Illinois Attorney General Lisa Madigan has joined with the Federal Trade Commission and state regulators from 49 states to announce a settlement with two sham cancer charities over allegations that the groups used millions of dollars in donations for personal use. The settlement concludes the largest joint charitable enforcement action by Madigan, the FTC and state regulators.
The settlement with Cancer Fund of America Inc. (CFA) and Cancer Support Services Inc. (CSS) will dissolve the national organizations and ban the head of the charities, James Reynolds II, from future charitable work. Madigan, the FTC and state regulators alleged CFA and CSS solicited donations under the guise that the funding would help cancer patients, but instead, the charities spent the overwhelming majority of donations for personal use, on their families and friends, and for fundraisers to raise more money for the organizations.
“This settlement puts an end to an egregious charitable deception,” said Madigan. “These charities defrauded donors and spent millions of dollars that should have gone to support cancer patients.”
The lawsuit was filed by Madigan, the FTC and state regulators in May 2015 and targeted four sham charities run by Reynolds and his family members that bilked more than $187 million from donors, of which more than $75 million was donated to CFA and CSS. The other two sham charities – Children’s Cancer Fund of America Inc. (CCFOA) and The Breast Cancer Society Inc. (BCS) – settled in May 2015 for similar terms.
Under the settlement order, CFA and CSS will be permanently closed and their assets liquidated. 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.
In filing today’s settlement, Attorney General Madigan urged consumers to review her office’s tips on Being an Informed Donor before donating to a charity.