South Carolina Secretary of State Mark Hammond has announced $2.5 million will be distributed to cancer centers across the country as a result of a multi-state enforcement action against sham cancer charities.
The $2.5 million was recovered through settlements of a landmark lawsuit against four affiliated sham charities – the Cancer Fund of America, Inc., The Breast Cancer Society, Inc., Cancer Support Services, Inc., and the Children’s Cancer Fund of America – and their founder James Reynolds and other individuals. The settlements put in place a receiver who seized and liquidated all available corporate and personal assets. The people responsible for fronting the false charities are all banned from any charity or fundraising activities for the rest of their lives.
This distribution marks the conclusion of the lawsuit, brought in May 2015. The suit was the first time agencies from all 50 states, the District of Columbia and the Federal Trade Commission joined together to shut down sham charities.
“I am proud that our office was able to participate in this landmark enforcement action, and pleased that the recovered money will be used to serve cancer patients as the donors intended,” Hammond said. “I hope that this case will stand as a warning to those who exploit donors’ goodwill, and put them on notice that charity fraud will not be tolerated in South Carolina or any other state.”
The complaint alleged that the so-called charities, led by James Reynolds and his family members, bilked the public out of more than $187 million between 2008 and 2012. Of the money collected, only 3 percent was directed to cancer patients in the United States in the form of “care packages” containing religious DVDs, MoonPies, random items of clothing, and various sundries.
Cancer Fund of American also claimed to supply patients with pain medications and transportation to chemotherapy treatments, when it provided no such services. The charities also participated in a “gift-in-kind” program in which they sent drugs that had nothing to do with cancer to other countries. The Complaint alleged the purpose of this program was to make the organizations appear larger than they were and to hide their high fundraising costs. The Complaint also alleged the leaders of these sham charities used donated funds to pay themselves exorbitant salaries and to go on trips to destinations such as Thailand, Las Vegas and Disney World. The Reynolds’ also bought themselves cars, boats, jet skis and houses, and used the charities’ credit cards to buy designer handbags, jewelry and clothing, and to pay for day-to-day expenses such as gas, groceries and utility bills.
The money will be transferred to Rockefeller Philanthropy Advisors (RPA) who, under a services agreement with the plaintiffs, will distribute the funds to select health and medical programs targeting breast and pediatric cancer. Eligibility will be determined through an invitation-only application process, and is limited to NCI-designated Cancer Care Centers, a designation bestowed by the National Cancer Institute on institutions and programs recognized for their scientific leadership, resources, and the depth and breadth of their research.
“We are pleased to be part of this landmark process of ensuring that the philanthropic intent of donors is coming to fruition, despite the conduct of bad actors,” RPA CEO Melissa Berman said.
RPA will ensure that the funding will serve patients in all 50 states, and will monitor, ensure compliance and provide detailed reporting for all grants awarded.
Hammond encourages anyone who has concerns about a charity or professional fundraiser to notify his office immediately. Complaints can be filed using the Online Charitable Solicitation Complaint Form on the Secretary of State’s Office website at www.sos.sc.gov. Citizens can also contact the Division of Public Charities by calling 1-888-CHARITI (242-7484) or emailing [email protected].
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