AG Cooper: Sham Cancer Charities To Pay for Bilking $187M From Donors

Published Wednesday, May 20, 2015 at 10:01 am

Four phony charities that claimed to fight cancer allegedly took $187 million in donations, including $1 million from consumers in North Carolina, but did little or nothing to help cancer victims, Attorney General Roy Cooper and Secretary of State Elaine F. Marshall announced Tuesday.

Cooper

Cooper

“Donations should go to help people in need, not line fundraisers’ pockets,” Cooper said. “When contributions to charity are wasted and misused, people in need suffer and consumers lose confidence in helping others. We’re cracking down to protect consumers from fraudulent charities and restore their trust in legitimate ones.”

Secretary Marshall added that, “State government regulators and our federal partners are sending the message to those trying to rip-off the giving public that we can find you, shut you down, and take you to court.”

Cooper and Marshall late yesterday joined 49 other states and the Federal Trade Commission to file suit against Cancer Fund of America, Children’s Cancer Fund of America, Cancer Support Services, The Breast Cancer Society, and the individuals who operated them for misrepresentation and fraud. The suit contends that the defendants portrayed themselves as legitimate charities with substantial nationwide programs that provided direct support to cancer patients, children with cancer, and breast cancer patients in the United States. In fact, the overwhelming majority of contributions raised never benefited actual cancer victims, going instead to the perpetrators, their families and friends, and professional fundraisers, who often received 85% or more of every donation.

In settlements filed along with the complaint, two of the four corporate defendants and three of the four individual defendants have agreed to leave the charity business and stop fundraising. They have also agreed to judgments totaling $137 million nationally, with any money collected from the judgments slated to go to legitimate national cancer charities to help cancer patients, as donors originally intended.

About the lawsuit
The lawsuit contends that the defendants and their telemarketers lied repeatedly to win contributions. Donors were often told that their contributions would be used to provide pain medication to children suffering from cancer, transport cancer patients to chemotherapy appointments, and/or pay for hospice care for cancer patients. However, none of the defendants has ever operated programs that provide these services.

The lawsuit contends that the sham charities have spent more money on salaries than on help for cancer patients. The individual defendants hired family members and friends, whether qualified or not, and used the organizations to provide them with steady, lucrative employment. Defendants spent donations on things like cruises, Jet Ski outings, concert tickets, and dating site memberships—actions made possible by corporate boards who rubber-stamped their decisions.

The defendants named in the federal court filings are:

  • Cancer Fund of America, Inc., Cancer Support Services, Inc., their president, James Reynolds, Sr., and Chief Financial Officer, Kyle Effler;
  • Children’s Cancer Fund of America, Inc., and its president and Executive Director Rose Perkins; and
  • The Breast Cancer Society, Inc., and its Executive Director and former president, James Reynolds, II.

About the settlements
Under settlements filed along with the lawsuit and awaiting approval by the court, Children’s Cancer Fund and The Breast Cancer Society will be dissolved and Perkins, Reynolds, II, and Effler banned from operating charities, overseeing charitable assets, and fundraising. In addition:

  • Children’s Cancer Fund of America and Rose Perkins agreed to a judgment for $30,079,821, the amount that consumers donated between 2008 and 2012. The judgment will be partially paid by liquidating Children’s Cancer Fund’s assets.
  • The Breast Cancer Society agreed to a judgment for $65,564,360, the amount consumers donated to it between 2008 and 2012, and its assets liquidated to pay the judgment. Its Hope Supply Warehouse program may be spun off to a legitimate charity, subject to court approval.
  • Reynolds, II agreed to a $65,564,360 judgment, suspended when he pays $75,000 because financial information indicates he is unable to pay more.
  • Effler, former Cancer Support Services president and CFO of Cancer Fund, agreed to a judgment for $41,152,231, the amount that consumers donated to Cancer Support Services between 2008 and 2012. That judgment will be suspended once he pays $60,000 because financial information indicates he is unable to pay more.

About the remaining defendants
North Carolina, the FTC and the other states will continue to pursue their case in federal court against Cancer Fund of America, Cancer Support Services (which the complaint alleges operates as a common enterprise with Cancer Fund of America), and James Reynolds, Sr.

North Carolina donations and complaints
Consumers filed a total of 85 complaints against the defendants with Cooper’s Consumer Protection Division, mostly for the charity’s telemarketing calls to raise donations. Cooper’s office got 21 complaints about Cancer Fund of America, all but one about its telemarketing calls; two complaints about Cancer Support, including one about telemarketing; 61 complaints about The Breast Cancer Society, all but two about telemarketing; and one complaint about Children’s Cancer Fund of America, for its telemarketing.

According to the North Carolina Secretary of State’s Office, North Carolina consumers donated $1,012,775.78 to the charities named in the lawsuit, with more than 80 percent of the money given going to fundraisers.

“Give generously to help others if you are able to, but make sure your money will be used as you intend,” Cooper said. “Before you give, do your homework so your donation can do the most good possible.”

Cooper’s office offers tips on how to check out a charity and avoid charity scams at www.ncdoj.gov. North Carolina consumers who spot a potential charity scam can file a complaint with Attorney General’s Consumer Protection Division online at ncdoj.gov or call1-877-5-NO-SCAM toll-free within state.

People with questions about individual charities or charitable solicitation activities in general can call the Secretary of State’s Office, Charitable Solicitation Licensing (CSL) Division at 1-888-830-4989 (toll-free in North Carolina) or 1-919-807-2214 or visit CSL on-line at http://www.secretary.state.nc.us/csl/

 

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