Cancer charity scams shut down by FTC, states

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Money fanThe Federal Trade Commission and consumer protection agencies from all 50 states, including the Delaware Department of Justice, have obtained a permanent injunction to dissolve two nationwide sham cancer charities and ban their president from profiting from any charity fundraising in the future under a settlement filed in court today.

Cancer Fund of America Inc. (CFA), Cancer Support Services Inc. (CSS) and their leader, James Reynolds, Sr., agreed to settle charges that CFA and CSS claimed to help cancer patients, but instead, spent the overwhelming majority of donations on their operators, families and friends, and fundraisers. The injunction was entered Wednesday in United States District Court for the District of Arizona.

The complaint, filed in May 2015, targeted four sham charities run by Reynolds and his family members that allegedly bilked more than $187 million from donors.  CFA and CSS were responsible for more than $75 million of that amount. The other two sham charities settled in May 2015. The settlement announced today concludes the largest joint enforcement action ever undertaken by the FTC and state charity regulators.

Under the settlement order, CFA and CSS will be permanently closed and their assets liquidated. Reynolds is banned from profiting from charity fundraising and nonprofit work, and from serving as a charity’s director or trustee or otherwise managing charitable assets.

The order imposes a judgment against CFA, CSS, and Reynolds, jointly and severally, of $75,825,653, the amount consumers donated to CFA and CSS between 2008 and 2012.  The judgment against CFA and CSS will be partially satisfied via liquidation of their assets. The judgment against Reynolds will be suspended upon surrender of certain artwork, two pistols, and sale of a pontoon boat. The full judgment will become due immediately if he is found to have misrepresented his financial condition.

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The other defendants in the case were CFA’s and CSS’s 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. Under the respective settlement orders, Effler, Perkins and Reynolds II were banned from fundraising, charity management, and oversight of charitable assets, and CCFOA and BCS are in receivership and will be dissolved after their assets are liquidated.

“There are so many charities that do such good work that it is important to weed out those that are essentially money-making operations for a few greedy individuals,” Attorney General Matt Denn said. “The Consumer Protection Unit of the Delaware Department of Justice participated in this important case and I thank Deputy Attorney General Gillian Andrews for serving as part of the national executive committee of this multistate effort to shut down these sham charities.”

Delaware’s Consumer Protection Unit recommends that consumers do some research before donating to a charity to confirm that it is a legitimate charity, and pay special attention to the percentage of funds collected that are actually being used for charity. For more information about charities, consumers can visit www.guidestar.org orwww.charitynavigator.org to obtain a charity’s Form 990 and can ensure that an organization is tax-exempt by checking the IRS Exempt Organizations Division’s Select Check database at https://apps.irs.gov/app/eos/.

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