FTC: ‘Sham Cancer Charities’ Bilked more than $187M from Consumers

May 19th, 2015

Consumers who were led to believe that their donations would help cancer-stricken patients instead had their contributions spent on lavish vacations, college tuition and Jet Ski outings by a close-knit network of family and friends running the charities to which they donated, the FTC and all 50 states allege in a joint complaint filed against four cancer charities on Monday.

“The defendants took in millions of dollars in donations meant to help cancer patients, but spent it on themselves and their fundraisers,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “I’m please that the FTC and our state partners are acting to end this appalling scheme.”

CFA featured photo

An image that appeared on the Cancer Fund of America’s website in 2012.

In total, the charities — the Cancer Fund of America (CFA), Cancer Support Services (CSS), Children’s Cancer Fund of America (CCFOA) and The Breast Cancer Society (BCS) — allegedly bilked more than $187 million from consumers from 2008 to 2012. During that time, the complaint alleges that the charities collectively spent less than a paltry 3 percent of donations on cancer patients.

Rather than allocating the money for what was promised for cancer patients on telemarketing calls and in direct mail — pain medication, transportation to chemotherapy and hospice care, among other things — the overwhelming majority of the donations went to a laundry list of luxuries that the charity executives and fundraisers themselves enjoyed, the complaint says. Included in that lot were luxury cruises, cars, concert tickets, gym and dating site memberships and two all-expense paid trips to Disney World.

“Some charities send children to Disney World,” said South Carolina Secretary of State Mark Hammond, at a Washington D.C. news conference Tuesday. “These charities sent themselves to Disney World.”

A family affair

And apparently it was a family affair. Among those named in the federal court complaint are James Reynolds, Sr., president of the CFA; his son, James Reynolds II, executive director of the BCS; and the elder Reynolds’ ex-wife, Rose Perkins, executive director of CCFOA.

A 2013 Tampa Bay Times investigation in collaboration with the Center for Investigative Reporting noted Reynolds family ties in ranking the CFA as the second-worst charity in the country:

CFA’s founder (James Reynolds, Sr.) and at least a dozen other family members earn a total of $1 million in salaries from CFA and four spin-off charities. … Over the past decade, fundraisers have collected $98 million in donations. Patients have gotten less than $1 million in direct cash aid over those 10 years, IRS records show.

The Children’s Cancer Fund of America and The Breast Cancer Society have agreed to settlements that shut down both charities, while litigation continues against the Cancer Fund of America and Cancer Support Services.

Meanwhile, it doesn’t look like much restitution, if any, will be headed to consumers who were allegedly misled by the charities.

“Unfortunately, the defendants have spent most of the money and we’re not in a position to provide donors with money back,” said the FTC’s Rich.

For tips on how to protect yourself from unscrupulous charities, click here.

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