The Federal Trade Commission and all 50 states on Tuesday accused four cancer charities of being “sham charities,” charging that the groups had deceived donors, misspending more than $187 million in donations, in one of the largest charity fraud cases ever.
In soliciting donations through telemarketing calls and direct-mail, the F.T.C. complaint says, the charities described specific uses for the money they solicited, like transporting patients to and from chemotherapy or purchasing pain medication for children. “These were lies,” the complaint says, and much of the money went to the people running the charities for expenses like gym memberships, college tuition and dating website subscriptions. “Donations have enriched a small group of individuals.”
The charities — the Cancer Fund of America, Cancer Support Services, Children’s Cancer Fund of America and the Breast Cancer Society — were created and controlled by the same network of people and led by James Reynolds Sr., the F.T.C. says.
Together with attorneys general from all 50 states and the District of Columbia, the F.T.C filed suit against those organizations on Monday in the United States District Court for Arizona, also naming Mr. Reynolds and some of his relatives and associates as defendants.
According to the complaint, Mr. Reynolds devised the fund-raising scheme in 1987 and recruited his son, friends and members of his church congregation to participate in the years that followed. The F.T.C.’s finding of $187 million in misspent donations reflects the charities’ activity from 2008 to 2012. In that time, the charities spent less than 3 percent of donations on cancer patients.