|TRENTON – Acting Attorney General Robert Lougy announced today that New Jersey has entered into a multi-state and federal settlement that permanently dissolves two national cancer charities accused of defrauding donors and bans their former president from any further involvement in charitable solicitation.
Filed today in U.S. District Court in the District of Arizona, the settlement resolves civil fraud and other allegations brought by the Federal Trade Commission, the participating states and the District of Columbia against three defendants – Cancer Fund of America, Inc., Cancer Support Services, Inc. and James Reynolds, Sr., former president of the two discredited charities.
Under the settlement, defendants Cancer Fund of America, Cancer Support Services and Reynolds, Sr. have agreed to entry of judgment against them for approximately $75.8 million – the amount that contributors donated to Cancer Fund of America and Cancer Support Services between 2008 and 2012. The charities are being dissolved as part of the settlement, and judgment against them will be partially satisfied through liquidation of their assets by a receiver.
Previously, six other defendants in the multi-state and federal case have settled, including two other bogus cancer charities – the Children’s Cancer Fund of America, Inc. and the Breast Cancer Society, Inc. – and four individual employees. Under those prior settlements, Children’s Cancer Fund of America and the Breast Cancer Society were dissolved, and the four employees – Rose Perkins, Kyle Effler, James Reynolds Jr. and his wife, Kristina Reynolds – were banned from any future charitable fund raising.
“Today I’m pleased to stand with our state and federal partners in announcing this settlement, which resolves allegations of some incredibly callous, deceitful and greed-driven conduct,” said Acting Attorney General Lougy.
“Through this cooperative federal-state litigation effort,” Lougy said, “we have permanently ended a pattern of cruel, deceptive solicitation that went on for years, and targeted countless charitable donors – people who were led to believe their contributions would help suffering children and others stricken with cancer.”
The original lawsuit filed by the FTC, all 50 states and the District of Columbia alleged that Cancer Fund of America, Cancer Support Services, Children’s Cancer Fund of America and the Breast Cancer Society had used telemarketing calls and direct mail to falsely portray themselves as legitimate charities that aided cancer patients.
Among other things, the defendants or their telemarketers often told donors their contributions would be used to provide pain medication to children suffering from cancer, transport cancer patients to chemotherapy appointments, and/or pay for hospice care for cancer patients. These claims, however, were alleged to be false.
In reality, the lawsuit alleged, the overwhelming majority of contributions collected – approximately $187 million from donors across the country, including more than $6 million in New Jersey – benefited only the individual defendants, their families, friends and professional fundraisers, who often received 85 percent or more of every contribution.
According to the lawsuit, the four charities spent significantly more money on salaries than on the goods and services they provided to cancer patients. In addition, much of the money went to fund a luxury lifestyle for a small clique of family members and friends.
Specifically, the defendants were accused of spending charitable donations on such purchases as cruises, jet ski outings, concert tickets, and memberships on dating Web sites—expenditures that were made possible by corporate boards who rubber-stamped the decisions of the individual defendants.
Among the individuals who settled previously, defendant Kyle Effler was once chief financial officer of both the Children’s Cancer Fund of America and the Breast Cancer Society.
Defendant Rose Perkins was president and executive director of the Children’s Cancer Fund of America, and James Reynolds II – son of James Reynolds Sr. – was executive director and president of the Breast Cancer Society. Reynolds’ wife, Kristina, was an employee of the charities as well.
Deputy Attorney General Erin M. Greene, assigned to the Division of Law’s Consumer Fraud Prosecution Section, handled this matter on behalf of the State.