AS WE HAVE BEEN WARNING FOR YEARS, ALL CHARITIES ARE FLAT OUT MONEY SCAMS.
In a rare joint action
with attorneys general for each of the 50 states, the Federal Trade Commission says four cancer charities run by
extended members of the same family conned donors out of $187 million from 2008
through 2012 and spent almost nothing to help actual cancer
patients.
Each of the charities
charged were the subject of extensive reporting by CNN in 2013. And in each
instance, none of the four charities would comment. We were ordered out of the
building at the Cancer Fund of America in Knoxville, Tennessee, and were the
object of an obscene gesture by the CEO of The Breast Cancer Society in Mesa,
Arizona.
The Cancer Fund of
America is run by James Reynolds Sr. His son James Reynolds Jr. is the CEO of
the Breast Cancer Society. Another charity, the Children's Cancer Fund of
America, is run by Rose Perkins, the ex-wife of the elder James Reynolds. He's
also the CEO of the fourth charity, Cancer Support Services.
The government says the
charities claimed to provide direct support for cancer patients, breast cancer
patients and children with cancer.
"These were lies," the
government's complaint says.
Jessica Rich, chief of
the FTC's Bureau of Consumer Protection, says that in all, the charities spent
about 97% of donations they received either on private fundraisers or on
themselves. Only 3%, she says, went to help actual cancer
patients.
According to the
complaint, funds donated to help cancer patients instead went for personal use,
in often lavish ways.
"[D]onated funds were
used to pay for vehicles, personal consumer goods, college tuition, gym
memberships, Jet Ski outings, dating website subscriptions, luxury cruises, and
tickets to concerts and professional sporting events," the complaint
says.
"Most of what we are
doing is bringing actions against fraud," says Rich. "And this is as about as
bad as it can get: taking money away from cancer victims."
There was also what the
FTC calls "rampant nepotism" at play in all of the charities. For instance, at
the Breast Cancer Society, James Reynolds Jr. hired his wife, Kristina Hixson,
to be his public relations manager. The complaint states that he also hired
Hixson's two sisters, her son by a previous marriage, her mother and her
step-nephew. According to the complaint, Hixson's mother had been a caterer. At
the Breast Cancer Society, she was hired to write grant
applications.
Moreover,on their tax
returns, each charity claimed millions of dollars in donated goods shipped to
overseas locations on behalf of cancer patients. The complaint says the
charities never owned any of the goods in question and simply paid a fee to a
private firm in South Carolina to ship the goods, called gifts-in-kind. CNN went
to Guatemala in early 2014 to investigate anyone who may have received those
gifts and could find no evidence that they even existed.
As a result of the
complaint, two of the charities say they will close their doors. Both the Breast
Cancer Society and the Children's Cancer Fund of America are being dissolved,
according to the complaint. James Reynolds Jr. faces a judgment of more than $60
million in fines and Rose Perkins, who runs the Children's Cancer Fund of
America, faces a judgment of around $30 million.
Under a proposed final
order, the judgment against Reynolds Jr. will be suspended when he pays $75,000.
The judgments against Children's Cancer Fund of America will be partly met upon
liquidation of its assets, and the judgment against Perkins will be suspended
due to her inability to pay.
The FTC's Jessica Rich,
however, said there are few assets left. Government regulators will be lucky to
recover $1 million, she told CNN.
As for James Reynolds
Sr., he will contest the charges in the complaint, the government says. CNN
hasn't yet been able to reach attorneys for Reynolds Sr., his son or Perkins for
comment, but in a message posted on the Breast Cancer Society website, Reynolds
Jr. said:
