Sham Cancer Charities in $187M Scam Shut Down, Leader Gets Lifetime Fundraising Ban
In a settlement with the Federal Trade Commission (FTC), the leader of various sham cancer nonprofits has agreed to shut down his organizations in what the agency has called the largest joint enforcement action against charity fraud.
James Reynolds Sr., president of Cancer Fund of America Inc. (CFA) and Cancer Support Services Inc. (CSS), has agreed to dissolve both charities and liquidate their assets as part of a deal with the FTC and attorneys general from all 50 states and Washington, D.C., according to the settlement. Reynolds, who created CFA in 1987, also has been banned from participating in future charity fundraising or other nonprofit work, serving as a charity director or any position that manages charitable assets, and receiving any kind of payment from a nonprofit. However, he is permitted to volunteer for his church as long as it's not in a role the settlement prohibits.
His charities claimed to help cancer patients, but, instead, the FTC claimed they used $187 million in donor funds on their operators, family members, friends and fundraisers. The complaint against the charities and its operators noted that donations were used for vehicles, personal consumer goods, college tuition, gym memberships, Jet Ski outings, dating website subscriptions, luxury cruises, and tickets to concerts and professional sporting events. CFA, which ranked No. 2 on Tampa Bay Times' America's Worst Charities, and CSS, CFA's fundraising arm, allegedly scammed more than $75 million of the $187 million donated to all the charities between 2008 and 2012.
"The FTC and our state enforcement partners have ended a pernicious charity fraud that siphoned hundreds of millions of dollars away from well-meaning consumers, legitimate charities and people with cancer who needed the services the defendants falsely promised," said Jessica Rich, director of the FTC’s Bureau of Consumer Protection in a statement. "[Wednesday's] settlement, along with those announced earlier, shut down the sham charities once and for all, and banned the individual perpetrators for life."
It is noted in court documents that Reynolds and his charities "neither admit nor deny any of the allegations in the complaint" as part of the settlement. However, Reynolds, CFA and CCS received a judgment for approximately $75.8 million—the amount donated to CFA and CSS between 2008 and 2012, according to the settlement. Asset liquidation of the two charities will fund the judgment partially. Reynolds also must surrender framed art prints, Remington statues, collector beer steins and two 9mm pistols, in addition to selling his 2009 pontoon boat to have his portion of the judgment suspended. All funds will go into a short-term court-ordered trust fund, which will be distributed to states to pay for investigation and litigation fees, and then be disbursed to organizations with similar charitable purposes to CFA and CSS.
The previous settlements involved two other Reynolds-linked nonprofits—Children’s Cancer Fund of America Inc. (CCFOA) and The Breast Cancer Society Inc. (BCS), which settled and agreed to liquidate their assets in May. Kyle Effler, chief financial officer of CFA and CSS, former president of CSS and Reynolds' long-time associate; Rose Perkins, president and executive director of CCFOA and Reynolds' ex-wife; and James Reynolds II, executive director and former president of BCS, also were banned from fundraising, charity management and oversight of charitable assets. CCFOA and Perkins had a $30.1 million judgment; BCS and James Reynolds II received a $65.6 million judgment; and Effler had a $41.2 million judgment. After asset liquidation, Perkins' judgment was suspended due to her inability to pay; James Reynolds II had to pay $75,000; and Effler was expected to pay $60,000.