05/19/2015 04:00 pm ET Updated May 21, 2015

FTC Accuses Cancer Charities Of Stealing Nearly $200 Million

The Federal Trade Commission, along with officials from every state in the country and the District of Columbia, announced on Tuesday that they were filing charges alleging that four cancer charities misled donors and stole nearly $200 million.

In a complaint filed in the U.S. District Court for the District of Arizona, the commission accused four charities along with former and current organization officials of misleading donors about the services they provide and misusing over $187 million. The four charities are the Cancer Fund of America, Inc., Cancer Support Services Inc., Children’s Cancer Fund of America Inc. and The Breast Cancer Society Inc.

The complaint claims that the charities misrepresented themselves by claiming to provide legitimate assistance to cancer patients, helping with costs for things like transportation to chemotherapy. In reality, the FTC alleges, the charities used the money for things like luxury cruises, gym memberships, jet ski outings and to pay family members' salaries.

In a statement, the FTC announced that Children’s Cancer Fund of America and The Breast Cancer Society had agreed to settle charges. Under the proposed settlement order, which still needs to be approved by the District Court judge, both organizations would be dissolved. James Reynolds II, who was named in the complaint and was executive director of The Breast Cancer Society, has agreed to settle the charges. Kyle Effler, who was named as well and is the chief financial officer and former president of Cancer Support Services, and Rose Perkins, president and executive director of the Children's Cancer Fund of America, have also agreed to settle.

The FTC is also proposing as part of the settlement that the individuals involved in wrongdoing be banned from fundraising and other charity work.

The FTC said that it would continue litigation against the Cancer Fund of America, as well as Cancer Support Services and James Reynolds Sr., the group's president.

“Cancer is a debilitating disease that impacts millions of Americans and their families every year. The defendants’ egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support,” said Jessica Rich, the director of the FTC’s Bureau of Consumer Protection. “The defendants took in millions of dollars in donations meant to help cancer patients, but spent it on themselves and their fundraisers."

Reynolds II denied that his organization had engaged in any kind of wrongdoing in a letter posted on the charity's website.

"While the organization, its officers and directors have not been found guilty of any allegations of wrong doing, 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," Reynolds wrote.

A joint report by the Center for Investigative Reporting and the Tampa Bay Times last year found that at the Cancer Fund for America, less than "2 cents of every dollar raised has gone to direct cash aid for patients or families." Even though the charity advertised that it provided direct financial aid to sick patients, it actually sent packages filled with things like "paper cups, napkins, and kids toys," the joint investigation found.

The four charities did not immediately respond to requests for comment.

Read the full complaint below:

Cancer Charities Complaint



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