Bogus charities stole $75 million, must close

Posted at 3:23 PM, Mar 30, 2016
and last updated 2016-03-31 00:42:18-04

Federal officials shuttered two national cancer charity groups following a settlement with the Federal Trade Commission, all 50 states and the District of Columbia.

The order was filed in the U.S. District Court for the District of Arizona.

Cancer Fund of America Inc., Cancer Support Services Inc. and their leader, James Reynolds, Sr., settled charges that CFA and CSS claimed to help cancer patients, but instead, spent the money on their operators, families and friends, and fundraisers.

It's estimated the group misspent $75 million with only $.03 on the dollar going to charitable causes.

"This settlement helps ensure Reynolds is punished for his despicable and greedy acts. Reynolds took millions of dollars in donations intended to help cancer victims and instead lined his own pockets. Under this settlement, Reynolds is now permanently banned from operating or fundraising for non-profit organizations," Arizona Attorney General Mark Brnovich said.

The investigation initially involved $187 million raised by four sham non-profits run by Reynolds and his family.  CFA and CSS were responsible for more than $75 million of that amount. The other two bogus charities settled in May 2015.

The assets from the charities will be liquidated to pay for a portion of the judgment.  Reynolds is also ordered to sell some personal assets.

The settlement is historic.  It is the largest joint enforcement action ever by the FTC and state charity regulators.