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发帖数: 2924 | 1 WASHINGTON (AP) -- A Tennessee man and his family used much of the $187
million it collected for cancer patients to buy themselves cars, gym
memberships and take luxury cruise vacations, pay for college tuition and
employ family members with six-figure salaries, federal officials alleged
Tuesday in one of the largest charity fraud cases ever, involving all 50
states.
The joint action by the Federal Trade Commission and the states says James T
. Reynolds Sr., his ex-wife and son raised the money through their various
charities: The Cancer Fund of America in Knoxville, Tennessee, and its
affiliated Cancer Support Services; The Breast Cancer Society in Mesa,
Arizona; and the Children's Cancer Fund of America in Powell, Tennessee.
The charities hired telemarketers to collect $20 donations from people
across the country, telling consumers that they provided financial aid and
other support to cancer patients, including pain medication, transportation
to chemotherapy visits and hospice care.
But little money made it to cancer patients, as the groups "operated as
personal fiefdoms characterized by rampant nepotism, flagrant conflicts of
interest, and excessive insider compensation" with none of the controls used
by bona fide charities, the FTC said Tuesday.
Anyone who donated money to these groups shouldn't expect a refund anytime
soon. While litigation against Reynolds Sr. and the Cancer Fund of America
is ongoing, the settlement agreements with Reynolds' son, ex-wife and a long
-time associate of the family — Kyle Effler — notes that much of the money
has already been spent. The agreement bans the three from fundraising and
shuttered their organizations.
"The money is mostly gone," said Jessica Rich, director of the FTC Bureau of
Consumer Protection. Rich declined to say whether a separate criminal
investigation might be underway, noting only that the regulatory agency
doesn't have that authority.
None of the groups returned phone calls and emails asking for comment.
Attempts to reach family members at home by telephone were unsuccessful.
The Breast Cancer Society, which agreed to cease operations as part of the
settlement agreement, posted a lengthy statement online Tuesday attributed
to its executive director — Reynolds' son, James T. Reynolds II — that
blamed increased government scrutiny for the charity's downfall.
"While the organization, its officers and directors have not been found
guilty of any allegations of wrongdoing, and the government has not proven
otherwise, our board of directors has decided that it does not help those
who we seek to serve, and those who remain in need, for us to engage in a
highly publicized, expensive, and distracting legal battle around our
fundraising practices," according to the statement.
The Cancer Fund of America website previously identified Reynolds Sr. as its
president and said he served in the U.S. Army Medical Corps for 12 years
and attended Brigham Young University. The website went down Tuesday ahead
of the FTC announcement.
Reynolds' ex-wife, Rose Perkins, ran the Children's Cancer Fund of America.
That group's website also was taken down.
According to the complaint, the organizations hid their high administration
costs from donors and regulators. The groups filed public financial
documents saying they had taken in more than $223 million "gifts in kind,"
which would be distributed to international recipients. Investigators say
that number was inflated and helped to create the illusion that the groups
were being more efficient with donated money than they actually were.
According to the FTC, 36 states alleged that the defendants filed "false and
misleading" financial statements with state charities.
The settlement agreement imposed hefty judgments based on the amount of
money donated to the charities between 2008 and 2012. But because of Perkins
' "inability to pay," her $30 million judgment would be suspended entirely.
The $65.5 million judgment against Reynolds II would be suspended after he
pays $75,000.
Effler, former president of Cancer Support Services, faced a $41 million
judgment that would be forgiven after paying $60,000.
Officials on Tuesday said that any money recouped under the settlements
would go to state authorities, which will have the ability to distribute the
money to legitimate charities. Officials cited complexities of the case to
explain why the charities were allowed to continue operating even after
media outlets flagged them as potentially fraudulent.
"I hope it serves as a strong warning for anyone trying to exploit the
kindness and generosity of others," Virginia Attorney General Mark Herring
said of the investigation.
The FTC recommends that when considering a donation, look for a long-
standing charity with a good reputation and avoid any group that uses high-
pressure tactics or is reluctant to provide detailed documentation on how
the money is spent. |
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