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March 30, 2016

Joint State-National Settlement Dissolves Two Sham Cancer Charities, Bars Leader from Charitable & Non-Profit Work

DES MOINES, Iowa – Two nationwide sham cancer charities are dissolved and their leader is banned from profiting from any charity fundraising in the future, through the largest joint enforcement action ever undertaken by state charity regulators and the Federal Trade Commission.

The civil enforcement case with all 50 states plus the District of Columbia, and the FTC, targets Knoxville, Tennessee-based Cancer Fund of America Inc. (CFA), Dearborn, Michigan-based Cancer Support Services Inc. (CSS), and the president of both organizations, James Reynolds Sr., of Tennessee.

The settlement resolves allegations that the bogus charities and their leaders spent the overwhelming majority of donations for cancer patients on their operators, families, friends and fundraisers.

The case involves four fraudulent 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.

“This is the worst of the worst, in terms of people who personally profit by invoking others’ diseases and suffering--in this case cancer--through emotional and blatantly deceptive fundraising appeals,” Attorney General Tom Miller said. “This complex scheme took advantage of donors across the country who wanted to help people with cancer, and it raised money at the expense of legitimate charities and cancer patients themselves.”

Recorded Solicitations to Iowa’s Undercover Consumer Protection Line

The nationwide investigation that led to the settlement included evidence collected in Iowa, through two 2009 audio recordings of CFA solicitations. In both cases, solicitors thought they were speaking to potential Iowa donors. The calls, however, were answered and recorded by a Consumer Protection Division employee.

In both recordings, professional fundraisers claimed that donations they sought would help cancer patients with hospice care or medical supplies. The solicitors also claimed that they were not telemarketers and that “100 percent” of the money they raised would go directly to charity.

[CLICK HERE FOR THE FEBRUARY, 2009 AUDIO RECORDING]

[CLICK HERE FOR THE JUNE, 2009 AUDIO RECORDING]

Joint State-Federal Complaint Filed Against Four Charities & Principals, Two Initial Settlements

In May 2015, the states and FTC filed a federal complaint against four fraudulent charities, including Cancer Fund of America, Cancer Support Services, Children’s Cancer Fund of America (CCFOA), and The Breast Cancer Society Inc. (BCS).

The government simultaneously settled with the latter two organizations and their principals, including CFA’s and CSS’s chief financial officer and CSS’s former president, Kyle Effler; CCFOA and its president and executive director, Rose Perkins; and BCS and its executive director and former president, James Reynolds II.

The 2015 settlement orders banned Effler, Perkins and Reynolds II from fundraising, charity management, and oversight of charitable assets. CCFOA and BCS are in receivership and will be dissolved after their assets are liquidated.

Today’s Agreement with Cancer Fund of America & Cancer Support Services

Today’s settlement order permanently closes CFA and CSS and liquidates their assets. The order bans Reynolds Sr. from profiting from any future charity fundraising or nonprofit work, and from serving as any 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 or state laws.

The order includes a $75.8 million judgment against CFA, CSS, and the elder Reynolds, which is the amount consumers donated to the two organizations from 2008 through 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 artwork, two pistols, and sale of a pontoon boat. The full judgment will become due immediately if Reynolds is found to have misrepresented his financial condition.

How to handle phone calls asking for support

  • Don’t be fooled by a sympathetic name.  Many causes clearly deserve generous public support, including those that fight against disease, and those serving veterans, law enforcement and firefighters. However, some marginal operations claiming connections with such groups actually provide very little support.  Don’t be pressured into donating until you have checked out a worthy-sounding organization.
  • Show healthy skepticism.  Be wary of claims that most of the money you send goes to a worthy cause, or that your donation will be used locally.
  • Get it in writing.  Check out the operation before you make a decision.  Be suspicious if they insist on a pledge before they’ll send you information. Charities can be checked out at the national Better Business Bureau’s “Wise Giving” site – www.give.org.
  • Don't give your credit card or checking account numbers over the phone to someone you don't know.
  • Give wisely!  Giving to a charity you know and trust is often the best option.

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