Wednesday, March 30, 2016

Two sham cancer charities face the music

NEW YORK – Attorney General Eric T. Schneiderman today joins the Federal Trade Commission (FTC), the other 49 states, and the District of Columbia in announcing the successful conclusion of the largest multistate charity fraud action to date. Two nationwide sham cancer charities are being dissolved and their president is banned from profiting from any charity fundraising in the future, pursuant to a settlement agreed to by the FTC, all 50 states, and the District of Columbia. 
Cancer Fund of America Inc. (CFA) and 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, the overwhelming majority of donations benefitted the sham charity operators, their families and friends, and fundraisers.
“Sham charities betray the generosity of donors and do a disservice to the causes they claim to support,” said Attorney General Schneiderman.

“We are proud to join with regulators across the country in this historic action. My office will continue to pursue those who take advantage of New Yorkers’ generosity and who tarnish the reputation of our charitable sector.”
The joint federal-state complaint, filed in May 2015, targeted four sham charities run by Reynolds and his family members that allegedly bilked more than $187 million from donors, including nearly $3 million in New York State since 2008. CFA and CSS were jointly responsible for more than $75 million of that amount. The other two sham charities settled in May 2015. Litigation proceeded against CFA, CSS, and Reynolds. The settlement announced today concludes that litigation, which was the largest joint enforcement action ever undertaken by the FTC and state charity regulators.
Under the settlement order, CFA and CSS will be permanently closed 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 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 the liquidation of their assets by a court-appointed receiver. 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.
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 will be dissolved after their assets are liquidated.
The order was entered by Judge Neil V. Wake of the U.S. District Court for the District of Arizona on March 30, 2016.