FTC: Family raised $187M for cancer, spent it on themselves
Washington — 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 and the District of Columbia.
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.
In a statement Tuesday announcing that his office had joined the federal lawsuit, Michigan Attorney General Bill Schuette said: “Federal and State law requires honesty of our charities and fundraisers. We will not tolerate those who employ unscrupulous fundraising tactics to deceive donors in Michigan and across the country. Our actions today mean that those charities aiming to deceive those who want to help children with cancer and breast cancer patients will be held accountable.”
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.
According to the complaint, the organizations hid their high administration costs from donors and regulators.
Detroit News Staff Writer Candice Williams contributed to this report.
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