AG Zoeller: Indiana Settles Claims Against Two Sham Cancer Charities

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Multistate settlement concludes action against charities
that bilked more than $75M from donors

INDIANAPOLIS, Ind. – Indiana Attorney General Greg Zoeller along with the Federal Trade Commission (FTC) and agencies from all 50 states have obtained a permanent injunction to dissolve two nationwide sham cancer charities and ban their president from profiting from any charity fundraising in the future under a settlement filed in court late yesterday.

Cancer Fund of America Inc. (CFA), Cancer Support Services Inc. (CSS) and their leader, James Reynolds, Sr., agreed to settle charges that CFA and CSS claimed to help cancer patients, but instead, spent the overwhelming majority of donations on their operators, families and friends, and fundraisers.

The agencies’ complaint, filed in May 2015, targeted four sham charities run by Reynolds and his family members that allegedly bilked more than $187 million from donors.  CFA and CSS were responsible for more than $75 million of that amount. The other two sham charities settled in May 2015. The settlement announced today concludes the largest joint enforcement action ever undertaken by the FTC and state charity regulators.

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. He is also prohibited from making misrepresentations about goods or services, and violating the FTC’s Telemarketing Sales Rule and state laws.

“The defendants in this case preyed off of peoples’ compassion and generosity. This contemptible behavior harmed donors who believed their money would be used to help cancer patients as well as legitimate charities that could have used those donations to make a real impact in fighting this disease,” Zoeller said. “This settlement highlights the importance of doing research on charitable organizations to ensure your money is used how you intended.”

The order imposes a judgment against CFA, CSS, and Reynolds, jointly and severally, of $75,825,653, the amount consumers donated to CFA and CSS between 2008 and 2012.  The judgment against CFA and CSS will be partially satisfied via liquidation of their assets.

A portion of any money collected through settlements will be granted to charities that do provide assistance to cancer patients, as selected by participating states. A portion will also be used to cover costs borne by the states in investigating and prosecuting this action.

Zoeller reminded Hoosiers to follow the below guidelines for safe charitable giving:

  • Before donating, contact one of the organizations listed on the Attorney General’s website that collect financial information on charities, especially those that conduct nationwide solicitation campaign;
  • Ask the caller for written information on the charitable organization, including the charity’s name, address, telephone number, mission and details on how your donation will be used;
  • Watch out for charities with similar sounding names. Some unscrupulous charities use names that are very similar to those of respected organizations to scam consumers;
  • Do not click on pop-up solicitations or reply to emails asking for donations. These are likely phishing scams;
  • Be suspicious if a caller or invoice thanks you for making a pledge that you didn’t make. If you have any doubt about whether you made a pledge, check your records;
  • Under Indiana law, you have the right to cancel a pledge prior to making a contribution; and
  • Always make contributions by credit card or check and payable to the charitable organization, not to the solicitor. Never wire money or use a pre-paid debit card to make a donation.

Under Indiana law, a professional solicitor who is hired to solicit contributions for a charitable organization must register with the Attorney General’s Office a copy of its contract with the charitable organization. Additionally, professional solicitors are required to submit financial data to the Attorney General’s Office after the end of each solicitation campaign, and after the anniversary of the start of a solicitation campaign lasting more than one year. For more information, click here.

Hoosiers who believe they have been deceived by a charity can file a complaint with the Attorney General’s Office at www.IndianaConsumer.com or by calling 800-382-5516.

Zoeller thanked Deputy Attorneys General Justin Hazlett and Jefferson Garn for their work on this case.

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