AG Healey Joins Federal-State Crackdown on Four Cancer Charities Charged with Bilking $187 Million From Donors
BOSTON – Attorney General Maura Healey, the U.S. Federal Trade Commission (FTC), all 49 other states, and the District of Columbia, have jointly filed a federal lawsuit against four sham cancer charities and their operators for swindling more than $187 million from consumers throughout the country. This is one of the largest actions brought to date by enforcers against charity fraud.
The complaint, filed in the U.S. District Court for the District of Arizona, alleges that Cancer Fund of America, Inc., Children’s Cancer Fund of America, Inc., Cancer Support Services, Inc. and The Breast Cancer Society, Inc., falsely portrayed themselves to donors as legitimate charities with substantial nationwide programs whose primary purposes were to provide direct support to cancer patients, when they did not, in fact, operate such programs.
“These fraudulent cancer charities misused millions of dollars in generous donations and failed to provide much-needed funds and support for cancer victims nationwide,” AG Healey said. “I am pleased to join with our state and federal partners in ending these deceptive solicitations that targeted residents of Massachusetts and every other state in the country. While there are many worthy charities out there, we remind people to make informed decisions when donating to maximize the value of their contribution so they can be confident their money is going to reputable organizations that can best help those in need.”
The complaint also names James Reynolds, Sr., the president and executive director of Cancer Fund of America, and the interim president of Cancer Support Services; Kyle Effler, the former president and chief financial officer of Cancer Support Services, as well as the former chief financial officer of Cancer Fund of America; Rose Perkins, the president and executive director of Children’s Cancer Fund of America; and James Reynolds, II, the chief executive officer of The Breast Cancer Society.
Five of the defendants – Children’s Cancer Fund of America, The Breast Cancer Society, Perkins, Effler and James Reynolds, II – have agreed to settle the charges asserted against them in stipulated judgments, subject to court approval. The proposed settlements enjoin Perkins, Effler, and James Reynolds, II, from charitable fundraising, management and oversight. The proposed settlements also order the liquidation of the assets of Children’s Cancer Fund of America and Breast Cancer Society, and the dissolution of those entities. The substantial monetary judgments against each of the defendants will be partially satisfied by payments from the liquidation of the assets of Children’s Cancer Fund of America and Breast Cancer Society. Litigation will continue against the Cancer Fund of America, Cancer Support Services and James Reynolds, Sr.
According to the complaint, the defendants used 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 with substantial programs that provided direct support to cancer patients in the United States, including women suffering from breast cancer and children. These solicitations included representations that the corporate defendants provided patients with pain medication, transportation to chemotherapy, and hospice care.
The defendants allegedly used the organizations for lucrative employment for family members and friends, and spent consumer donations on cars, trips, luxury cruises, college tuition, gym memberships, Jet Ski outings, sporting event and concert tickets, and dating site memberships. They allegedly hired professional fundraisers who often received 85 percent or more of every donation.
The complaint also alleges that, to hide their high administrative and fundraising costs from donors and regulators, the defendants falsely inflated their revenues by reporting, in publicly filed financial documents – including annual information returns filed with AG Healey’s Non-Profit Organizations/Public Charities Division – more than $223 million in donated “gifts in kind” which they claimed to distribute to international recipients. In fact, the defendants were merely pass-through agents for such goods. By reporting the inflated “gift in kind” donations, defendants created the illusion that they were larger and more efficient with donors’ dollars than they actually were.
For more information about steps consumers can take to give wisely to a charity in Massachusetts, visit AG Healey’s website. Individuals with inquiries or complaints about charitable solicitations should call the Attorney General's Non-Profit Organizations/Public Charities Division at 617-727-2200 x 2101, access the complaint form online, or write to:
Office of the Attorney General
Non-Profit Organizations/Public Charities Division
One Ashburton Place
Boston, MA 02108
This case is being handled for Massachusetts by Assistant Attorney General Brett Blank of AG Healey’s Non-Profit Organizations/Public Charities Division.