ATTORNEY GENERAL, DCP: MULTISTATE ACTION SETTLES
CLAIMS AGAINST TWO SHAM CHARITIES
Charities dissolved, leader banned from working for nonprofits;
settlement concludes joint enforcement action by all 50 states and D.C., FTC
Two nationwide sham cancer charities have been dissolved and their president is banned from profiting from any charity fundraising in the future under a settlement reached with Connecticut, all 49 other states, the District of Columbia and the Federal Trade Commission (FTC), Attorney General George Jepsen and state Department of Consumer Protection Commissioner Jonathan A. Harris announced today.
Cancer Fund of America, Inc. (CFA), Cancer Support Services, Inc. (CSS) and their leader James Reynolds, Sr. have agreed to settle charges that the charities claimed to help cancer patients, but instead spent the overwhelming majority of donations on their operators, friends and families and professional fundraisers.
"The conduct alleged in this case represented an egregious violation of donor intent and a complete abuse of the trust placed in charitable organizations," Attorney General Jepsen. "Operating a charity for the purpose of obtaining personal wealth, rather than helping those in need, is a shameful and deceptive act. I appreciate the dedicated work of so many of our partners in this enforcement action, which has brought us to the conclusion of this case."
"This is an historic action that we're pleased to be a part of at the Department of Consumer Protection. Too often, honest consumers are conned out of their hard-earned money because a person or company tugged at their heartstrings and encouraged them to act immediately. Although these sham charities can no longer hurt consumers, many people lost hard-earned money," said Commissioner Harris. "We encourage consumers to be vigilant so that only reputable charities receive their donations. We encourage consumers always to check a charity's registration, ask how much of their donation goes directly to the charity, and collect as much background information they need before giving, even if it means hanging up the phone or turning away a person who is soliciting, and donating later."
The states and the agency alleged in a federal complaint filed in May 2015 that four sham charities run by Reynolds and his family had scammed more than $187 million from donors. CFA and CSS were responsible for more than $75 million of that amount.
The settlement order imposes a judgment against CFA, CSS and Reynolds, jointly and severally, of $75,825,653 the amount consumers donated to the charities between 2008 and 2012. CFA and CSS's assets will be liquidated in order to partially satisfy the judgement. The judgment against Reynolds requires him to surrender certain personal assets.
Settlements with the other two charities the Children's Cancer Fund of America, Inc. and the Breast Cancer Society, Inc. and with the other defendants in the case Kyle Effler, Rose Perkins and James Reynolds II were reached with the states and the FTC in May 2015. Under settlement orders, Effler, Perkins and Reynolds II were banned from fundraising, charity management and oversight of charitable assets. The Children's Cancer Fund of America and Breast Cancer Society are currently in receivership and will be dissolved and their assets liquidated.
Today's settlement announcement concludes the largest joint enforcement action ever undertaken by state charity regulators and the FTC.
The Office of the Attorney General and the Department of Consumer Protection 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.
Charities soliciting in Connecticut must be registered with the Department of Consumer Protection. DCP maintains information on charities that are registered with the state and the minimum percentage guaranteed to go to that charity. The state's license and registration look-up Web site www.elicense.ct.gov provides charity registration information and displays any active solicitation campaign notices for a registered charity or its paid solicitor. Consumers with questions can contact the Attorney General's Charities Unit at 860-808-5020 or DCP at 1-800-842-2649.
Assistant Attorney General Gary Hawes assisted the Attorney General with this matter.
Please click here to view the settlement documents, and click here to view the original complaint.