Claims Settled against Deceptive Cancer Charities
AUSTIN, March 31, 2016 - Attorney General Ken Paxton, along with the Federal Trade Commission and agencies from all 50 states, today announced a permanent injunction dissolving two nationwide sham cancer charities and banning their president from profiting from any charity fundraising in the future, under the terms of a settlement.
“These are actions that take advantage of people’s best intentions to support our ongoing war against the dreaded disease of cancer,” said Texas Attorney General Paxton. “With the help of real charities and donors, cancer researchers in Texas and across the country are working to make cancer a disease of the past. Their jobs, unfortunately, are made harder every time someone uses the fight against cancer as a false front to enrich themselves and their friends.”
Cancer Fund of America Inc. (CFA), 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, spent the overwhelming majority of donations on their operators, families and friends, and fundraisers.
The agencies’ complaint, filed in May 2015, targeted four deceptive cancer charities run by Reynolds and his family members that allegedly bilked more than $187 million from donors. CFA and CSS were responsible for more than $75 million of that amount. The other two sham charities settled in May 2015. The settlement announced today concludes 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 liquidation of their assets.
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 are in receivership and will be dissolved after their assets are liquidated.
Stipulated orders have the force of law when approved and signed by the District Court judge.