The newly announced settlement order indicates that Reynolds must liquidate, among other items, 15 framed art prints, five Remington statues, 50 collector beer steins, two pistols, and a pontoon boat.
Reynolds will also have to surrender an unspecified amount of personal assets and is banned for life from managing charitable assets, being part of a charity's board, or being a trustee.
However, according to a report published in the Washington Post, the FTC's win is "mostly symbolic because most of the money that was raised is already gone." In fact, "about 85% was spent on fundraising to keep the scheme going while the rest may have gone to the charity leaders."
"The FTC and our state enforcement partners have ended a pernicious charity fraud that siphoned hundreds of millions of dollars away from well-meaning consumers, legitimate charities, and people with cancer who needed the services the defendants falsely promised," said Jessica Rich, director of the Bureau of Consumer Protection at the FTC.
The settlement announced yesterday is part of the largest joint enforcement action ever undertaken by the FTC and state charity regulators.
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Cite this: Two Sham Cancer Charities Closed, $75 Million Owed - Medscape - Mar 31, 2016.