FTC, States Settle Claims Against Two Entities Claiming to Be Cancer Charities; Orders Require Entities to Be Dissolved and Ban Leader from Working for Non-Profits

Two nationwide organizations purporting to be cancer charities will be dissolved, and their president is banned from profiting from any charity fundraising in the future, under a settlement with the Federal Trade Commission, all 50 states and the District of Columbia.

Cancer Fund of America Inc. (CFA), Cancer Support Services Inc. (CSS) and their leader, James Reynolds, Sr., agreed to settle charges that CFA and CSS claimed to help cancer patients, but instead, spent the overwhelming majority of donations on their operators, families and friends, and fundraisers.

The agencies’ complaint, filed in May 2015, targeted four purported non-profits, which the Commission alleged were sham charities, run by Reynolds and his family members that allegedly bilked more than $187 million from donors. CFA and CSS were responsible for more than $75 million of that amount. The other two alleged sham charities settled in May 2015. The settlement announced today concludes the largest joint enforcement action ever undertaken by the FTC and state charity regulators.

Under the settlement order, CFA and CSS will be permanently dissolved and their assets liquidated. Reynolds is banned from profiting from charity fundraising and nonprofit work, and from serving as a charity’s director or trustee or otherwise managing charitable assets. He is also prohibited from making misrepresentations about goods or services, and violating the FTC’s Telemarketing Sales Rule and state laws.

“The FTC and our state enforcement partners have ended a pernicious charity fraud that syphoned hundreds of millions of dollars away from well-meaning consumers, legitimate charities, and people with cancer who needed the services the defendants falsely promised,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Today’s settlement, along with those announced earlier, shut down the sham charities once and for all and banned the individual perpetrators for life.”

“Our office is proud to have shut down these individuals who stole donations meant to benefit people suffering from cancer and used those funds to live luxurious lifestyles and for their own personal gain,” New Mexico Attorney General Hector Balderas said. “Together, the FTC and charity regulators from every state in the country have made it clear--we will not sit idly while scammers defraud consumers and deprive legitimate charities of much needed support.”

Arizona Attorney General Mark Brnovich said, “This settlement helps ensure Reynolds is punished for his despicable and greedy acts. Reynolds took millions of dollars in donations intended to help cancer victims and instead lined his own pockets. Under this settlement, Reynolds is now permanently banned from operating or fundraising for non-profit organizations.”

The order imposes a judgment against CFA, CSS, and Reynolds, jointly and severally, of $75,825,653, the amount consumers donated to CFA and CSS between 2008 and 2012. The judgment against CFA and CSS will be partially satisfied via liquidation of their assets. The judgment against Reynolds will be suspended upon surrender of certain personal assets. The full judgment will become due immediately if he is found to have misrepresented his financial condition.

The other defendants in the case were CFA’s and CSS’s chief financial officer and CSS’s former president, Kyle Effler; Children’s Cancer Fund of America Inc. (CCFOA) and its president and executive director, Rose Perkins; and The Breast Cancer Society Inc. (BCS) and its executive director and former president, James Reynolds II. Under settlement orders, Effler, Perkins and Reynolds II were banned from fundraising, charity management, and oversight of charitable assets, and CCFOA and BCS are in receivership and will be dissolved after their assets are liquidated.

The Commission vote approving the proposed stipulated final order was 4-0. It was filed in the U.S. District Court for the District of Arizona.

NOTE: Stipulated orders have the force of law when approved and signed by the District Court judge.

Before giving to a charity, read the FTC’s Charity Scams.

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