$187M 'sham': FTC sues 4 cancer charities for fraud

A family whose charities claimed to raise money for people with cancer is being sued for keeping approximately $187 million in donations over five years, spending the money on lavish vacations and expensive cars, among other things, according to the Wall Street Journal.

In what would be one of the largest-ever cases of fraud involving a charity, the Federal Trade Commission described the four charities as "shams," saying they "operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest and excessive insider compensation," according to the report.

The defendants in the FTC's complaint include James Reynolds Sr., who runs The Cancer Fund of America and CEO of Cancer Support Services, his son James Reynolds Jr., CEO of the Breast Cancer Society and Rose Perkins, the ex-wife of Mr. Reynolds Sr. and operator of the Children's Cancer Fund of America, as well as an associate, Kyle Effler, according to CNN.

The FTC alleges the four charities used external groups, such as telemarketing companies, to solicit donations by phone, mail and online. While the charities claimed donations would be used to aid victims of cancer, most of the donations collected between 2008 and 2012 were used to pay the telemarketing companies, with the operators of the charities keeping most of the rest for themselves. According to the report, the defendants spent this donation money on cars, vacations, college tuition, dating site memberships for family, friends and employees, as well as unmonitored credit cards.

According to the FTC's complaint, the money that was actually spent on cancer patients went toward care packages that included Little Debbie snack cakes, sample-size shampoos and iPod cases. These packages were sent to cancer patients regardless of age or gender, according to the report.

Mr. Perkins, Ms. Perkins, Mr. Effler and Mr. Reynolds Jr. have agreed to be banned from any future fundraising or charity work, according to the FTC. Included in these agreements are monetary penalties worth tens of millions of dollars, though little money is expected to be recovered. The Breast Cancer Society and the Children's Cancer Fund of America have agreed to shut down to settle the complaint, while the civil suit against Mr. Reynolds Sr., the Cancer Fund of America and Cancer Support Services continue.

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