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Phony cancer charities shut down for ripping off donors

RALEIGH — Two sham cancer charities that misled donors out of $75 million nationwide will be dissolved and their leader banned from nonprofit work, North Carolina Attorney General Roy Cooper and Secretary of State Elaine Marshall announced Wednesday.

Cooper, Marshall, officials from 49 other states and the Federal Trade Commission today announced a permanent injunction that will shut down Cancer Fund of America Inc. (CFA) and Cancer Support Services Inc. (CSS), donate their assets to legitimate charities, and ban their leader, James Reynolds, from profiting from fundraising and nonprofit work and from serving as a charity’s director or trustee.

The injunction is part of a settlement to resolve allegations that CFA and CSS claimed to help cancer patients and used misleading fundraising solicitations and phone calls, but spent the vast majority of the money they raised on themselves, their families and friends and professional fundraisers.

“Many charities do amazing work in our communities but when charitable donations are misused, people in need suffer and consumers lose confidence in giving,” Cooper said. “We took action to protect consumers from these fraudulent charities and restore their trust in legitimate ones.”

“Today you are seeing a successful united front by the federal government and every single state charity regulator in this great nation,” Marshall said Wednesday. “This settlement forces these sham charities into dissolving, liquidates the known assets in the case, and bans this shameful bunch from ever running another nonprofit. That’s great news.”

Under the settlement, CFA, CSS and Reynolds are ordered to pay $75,825,653, the amount consumers donated to them between 2008 and 2012.  The sham charities’ assets will be sold and any profits will go to support charities that actually help cancer patients and to cover the costs of the investigation. The judgment against Reynolds will be suspended if he surrenders certain assets, with the full judgment due immediately if he is found to have misrepresented his finances.

The injunction resolves a lawsuit filed in May 2015 against CFA, CSS, Children’s Cancer Fund of America, The Breast Cancer Society, and their operators for allegedly bilking more than $187 million from donors. Cancer Fund of America and Cancer Support Services were responsible for around $75 million of that amount.

In the lawsuit, Cooper and Marshall alleged that the defendants portrayed themselves as charities that gave direct support to cancer patients across the country, but 85 percentof the contributions they raised never benefited actual cancer victims. Investigators found that the defendants spent charitable contributions on cruises, concert tickets, dating site memberships, and Jet Ski trips, all approved by their boards of directors.

According to the North Carolina Secretary of State’s Office, North Carolina consumers donated $1,012,775.78 to the four charities named in the original lawsuit, with more than 80 percent of the money given going to fundraisers.

Children’s Cancer Fund of America, The Breast Cancer Society and the individual defendants other than Reynolds entered into settlements in 2015 to resolve the allegations against them.

Cooper and Marshall urge North Carolina consumers to research charities before donating to them.
“North Carolina is home to so many generous people and we want to make sure their donations are used as they intend,” Cooper said.

“Do your homework before you give so that your contributions can do the most good,” Marshall said.
Cooper’s Consumer Protection Division offers tips on researching charities and avoiding charity scams at ncdoj.gov. Consumers who spot charity scams are encouraged to file a complaint with our office online or by calling 1-877-5-NO-SCAM toll-free within North Carolina.

Consumers who have questions about individual charities or charitable solicitation activities can call the Secretary of State’s Office’s Charitable Solicitation Licensing Division toll-free within North Carolina at 1-888-830-4989 or 1-919-807-2214, or visit the division online at secretary.state.nc.us/csl.

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