Think Donation Helped Cancer Patients? It Didn't: Settlement

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Two bogus national cancer charities with Michigan ties that bilked well-meaning donors out of $75 million they thought would assist victims of the disease that kills more than half a million Americans a year, including nearly 2,000 children, will be dissolved under a settlement reached with the Federal Trade Commission, all 50 states and the District of Columbia, authorities said Wednesday.

The gullible donors weren’t helping cancer victims. Most of their money was going to a man named James Reynolds Sr., who lives, apparently without conscience, in Knoxville, TN.

Nearly all the money donated for cancer patients went to him; his "charities" were shams, the government said.

As a result of the settlement, the two charities — the Cancer Fund of America, which ran a call center in Dearborn, and Cancer Support Services, which used a Southfield-based telemarketer that keeps 90 percent of the money it collects — are effectively shut down, and Reynolds is barred from working as a charity fundraiser or anywhere in the not-for-profit world.

The settlement was filed in U.S. District Court for the District of Arizona Wednesday.

“The FTC and our state enforcement partners have ended a pernicious charity fraud that siphoned hundreds of millions of dollars away from well-meaning consumers, legitimate charities, and people with cancer who needed the services the defendants falsely promised,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement. “Today’s settlement, along with those announced earlier, shut down the sham charities once and for all and banned the individual perpetrators for life.”

Michigan Attorney General Bill Schuette said, also in a written statement, that the settlement helps ensure that Michiganders’ charitable donations are used as they intended — for the good of society.

“Giving to a charity should leave you with a good feeling, a feeling that you are helping others, not a concern that the donation you have made is going to fund someone’s lavish lifestyle,” Schuette said.

The two charities are among four charities run by Reynolds that the government contended in 2015 were shams that cheated well-meaning donors out of more than $187 million. The other two charities — the Children’s Cancer Fund of America and The Breast Cancer Society — settled with the Federal Trade Commission and the states last May.

Not counting last year's settlement, a total judgment of $75,825,653 was imposed against the remaining two organizations and Reynolds.

But where will this judgment money go?

It will be put into a trust fund, managed by the Hawaii Attorney General. The fund will pay for every state's legal fees, and then give the rest to charity organizations that will actually help out cancer patients

To help pay for his part of the settlement, authorities are hitting Reynolds where it (apparently) hurts.

He will have to turn over — among other things — 15 framed art prints, 50 collectible beer steins and two pistols. He also has to put his his pontoon boat up for auction.

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 also 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.

Wednesday’s settlement concludes the largest joint enforcement action ever undertaken by the FTC and state charity regulators.

In his news release, Schuette released recordings of fundraising calls made by the Dearborn call center

The Southfield telemarketer, Associated Community Services, keeps up to 90 percent of the donations it collects, according to a 2013 report by the Detroit Free Press that analyzed the group’s IRS forms.

ASC, one to the nation’s largest charity telemarketing firms, makes millions of calls annually to Americans, purportedly to raise money for cancer patients, homeless veterans and disabled firefighters.

Related

• How to Stop Charity Calls, Junk Mail Solicitations, IRS Scams

But once the donors give to one cause, they’re bombarded with calls from ASC’s other charity clients, according to an investigation by the Tampa Bay (Florida) Times and The Center for Investigative Reporting.

» LISTEN: You can listen to recordings of the fund-raising calls here and here.

( Marc Torrence of Patch’s national desk contributed to this report.)