May 19, 2015
Carson City, NV – Nevada Attorney General Adam Paul Laxalt joined with the Federal Trade Commission (FTC) and other state law enforcement officials today in the filing of a complaint charging four sham cancer charities and their operators with bilking more than $187 million from donors. The defendants are alleged to have misled people into believing that their donations would benefit cancer patients, including women suffering from breast cancer and children. The overwhelming majority of the contributions, however, benefitted only the perpetrators and their families, friends and respective fundraisers.
“I am proud to be a part of this historic and collaborative federal-state effort to combat charity fraud,” said Laxalt. “Today’s action will bring us one step closer to permanently ending the despicable practice of purported charities preying on the public’s good will and generosity. The filing of this complaint should remind each of us about the importance of wisely conducting research before giving.”
Named in the eight count federal court complaint are Cancer Fund of America Inc., Cancer Support Services Inc., the president of these two corporations, James R. Reynolds, Sr., the CFO of Cancer Support Services, Kyle Effler, Children’s Cancer Fund of America, Inc. and its president and Executive Director Rose Perkins, as well as The Breast Cancer Society Inc. and its executive director and former president, James Reynolds, II.
Settlement agreements were filed with five of these defendants: Children’s Cancer Fund and Rose Perkins; The Breast Cancer Society and James Reynolds, II; and Kyle Effler. These settlements require that the individuals be banned from operating charities, and that the Children’s Cancer Fund and The Breast Cancer Society be dissolved. Litigation will proceed against Cancer Fund of America, Cancer Support Services and James Reynolds, Sr.
The complaint alleges that the defendants used telemarketing calls, direct mail, websites and materials distributed by the Combined Federal Campaign to portray themselves as legitimate charities with substantial programs providing direct support to cancer patients. The defendants are also alleged of misrepresenting specific program benefits by claiming to provide patients with pain medication, as well as transportation to chemotherapy and hospice care. The defendants are also alleged to have misrepresented the primary focus of their reported programs, as well as the revenue and program expenses related to international gifts in kind.
Thirty-six states alleged that the defendants made false and misleading filings with state charity regulators. The FTC and 36 states further alleged that Cancer Fund of America, Children’s Cancer Fund and the Breast Cancer Society provided their professional fundraisers with deceptive fundraising materials. The defendants are also alleged to have violated the FTC’s Telemarketing Sales Rule (TSR), and to have assisted and facilitated TSR violations. Cancer Support Services was alleged to have made deceptive charitable solicitations.
According to the complaint, the defendants used the organizations for lucrative employment for their family members and friends, and spent donations on cars, trips, luxury cruises, college tuition, gym memberships, Jet Ski outings, sporting events and concert tickets, and dating site memberships. The defendants hired professional fundraisers who often received 85 percent or more of every donation.
Chief Deputy JoAnn Gibbs of the Nevada Attorney General’s Bureau of Consumer Protection represented Nevada in this matter.
Additional information about fraudulent charities and how to avoid them can be found on the FTC website. The FTC also provides complaint assistance for any donors that suspect they have been the victim of a charity scam. Nevadans can also file complaints regarding fraudulent charities with the Office of the Nevada Attorney General here.
To view the complaint, click here. To view tips for donors provided by the Office of the Nevada Attorney General, click here. To view an infographic provided by the FTC, click here.