Cancer centers across the country will share $2.5 million recovered in a multistate enforcement action against sham cancer charities, Kansas Attorney General Derek Schmidt announced.
The $2.5 million was recovered through settlements of a landmark lawsuit against four affiliated sham charities – the Cancer Fund of America, Inc., The Breast Cancer Society, Inc., Cancer Support Services, Inc., and the Children’s Cancer Fund of America – and their founder James Reynolds and other individuals, according to the attorney general’s office.
The settlements put in place a receiver who seized and liquidated all available corporate and personal assets. The people responsible for fronting the false charities are all banned from any charity or fundraising activities for the rest of their lives.
This distribution marks the conclusion of the lawsuit, brought by Kansas and other plaintiffs in May 2015. The suit was the first time that all 50 States, the District of Columbia and the Federal Trade Commission joined together to shut down sham charities.
The complaint alleged that the so-called charities, led by James Reynolds and his family members, bilked the public out of more than $187 million dollars in donations between 2008 and 2012. Most of the money collected was paid to professional fundraisers or squandered by the defendants. Of the money the defendants collected, only 3 percent was directed to cancer patients in the United States in the form of “care packages” containing religious DVDs, Moon Pies, random items of clothing, and various sundries.
Cancer Fund of American also claimed to supply patients with pain medications and transportation to chemotherapy treatments, but in fact it provided no such services. The charities also participated in a “gift-in-kind” program in which they sent drugs that had nothing to do with cancer to other countries. The complaint alleged that the purpose of this program was to make the organizations appear larger than they were and to hide their high fundraising costs.
The complaint also alleged that the leaders of these sham charities used donated funds to pay themselves exorbitant salaries and to go on trips to destinations like Thailand, Las Vegas and Disneyworld. The Reynolds also bought themselves cars, boats, jet skis and houses and used the charities’ credit cards to buy designer handbags, jewelry and clothing and to pay for day-to-day expenses such as gas, groceries and utility bills.
The money will be transferred to Rockefeller Philanthropy Advisors (RPA) who, under a services agreement with the plaintiffs, will distribute the funds to select health and medical programs targeting breast and pediatric cancer. Eligibility will be determined through an invitation-only application process, and is limited to NCI-designated Cancer Care Centers, a designation bestowed by the National Cancer Institute on institutions and programs recognized for their scientific leadership, resources, and the depth and breadth of their research.
As an NCI-designated Cancer Center as of 2012, the University of Kansas Cancer Center will be eligible to apply for funds.
“Because only limited funds could be recovered, it is impractical to return the money to its donors,” Schmidt said. “Therefore, it was agreed by the states and the federal government that the best option available is to carry out the donor’s wishes to support cancer services by providing these funds to bona fide cancer centers.”
The case was Federal Trade Commission, et al. v. Cancer Fund of America, Inc., et al., Civil Action No. 2:15-cv-00884-NVW in the U.S. District Court for the District of Arizona. A copy of the order approving the fund distribution plan is available at https://bit.ly/2x3d4vA.