Federal regulators accused four cancer charities Tuesday of spending more than $187 million in donations not to help patients, but on cars, luxury cruises and trips, jet ski outings, sport and concert tickets, dating site memberships and college tuition for family and friends.
The four sham charities — Cancer Fund of America, Inc., Cancer Support Services Inc., Children’s Cancer Fund of America, Inc. and The Breast Cancer Society Inc. — “operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest and excessive insider compensation,” according to a federal complaint filed in the District Court of Arizona.
The defendants collectively spent less than 3% of the donated funds on cancer patients, according to the complaint. All 50 states and D.C. joined the Federal Trade Commission in filing the charge — one of the largest charity fraud cases to date, according to the FTC.
“The defendants’ egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a release.
The FTC proposed more than $135 million collectively in settlements, though it said there are few assets left to recover because the defendants spent most of the money.
The websites for the Cancer Fund of America, Children’s Cancer Fund of America and Cancer Support Services were defunct as of publication. The Breast Cancer Society will be dissolved but may spin off one of its charity programs to a legitimate, qualified charity if the court approves. The Children’s Cancer Fund of America will also be dissolved.
The Breast Cancer Society’s website features a letter from James Reynolds II, its executive director, who under proposed settlement orders will be banned from fundraising, charity management and oversight of charitable assets and owes a $75,000 fine.
“The vast majority of money raised for breast cancer causes are spent to fund research,” the letter says. “Charities — including some of the world’s best-known and reputable organizations — are increasingly facing the scrutiny of government regulators in the U.S. The Breast Cancer Society (TBCS) is no exception. Unfortunately, as our operations expanded – all with the goal of serving more patients – the threat of litigation from our government increased as well.” He also said the organization, its officers and board have not been found guilty of allegations of wrongdoing.
The complaint also says Cancer Fund of America employees charged company cards for personal expenses that were never repaid, including purchases of meals at Hooters, cell phone apps and games, car washes, gas and movie tickets. The Children’s Cancer Fund of America funded two all-expense paid trips for board members, employees and their families to Disney World, and even covered the cost to bring along a baby sitter.
“If you didn’t know better, you’d think someone was just making up the most deplorable scam they could imagine,” Virginia Attorney General Mark Herring said at a news conference.
The FTC offers several tips for spotting signs of a charity scam on its website, including asking fundraisers what portion of the donation will end up with the charity itself versus toward the actual cause.
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