The Federal Trade Commission is accusing four national cancer charities of spending $187 million in donations meant to benefit cancer patients on new cars, exorbitant salaries, lavish trips and generous commissions. Children’s Cancer Fund of America, The Breast Cancer Society Inc., Cancer Support Services Inc. and Cancer Fund of America face allegations related to fundraising for personal gain and violating laws governing charitable contributions, the commission announced on Tuesday.
“The defendants took in millions of dollars in donations meant to help cancer patients, but spent it on themselves and their fundraisers,” Jessica Rich, director of the Bureau of Consumer Protection, said in a news release. ”I’m pleased that the FTC and our state partners are acting to end this appalling scheme.”
The FTC says these charities “operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation, with none of the financial and governance controls that any bona fide charity would have adopted.”
The charities used telemarketing, direct mail, website and even a federal fundraising program to raise money that organizers promised would help cancer patients access pain medication, chemotherapy and hospice care. In reality, the groups hired friends and family members who earned 85 percent commission on any donation they secured and then spent the money on luxury cruises, college tuition, jet ski outings, concert tickets, and fees for online dating services.
The FTC stated in a release that two of the charities – Children’s Cancer Fund of America and The Breast Cancer Society Inc. -- have agreed to a settlement and will be dissolved. The final court order also demands that Children’s Cancer Fund of America return $30,079,821 and the Breast Cancer Society repay $65,564,360 in order to recover the money that consumers donated to these charities between 2008 and 2012. Litigation with proceed for the other two organizations – Cancer Fund of America and Cancer Support Services Inc.
Three top executives – James Reynolds II, executive director and former president of The Breast Cancer Society; Kyle Effler, former president of Cancer Support Services and Rose Perkins, president and executive director of Children’s Cancer Fund of America are banned from fundraising, charity management and oversight of charitable assets as part of the settlement. James Reynolds Sr., president of Cancer Support Services faces separate charges that have not been settled.
The FTC’s complaint represents one of the largest actions to date against charity fraud. The commission pressed charges in federal court in conjunction with the District of Columbia and 58 law enforcement agencies across the country. The FTC maintains a reference page about charity scams and advises donors to consult the list before pledging money to organizations.