The Federal Trade Commission on Wednesday announced a major victory in its efforts to crack down on sham cancer charities that pulled at Americans' heartstrings with pictures of sick women and children asking for help.
As part of a settlement with the FTC and states, the purported nonprofits agreed to be permanently dissolved and have their assets liquidated. The deal involves the Cancer Fund of America (CFA), Cancer Support Services (CSS) and their leader, James Reynolds Sr. He will also have to surrender an unspecified amount of his personal assets. Reynolds is also banned for life from managing charitable assets or being part of a charity's board or being a trustee.
Investigators from the FTC and the state attorneys general had said that the “overwhelming majority” of the more than $75 million the charities raised benefited only the charities’ organizers and their friends while less than 5 percent went to patients.
The marketing the charities did was designed to be emotional. One letter told potential donors that "one in eight women will be diagnosed with breast cancer in America” and had pictures of a woman who is bald, presumably from chemotherapy. The charities promised to give the money to patients to pay for pain medications and hospice services.
Jessica Rich, director of the FTC’s Bureau of Consumer Protection, called the scheme "a pernicious charity fraud."
"[The groups] syphoned hundreds of millions of dollars away from well-meaning consumers, legitimate charities, and people with cancer who needed the services the defendants falsely promised,” Rich said in a statement.
The FTC's win is mostly symbolic because most of the money that was raised is already gone. About 85 percent was spent on "fundraising" to keep the scheme going while the rest may have gone to the charity leaders.
The charities' remaining assets will provide some funds, and those will first go to repay states' litigation fees and, after that, to legitimate charities that the states select. But an FTC spokesman said in an email that "if there is any money left it would probably be a small amount."
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