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FTC Spotlight -- Cancer Charities Charged with Cheating Consumers Out of $187M

Posted  May 21, 2015

By the C|C Whistleblower Lawyer Team

In one of the largest actions ever brought for charity fraud, The FTC and all 50 states filed a complaint against four sham charities: the Cancer Fund of America, Inc. (CFA); Cancer Support Services Inc. (CSS); Children’s Cancer Fund of America Inc. (CCFOA); and The Breast Cancer Society Inc.  The FTC charges that the four phony charities bilked consumers out of nearly $200 million by falsely claiming donations would help pay for pain medication, hospice care and other services for cancer patients, including children and women suffering from breast cancer.  But the overwhelming majority of donations benefitted only the perpetrators, their families, friends, and fundraisers, spending the donations on luxury vacations, cars, sporting events, clothing, and more.

At the center of the fraud was James T. Reynolds Sr., who started the Cancer Fund of America in 1987.  He expanded the enterprise over the next 25 years to four separate groups and was joined by his son, friends and members of his Mormon Church congregation in Knoxville, Tenn.  According to the complaint, they used a variety of means to extract money from consumers, including telemarketing calls, direct mail, websites, and materials distributed by the Combined Federal Campaign, which raises money from federal employees for non-profit organizations, to portray themselves as legitimate charities.

In the FTC press release, Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, said “cancer is a debilitating disease that impacts millions of Americans and their families every year. The defendants’ egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support.”  Virginia Attorney General Mark Herring added that “the allegations of fundraising for personal gain in the name of children with cancer and women battling breast cancer are simply shameful…I hope [this action] serves as a strong warning for anyone trying to exploit the kindness and generosity of others.”

The FTC has put together a website to assist consumers in avoiding charity scams, providing tips to help consumers be sure their money goes to good charities doing the work they promise to be doing, rather than to fraudsters out to swindle donations for their own gain.