On May 19, the Federal Trade Commission and all fifty state attorneys general and the District of Columbia charged four cancer charities and their operators with bilking more than $187 million from consumers. The alleged fraud, detailed in a complaint filed in the United States District Court for the District of Arizona, is said to be one of the largest-ever involving a charity. The complaint describes the groups as “sham charities,” alleging they “operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation.”
Named in the federal court complaint are Cancer Fund of America, Inc. (CFA) and 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 complaint alleges that Knoxville-based Cancer Fund of America Inc. and the three other charities used outside groups to solicit donations by telephone and direct mail, and also on websites, claiming that money would be used to help people suffering from cancer. In reality, most of the money collected through donations from 2008 through 2012 went to pay the telemarketing companies, and the operators of the charities then kept most of the rest of the funds for themselves. The complaint alleges that defendants spent charitable donations on cars, luxury travel, college tuition, and even dating site memberships for family members, friends, and employees.
At a press conference in Washington, Virginia Attorney General Mark Herring said, “The allegations of fundraising for personal gain in the name of children with cancer and women battling breast cancer are simply shameful. This is the first time the FTC, all fifty states, and the District of Columbia have filed a joint enforcement action alleging deceptive solicitations by charities and I hope it serves as a strong warning for anyone trying to exploit the kindness and generosity of others.”
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