Two sham cancer charities that allegedly scammed nearly $76 million from consumers will be dissolved, their president banned from charity fundraising and their assets liquidated in a settlement announced today with all 50 states, the District of Columbia and the Federal Trade Commission.
Cancer Fund of America Inc., based in Knoxville, Tennessee, and Cancer Support Services Inc., based in Dearborn, Michigan, were among four phony cancer outfits that were sued by the FTC and state attorneys general last May in Arizona, charged with bilking a total of more than $187 million from donors. All four were run by James T. Reynolds Sr. or members of his family.
Besides Reynolds, the president of Cancer Fund of America and Cancer Support Services, the suit also named Children’s Cancer Fund of America Inc., based in Powell, Tennessee, and The Breast Cancer Society Inc., based in Mesa, Arizona, and their top executives. The Breast Cancer Society and Reynolds previously agreed to settle for nearly $65.6 million, compensate victims and liquidate their assets. The two organizations have been shut down.
According to the lawsuit, the vast majority of donations to the four sham organizations, supposedly intended to help cancer patients, went instead to the executives, their families and telemarketers who received up to 85 percent of every donation. The lawsuit alleged the individual defendants spent the proceeds on cars, trips, luxury cruises, college tuition, gym memberships, jet-ski outings, sporting events, concert tickets and dating site memberships.
Under the settlement announced today, Cancer Fund of America, Cancer Support Services and Reynolds agreed to pay nearly $76 million, representing the total consumers donated to the two organizations between 2008 and 2012, according to the FTC.
Reynolds, head of Cancer Fund of America since 1987, neither admitted nor denied the allegations in the complaint. The settlement requires him to relinquish ownership of 15 framed art prints, five Remington statues, 50 collector beer steins and two pistols. It also requires him to sell a pontoon boat.
In a statement, Kansas Attorney General Derek Schmidt said, “There are many charitable organizations who are providing important services that support cancer patients and work toward finding a cure. Unfortunately, we frequently see con artists take advantage by setting up fake charities to scam generous donors out of money that they think is going to a good cause.”
The monetary side of the settlement is probably moot. Schmidt said most of the donated funds were spent and can't be recovered. Any funds that are recovered, he said, will be used to cover litigation costs or given to legitimate cancer charities.
The FTC said the settlement is the largest joint enforcement action ever undertaken by the agency and state charity regulators.
The lawsuit was filed after the Tampa Bay Times and the Center for Investigative Reporting published the results of a yearlong investigation of Reynolds and his fundraising empire in 2013.
Dan Margolies, editor of the Heartland Health Monitor team, is based at KCUR. You can reach him on Twitter @DanMargolies.