Beech Tree News Network

FRANKFORT, KY. (March 30, 2016) – Today Attorney General Andy Beshear, along with the Federal Trade Commission and agencies from all 50 states, settled the largest joint enforcement action ever brought by state charity regulators.

The settlement filed today dissolves the Cancer Fund of America Inc. (CFA), Cancer Support Services Inc. (CSS) and bans the president, James Reynolds Sr., from profiting from any future charity fundraising.

The agencies’ complaint, filed in May 2015, targeted four sham charities run by Reynolds and his family members that allegedly bilked millions from donors. The charities claimed to help cancer patients, but instead, spent the overwhelming majority of donations on their operators, families and friends, fundraisers and travel boondoggles. The other charities include the Children’s Cancer Fund of America Inc., and The Breast Cancer Society Inc.

“The Office of the Attorney General’s core mission is to protect Kentucky families,” said Beshear. “And today’s settlement shuts down these charities and prevents them from taking advantage of anyone else.”

From 2008-2012, the four charities obtained more than $187 million in donations through direct mail and telemarketing. Only about two percent of the money raised went to charitable activities, which arguably had little to do with cancer treatment or cancer patients.

Information suggests nearly 150,000 Kentuckians donated more than $3.5 million to the four charities. At the time of the suit, the charities had active promotions in Kentucky.

The order imposes a judgment against CFA, CSS and Reynolds for $75.8 million, the amount consumers donated between 2008 and 2012. In an attempt to fulfill the judgement, CFA and CSS have been ordered to permanently close and liquidate their assets. Reynolds is banned from profiting from charity fundraising and nonprofit work, and from serving as a charity’s director or trustee or otherwise managing charitable assets.

“I would like to thank our Office of Consumer Protection for their work on the suit’s executive committee and I applaud the FTC and the Attorneys General of New Mexico and Missouri for their leadership,” said Beshear.

The other defendants in the case were CFA’s and CSS’s chief financial officer and CSS’s former president, Kyle Effler.

The other two sham charities, the Children’s Cancer Fund of America Inc., and its president and executive director, Rose Perkins, and The Breast Cancer Society Inc., and its executive director and former president, James Reynolds II, were also named defendants. The Children’s Cancer Fund of America Inc. and The Breast Cancer Society Inc. settled in May 2015 and will also be dissolved after their assets are liquidated.

Under the settlement orders, Effler, Perkins and Reynolds II are also banned from fundraising, charity management and oversight of charitable assets.

Stipulated orders have the force of law when approved and signed by the district court judge.

This case serves as a reminder to research a charity before making a contribution. Donors should not feel pressured to give money or financial information over the phone. Donors who are not familiar with a charitable organization and how they use their money can verify what percentage of their income goes to the charity’s purpose on CharityNavigator.org. Additional research tools and resources can be found on the Attorney General’s website.

To report a concern about a charitable solicitation contact the Attorney General’s Office at 888-432-9257, and file a complaint with the Federal Trade Commission.