FTC Files Suit Against Four Cancer Charities

The and the attorneys general of all fifty states and the District of Columbia have filed suit accusing four cancer charities of being "shams" that bilked individuals of more than $187 million in donations between 2008 and 2012.

The Cancer Fund of America, Cancer Support Services, Children's Cancer Fund of America, and the are accused of soliciting donations for programs that allegedly provided direct assistance to cancer patients but instead used the "overwhelming majority" of the funds to enrich individuals associated with the organizations. According to the (148 pages, PDF) filed in the United States District Court for Arizona, James Reynolds, Sr. devised the fundraising scheme in 1987 and recruited his son, friends, and members of his church to participate. Between 2008 and 2012, the four charities spent less than 3 percent of the funds they raised on actual assistance for cancer patients while often paying professional fundraisers more than eighty-five cents on every dollar raised. The complaint also accuses the organizations of falsifying financial documents and falsely reporting more than $223 million in in-kind donations.

The charities "operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation, with none of the financial and governance controls that any bona fide charity would have adopted," the complaint further alleges.

According to the FTC, the Children's Cancer Fund of America, the Breast Cancer Society, and their executive directors, along with Cancer Support Services' CFO agreed to settle the charges before the complaint was filed on Monday; the organizations will be dissolved and the individuals involved will be banned from all fundraising, charity management, and oversight of charitable assets in the future. Litigation will proceed against the Cancer Fund of America, Cancer Support Services, and Reynolds Sr. In a on the BCS website, executive director James Reynolds II wrote that "[w]hile the organization, its officers and directors have not been found guilty of any allegations of wrong doing, and the government has not proven otherwise, our Board of Directors has decided that it does not help those who we seek to serve, and those who remain in need, for us to engage in a highly publicized, expensive, and distracting legal battle around our fundraising practices."

Questions had been raised in the past about some of the charities, the notes. The Cancer Fund of America, for example, was second on a list of "" published by the and the in 2014.

"The allegations of fundraising for personal gain in the name of children with cancer and women battling breast cancer are simply shameful," said Virginia attorney general Mark Herring. "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."

"." Federal Trade Commission Press Release 05/19/2015. Rebecca R. Ruiz. "." New York Times 05/19/2015.