AG Fox Announces Distribution of Recovered Funds to Cancer Centers After Sham Charities Lawsuit

AG Fox Announces Distribution of Recovered Funds to Cancer Centers After Sham Charities Lawsuit

Attorney General Tim Fox announced today $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 money 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, as well as their founder James Reynolds and other individuals. The settlements put in place a receiver who seized and liquidated all available corporate and personal assets. The people responsible for fronting the false charities are forever banned from any charity or fundraising activities.

This distribution marks the conclusion of the lawsuit, brought in May 2015. The suit was the first time that all 50 states, the District of Columbia, and the Federal Trade Commission joined together to shut down sham charities. Attorney General Tim Fox said, “We are proud of the enormous amount of work and cooperation that went into this action, and pleased the recovered money will be used to serve cancer patients as the donors intended. This case is not only an historic event in the charity regulation arena, but serves as a warning to those who steal from people donating to help a deserving cause.”

The complaint alleged the so-called charities, led by James Reynolds and his family members, bilked the public out of more than $187 million dollars between 2008 and 2012. Of the money collected, only 3% was directed to cancer patients in the United States in the form of “care packages” containing religious DVDs, Moon Pies, random items of clothing, 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 charities also participated in a “gift-in-kind” program in which they sent drugs that had nothing to do with cancer to other countries. The Complaint alleged the purpose of this program was to make the organizations appear larger than they were and to hide their high fundraising costs. The Complaint also alleged the leaders of these sham charities used donations to pay themselves exorbitant salaries and to go on trips to destinations like Thailand, Las Vegas, and Disneyworld. The Reynolds also bought themselves cars, boats, jet skis, and houses, and used the charities’ credit cards to buy designer handbags, jewelry and clothing, and to pay for 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 the funding will serve patients in all 50 states, and will monitor, ensure compliance and provide detailed reporting for all grants awarded.

Before giving to a charity, read these tips offered by the Office of Consumer Protection at the Montana Department of Justice. You may also call the Office of Consumer Protection in Helena at 1-(800)-481-6896 during business hours for more information.

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