Fraudulent Cancer Charities Agree to Close Shop in Settlement with FTC
By Charity Smith, Courthouse News Service
(CN) - Two cancer charities accused of scamming $75 million from donors agreed to shut their doors as part of a settlement with the U.S. government.
All 50 states had joined the Federal Trade Commission last year in a complaint against the Cancer Fund of America, Cancer Support Services, Children's Cancer Fund of America and the Breast Cancer Society, saying they wasted and misused $187 million in charitable contributions.
While the Children's Cancer Fund of America and the Breast Cancer Society reached immediate settlements with the FTC, the other two waited until just this Wednesday to settle.
Michigan Attorney General Bill Schuette said in a statement that Cancer Fund of America and Cancer Support Services bilked donors of $75 million from 2008 to 2012.
Instead of helping cancer patients, the charities and their president, James Reynolds Sr., "spent the overwhelming majority of donations on their operators, families and friends, and fundraisers," according to a statement from Schuette's office.
To help satisfy a $75.8 million judgment, Reynolds must surrender of certain artwork, two pistols, and sale of a pontoon boat, the statement continues.
In addition to immediate dissolution and liquidation of the charities' assts, the settlement bans Reynolds "from profiting from charity fundraising and nonprofit work, and from serving as a charity's director or trustee or otherwise managing charitable assets," Schuette's office added.
The presidents of the other charged charities - Kyle Effler, Rose Perkins and James Reynolds II - face similar bans against fundraising, charity management, and oversight of charitable assets.
A federal judge in Phoenix, Ariz., must still sign off on the settlement.
"Giving to a charity should leave you with a good feeling, a feeling that you are helping others, not a concern that the donation you have made is going to fund someone's lavish lifestyle," Schuette said in a statement.
Each of the charities claimed to directly support people with cancer - saying donation dollars bought patients medications, transportation to doctors and hospice care.
The government said none of the organizations provided any such services.
"Today's agreement helps ensure that the charitable donations of Michigan residents are used as intended by their donors and for the good of society," Schuette said.
Schuette announced the settlement just two days after publishing fourth annual fundraising survey, which found that professional fundraisers keep an average of 67 cents for every dollar donated.
Professional fundraisers are the organizations or people charities hire to solicit funds, meaning the charities receive only a third of the money donated to their cause.
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