Cancer charities accused of using donations for cruises, dating sites

Cancer charities accused of using donations for cruises, dating sites
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The Federal Trade Commission has charged four major cancer charities and their operators with bilking $187 million from donors.

The FTC and law enforcement partners from every state and the District of Columbia have filed court complaints against the Cancer Fund of America Inc., Cancer Support Services Inc., Children’s Cancer Fund of America Inc., The Breast Cancer Society Inc. and their executives.

The FTC alleges that the executives of the charities spent consumer donations on cars, trips, luxury cruises, college tuition, gym memberships, jet ski outings, sporting events and concert tickets, and dating site memberships.

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They are also accused of hiring professional fundraisers who received 85 percent or more of every donation.

To hide their administrative and fundraising costs from donors and regulators, the FTC alleges that these charities falsely inflated their revenue, reporting more than $223 million in donated in-kind gifts, which they claimed to distribute to international recipients.

The individuals named in the charges include James Reynolds Sr., the president of Cancer Fund of America Inc. and Cancer Support Services, and the charities’ Chief Financial Officer Kyle Effler; Rose Perkins, the president and executive director of the Children’s Cancer Fund of America Inc., and James Reynolds II, executive director and former president of The Breast Cancer Society Inc.

According to the complaint, these charities used telemarketing calls, direct mail, websites and materials distributed by the Combined Federal Campaign to portray themselves as legitimate charities.

The charities, and Perkins, Reynolds and Effler have agreed to settle the charges against them. The two charities will be dissolved, and Effler, Perkins and Reynolds will be banned from fundraising, managing charities and overseeing charitable assets.

Children’s Cancer Fund of America Inc. and Rose Perkins have been order to pay $30.1 million — the amount people donated between 2008 and 2012. The charity’s portion will be satisfied by the liquidation of its assets, but the FTC said the judgment against Perkins will be suspended because of her inability to pay.

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The Breast Cancer Society Inc. and Reynolds have been ordered to pay $65.6 million, the amount people donated between 2008 and 2012. The charity, however, has the option to spin off its Hope Supply Warehouse program to a legitimate, qualified charity. All remaining assets will then be liquidated and used to partially satisfy the judgment.

Reynolds is only required to pay $75,000 of his fine, while Effler will only be required to pay $60,000 of his $41.15 million penalty. The FTC said full judgment amounts against the individuals will become due immediately if they are found to have misrepresented their financial situations.

The FTC said the litigation against the Cancer Fund of America, Cancer Support Services and James Reynolds Sr. will continue.

Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said Tuesday that charitable giving is not an area in which consumers can easily detect fraud.

“They give their money trustingly," she said. “They think it’s going to legitimate purposes, and they don’t have a lot of ability to discern where the money truly went. That’s why it’s so important for regulators to take action when we do uncover a problem.”

— This story was updated at 1:23 p.m.