Attorney General Peter F. Kilmartin, along with the Federal Trade Commission and agencies from all 50 states, have obtained a permanent injunction to dissolve two nationwide sham cancer charities and ban their president from profiting from any charity fundraising in the future under a settlement filed in court today.
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 sham 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.
"Charitable contributions support numerous vital activities in our communities. To sustain this level of giving, donors must be confident that their funds are solicited honestly and used for the promised charitable purposes," said Attorney General Kilmartin. "Together, states and the FTC presented a united front against charity fraud and put an end to these sham charities and their egregious lies. 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 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 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 he 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 are in receivership and will be dissolved after their assets are liquidated.
"Rhode Islanders should not let today's announcement deter them from donating to good causes. The overwhelming majority of charitable organizations are reputable and deliver on the promise of what the funding will go towards," added Kilmartin. "This settlement should serve as a reminder to do your homework before making a charitable donation to ensure the money goes toward the intended purpose."
Before you make any charitable donation, Kilmartin offers these tips:
o Verify the legitimacy of the organization. Several websites, including www.charitynavigator.org , www.give.org and www.guidestar.org provide helpful information regarding numerous charities. These websites can be a useful starting point for consumers looking to research companies prior to making a donation.
o Find out how your donation will be used and what percentage of the funds will be used for programming and how much will be spent on administrative costs.
o Do not pay bills or invoices you have received from charities unless you know you have already made a commitment to support them.
o Never send cash! Always contribute by check or credit card and donate directly to the charity. o Remember to ask for a receipt and a statement that the contribution is tax deductible.