via Moak: Cancer charities shut down, clarionledger.com, 2/1/16
In the largest charity fraud enforcement action in U.S. history, the Federal Trade Commission joined with all 50 states and the District of Columbia this week to shut down two nationwide “cancer charities.” The announcement came after an investigation of marketing and solicitation practices found evidence of alleged misrepresentation and misallocation of funds. The operators of the scheme were accused of bilking donors of more than $75 million with emotional marketing practices designed to take advantage of donors’ empathy for cancer patients.
As part of the settlement announced Wednesday, Cancer Fund of America Inc. and Cancer Support Services Inc. will be dissolved, and their president, James Reynolds Sr., is banned from profiting from any charity fundraising in the future.
“The FTC and our state enforcement partners have ended a pernicious charity fraud that syphoned hundreds of millions of dollars away from well-meaning consumers, legitimate charities, and people with cancer who needed the services the defendants falsely promised,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “Today’s settlement, along with those announced earlier, shut down the sham charities once and for all and banned the individual perpetrators for life.”
The operations concluded an investigation into Cancer Fund of America, Cancer Support Services and two other schemes, which were shuttered last May after reaching a settlement agreement with states and regulators.
Reynolds agreed to settle charges in Wednesday’s action. Under the settlement order, CFA and CSS will be permanently dissolved 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, or violating the FTC’s Telemarketing Sales Rule and state laws.
It’s not often that investigators use the terms “pernicious” and “sham” to describe subjects of an investigation, but since the organizations allegedly took advantage of donors by — for example — using pictures of purported cancer patients and cancer-stricken children, regulators pulled no punches in describing what their investigation found.
“Our office is proud to have shut down these individuals who stole donations meant to benefit people suffering from cancer and used those funds to live luxurious lifestyles and for their own personal gain,” New Mexico Attorney General Hector Balderas said. “Together, the FTC and charity regulators from every state in the country have made it clear — we will not sit idly while scammers defraud consumers and deprive legitimate charities of much needed support.”
As part of the settlement, the companies and Reynolds will have to pay nearly $76 million — the amount the two organizations collected in donations between 2008 and 2012. It’s not known how much — if any — of the settlement money will be returned to donors. For more on the action, visit this USA Today story athttp://www.usatoday.com/story/money/2016/03/30/phony-cancer-charities-bilked-75m-liquidated/82424982/.