Landmark lawsuit settled against four sham charities, founder
FRANKFORT, KY. (June 21, 2019) – Attorney General Andy Beshear announced on Thursday June 20, 2019 that $2.5 million will be distributed to cancer centers across the country as a result of a multistate enforcement action against sham cancer charities.
The $2.5 million was recovered through settlements of a landmark lawsuit against four affiliated sham charities – the Cancer Fund of America, Inc., The Breast Cancer Society, Inc., Cancer Support Services, Inc., and the Children’s Cancer Fund of America – and their founder James Reynolds, along with other individuals.
The settlements put in place a receiver who seized and liquidated all available corporate and personal assets. The people responsible for fronting these false charities are all banned from any charity or fundraising activities for the rest of their lives.
This distribution marks the conclusion of the lawsuit brought in May 2015. The suit was the first time all 50 states, the District of Columbia and the Federal Trade Commission joined together to shut down sham charities.
“We are proud of the teamwork that went into this action and pleased that the recovered money will be used to actually serve cancer patients in Kentucky and all states, as donors intended,” Beshear said. “This case sends a strong message to those who would steal from Kentuckians donating their hard-earned money to make a positive difference in the lives of others.”
The complaint alleged the so-called charities, led by James Reynolds and his family members, bilked the public out of more than $187 million between 2008 and 2012. Of the money collected, only 3% was directed to cancer patients in the United States, and that in the form of “care packages” containing religious DVDs, Moon Pies and various sundries.
Cancer Fund of American also claimed to supply patients with pain medications and transportation to chemotherapy treatments, when it provided no such services.
The complaint also alleged the leaders of these sham charities used donated funds to pay themselves exorbitant salaries, fund travel boondoggles and purchase luxury cars, boats, houses, handbags, jewelry and clothing. They also used funds to pay for day-to-day expenses such as gas, groceries and utility bills.
The money will be transferred to Rockefeller Philanthropy Advisors (RPA) who, under a services agreement with the plaintiffs, will distribute the funds to select health and medical programs targeting breast and pediatric cancer. Eligibility will be determined through an invitation-only application process, and is limited to NCI-designated Cancer Care Centers, a designation bestowed by the National Cancer Institute on institutions and programs recognized for their scientific leadership, resources and the depth and breadth of their research.
RPA CEO Melissa Berman noted, “We are pleased to be part of this landmark process of ensuring that the philanthropic intent of donors is coming to fruition, despite the conduct of bad actors.”
RPA will ensure that the funding will serve patients in all 50 states, and will monitor, ensure compliance and provide detailed reporting for all grants awarded.
Beshear said the case provides an opportunity to remind Kentuckians that they should be very cautious and always research charities before making donations.
Donors who are not familiar with a charitable organization should verify their 501(c)(3) status and what percentage of their income goes to the charity’s purpose.
There are several online watchdog websites where donors can verify this information and look over charity reviews, leadership and annual report information, including: IRS; BBB Wise Giving Alliance; GuideStar; Charity Navigator; Charity Watch; and The Office of the Attorney General
To report a concern about a charitable solicitation contact the Attorney General’s Office at 888-432-9257 and file a complaint with the Federal Trade Commission.