Alaska Joins Federal, State Crackdown on Four Cancer Charities
May 19, 2015
(ANCHORAGE, Alaska) — The Alaska Department of Law joined 49 states, the District of Columbia, and the U.S. Federal Trade Commission in a joint complaint charging four cancer charities and their operators with scamming consumers. According to complaint, the defendants—including Cancer Fund of America, Children’s Cancer Fund of America, Cancer Support Services and The Breast Cancer Society—collected $187 million in donations, most of which were wasted and misused.
Alaskans were told their donations would be used to provide direct aid to cancer patients, but the overwhelming majority of the funds were used to pay professional fundraisers and the salaries and personal expenses of the perpetrators—including cruises and concert tickets. According to registration documents filed with the Department of Law, professional fundraisers for one of the defendants, Cancer Fund of America, were paid 89% of the $22,000 they collected from Alaska donors. The complaint alleges that less than 3% of the donations the organizations received were used to help cancer patients.
The complaint, filed in federal court in Arizona, alleges that to hide their high administrative and fundraising costs from donors and regulators, the defendants falsely inflated their revenues by reporting in publicly filed financial documents over $223 million in donated “gifts in kind” which they claimed to distribute to international recipients. In fact, the defendants were merely pass-through agents for such goods. By reporting the inflated “gift in kind” donations, defendants created the illusion that they were larger and more efficient with donors’ dollars than they actually were.
The complaint names Cancer Fund of America, Inc., Cancer Support Services, Inc., the president of these two corporations, James Reynolds, Sr., as well as the CFO of both and the former president of Cancer Support Services, Kyle Effler; 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.
The federal and state plaintiffs today also filed stipulated judgments settling claims against five of these defendants: Children’s Cancer Fund and Rose Perkins; The Breast Cancer Society and James Reynolds, II; and Kyle Effler. The organizations will be dissolved, and the individuals are banned from overseeing charitable solicitations and charitable assets.
Litigation will proceed against Cancer Fund of America, Cancer Support Services (which the complaint alleges operates as a common enterprise with Cancer Fund of America), and James Reynolds, Sr.
The Department of Law encourages consumers to research charities before donating. For more information, visit www.law.alaska.gov/consumer.
For media inquiries, contact Assistant Attorney General Davyn Williams at 269-5200.
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