Four nationwide cancer charities and their operators defrauded consumers out of $187 million after telling donors their money would help cancer patients, including children and women suffering from breast cancer.
But the overwhelming majority of donations benefited only the perpetrators, their families and friends, and fundraisers, according to the U.S. Federal Trade Commission, in an action that also involved 58 law enforcement partners from every state and the District of Columbia.
This is one of the largest actions to date against charity fraud, the FTC said.
According to a complaint, the charities’ operators used the organizations for “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.”
They also hired professional fundraisers who often received 85 percent or more of every donation.
“Cancer is a debilitating disease that impacts millions of Americans and their families every year,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “The defendants’ egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support. They “took in millions of dollars in donations meant to help cancer patients, but spent it on themselves and their fundraisers. I’m pleased that the FTC and our state partners are acting to end this appalling scheme.”
Names of the So-Called Charities
Named in the federal court complaint are Cancer Fund of America, Inc. (CFA), Cancer Support Services Inc. (CSS), their president, James Reynolds, Sr., and their chief financial officer and CSS’s former president, Kyle Effler; Children’s Cancer Fund of America Inc. (CCFOA) and its president and executive director, Rose Perkins; and The Breast Cancer Society Inc. (BCS) and its executive director and former president, James Reynolds II.
The named defendants used telemarketing calls, direct mail, websites, and materials distributed by the Combined Federal Campaign, which raises money from federal employees for non-profit organizations, the FTC said.
They portrayed themselves as legitimate charities with substantial programs that provided direct support to cancer patients in the United States, such as providing patients with pain medication, transportation to chemotherapy, and hospice care.
In fact, the complaint alleges that these claims were deceptive and that the charities “operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation, with none of the financial and governance controls that any bona fide charity would have adopted.”