AG, DCP Join Historic Multistate Lawsuit Against Four Sham Cancer Charities
Attorney General George Jepsen and the state Department of Consumer Protection Commissioner Jonathan A. Harris today announced that Connecticut, all 49 other states, the District of Columbia, and the Federal Trade Commission have jointly filed a federal lawsuit against four sham cancer charities and those responsible for their operation. A historic and cooperative effort, the states allege that Cancer Fund of America, Children's Cancer Fund of America, Cancer Support Services and The Breast Cancer Society made misrepresentations to donors by portraying themselves as legitimate charities that provided relief to cancer patients. In addition, the FTC and the plaintiff states charge the defendants with misrepresenting specific program benefits and violating the FTC's Telemarketing Sales Rule, which prohibits deceptive charitable solicitations.
The joint complaint alleges that the defendants scammed more than $187 million from donors across the United States. The states claim that an overwhelming majority of the funds raised benefitted only the defendants, their families and professional fundraisers, who often received 85% or more of every donation made. The states allege that generous donations made by consumers were wasted and misused, rather than actually helping those with cancer.
"Forming a charity or non-profit for the sole purpose of obtaining wealth rather helping those in need is a shameful and deceptive practice," said Attorney General Jepsen. "Connecticut joins a unified front that will seek to halt the practice of deceptively soliciting donors and combat charity fraud of the worst kind.
“This joint effort should raise a flag for charities, solicitors, and donors alike,” Commissioner Harris said. “Fraudulent fundraising will not be tolerated and perpetrators will be held accountable under the law. However, lawsuits should be the last resort. Donors need to research any organization before entrusting their money to them. Bogus charities typically exploit the use of legitimate sounding names and high profile causes to line their pockets.”
The federal court complaint names in addition to the charities, James Reynolds, Sr., president of Cancer Fund of America, Inc. and Cancer Support Services, Inc., the CFO of both and the former president of Cancer Support Services, Kyle Effler; Rose Perkins and James Reynolds, II. The individual defendants allegedly hired family members or friends and used the organizations to provide them with steady, lucrative employment. The defendants also allegedly used donations to pay for vacations, cruise trips, gym memberships, concert tickets, college tuition and other consumer goods.
In settlements filed concurrently with the complaint, Perkins, Reynolds, II and Effler are permanently banned from fundraising or operating charities. Perkins and the Children's Cancer Fund of America have agreed to an entry of judgment totaling $30,079,821, which is the total amount that individuals donated between 2008 and 2012. Payment will be partially satisfied once The Children's Cancer Fund goes into receivership and its assets are liquidated. The receiver will also dissolve the corporate existence of the Children's Cancer Fund. In a similar settlement, the Breast Cancer Society agreed to a settlement for $65,564,360, which was the total amount of donations made between 2008 and 2012. James Reynolds, II, will also be banned from fundraising or managing charities and the Breast Cancer Society will be dissolved. Lastly, Kyle Effler, former president of Cancer Support Services and former CFO of Cancer Fund of America has agreed to a settlement of $41,152,231, the amount contributed between 2008 and 2012. Effler, too, will be banned from operating or managing charities or charitable assets.
"My office will work rigorously to ensure those that commit charity fraud are held accountable and that the public's interests in charitable gifts are protected," said Attorney General Jepsen. "I encourage those wishing to make charitable donations to use their best judgment and always exercise caution to ensure that their kindness is being used in the way that they had intended."
The Office of the Attorney General and DCP recommend that Connecticut residents should, prior to contributing to any charity, always ask questions as to how donations are used. Consumers should be wary of vague answers and ensure that donations will be used to support programs they find worthwhile. Consumers can also ask paid solicitors what percentage of their donation the organization will receive. Consumers should be comfortable with the percentage before contributing.
The Department of Consumer Protection maintains information on charities that are registered with the state and the minimum percentage guaranteed to go to that charity. The Department’s website, https://www.elicense.ct.gov Opens in a new window, provides charity registration information and displays any active solicitation campaign notices for a registered charity or its paid solicitor.
Additional information is also available at Charity Navigator, http://www.charitynavigator.org Opens in a new window; the Federal Trade Commission: http://www.ftc.gov/bcp/edu/microsites/charityfraud Opens in a new window; and the Better Business Bureau’s Wise Giving Alliance at http://www.bbb.org/us/charity Opens in a new window.
Consumers with questions can contact the Attorney General's Charities Unit at 860-808-5020, or the Department of Consumer Protection at 1-800-842-2649.
Assistant Attorney General Gary W. Hawes assisted the Attorney General with this matter.
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