A.G.: Sham charities charged with scamming $187M from consumers

A FEDERAL lawsuit has been filed against four phony cancer charities and their operators who allegedly scammed more than $187 million from consumers around the country, according to Attorney General Peter F. Kilmartin. / COURTESY R.I. ATTORNEY GENERAL'S OFFICE
A FEDERAL lawsuit has been filed against four phony cancer charities and their operators who allegedly scammed more than $187 million from consumers around the country, according to Attorney General Peter F. Kilmartin. / COURTESY R.I. ATTORNEY GENERAL'S OFFICE

PROVIDENCE – A federal lawsuit has been filed against four phony cancer charities and their operators who allegedly scammed more than $187 million from consumers around the country, according to Attorney General Peter F. Kilmartin.
Kilmartin, along with law enforcement partners from every other state and the District of Columbia and the Federal Trade Commission, filed the lawsuit.
“With our actions today, we are permanently ending deceptive solicitations by these individuals that claimed to assist children with cancer and breast cancer patients – solicitations that targeted residents of Rhode Island and every other state in the country. We are also continuing the fight against Cancer Fund of America in court, where we will be seeking to halt its deceptive acts as well,” Kilmartin said in a statement.
The joint complaint alleges that the defendants, including Cancer Fund of America, Children’s Cancer Fund of America, Cancer Support Services and The Breast Cancer Society, portrayed themselves to donors as legitimate charities with nationwide programs whose primary purposes were to provide direct support to cancer patients, children with cancer and breast cancer patients in the United States.
According to a news release from Kilmartin, the “overwhelming majority” of consumers’ contributions benefited only the perpetrators, their families and friends, and professional fundraisers, who often received 85 percent or more of every donation.
“Consumers’ donations were wasted and misused, cancer victims were not helped and the representations that defendants were legitimate charities were false. Among other things, defendants or their telemarketers often told donors that their contributions would be used to provide pain medication to children suffering from cancer, transport cancer patients to chemotherapy appointments and/or pay for hospice care for cancer patients. These, however, were lies. The defendants did not operate programs that provided these services,” the release states.

The federal court complaint alleges that Cancer Fund of America, Cancer Support Services, Children’s Cancer Fund of America and the Breast Cancer Society were sham charities, “operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest and excessive insider compensation, with none of the financial and governance controls that any bona fide charity would have adopted.”
In addition, the complaint alleges that the defendants spent donations on cruises, Jet Ski outings, concert tickets and dating site memberships – actions made possible by corporate boards who approved the decisions of the individual defendants.

In settlements filed concurrently with the eight-count complaint, five defendants agreed to leave the charity business and to stop fundraising.

For example, Children’s Cancer Fund of America and its president Rose Perkins have agreed to entry of a judgment for $30 million, the amount that consumers donated to Children’s Cancer Fund between 2008 and 2012. And, Breast Cancer Society agreed to entry of a judgment for $65.6 million, the amount consumers donated to it between 2008 and 2012.
“Rhode Islanders should not let today’s announcement and actions against these outfits deter them from donating to a good cause. The overwhelming majority of charitable organizations are reputable and deliver on the promise of what the funding will go towards,” Kilmartin said. “This settlement should serve as a reminder to do your homework before making a charitable donation to ensure the money goes toward the intended purpose.”

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The action was filed in the U.S. District Court for the district of Arizona. Settlement agreements will not be final until approved by the court. Litigation will proceed against Cancer Fund of America, Cancer Support Services and James Reynolds Sr., who operated them.

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