4 Cancer Charities Are Accused of Fraud

LINK



There were subscriptions to dating websites, meals at Hooters and purchases at Victoria’s Secret — not to mention jet ski joy rides and couples’ cruises to the Caribbean.

All of it was paid for with the nearly $200 million donated to cancer charities, and was enjoyed by the healthy friends and family members of those running the groups, in what government officials said Tuesday was one of the largest charity fraud cases ever.

At the center of the operation was James T. Reynolds Sr., who opened the Cancer Fund of America in 1987. Over the decades, according to a complaint filed by the Federal Trade Commission and regulators from 50 states and the District of Columbia, he expanded the enterprise to four separate groups and was joined by his son, friends and members of his Mormon Church congregation in Knoxville, Tenn.

In its complaint, the F.T.C. called all four of the cancer groups “sham charities,” charging the organizations with deceiving donors and misusing millions of dollars in donations, including putting money toward personal expenses like carwashes and college tuition, from 2008 to 2012.

The other charities connected to Mr. Reynolds and named in the suit were Cancer Support Services, Children’s Cancer Fund of America and the Breast Cancer Society. According to government officials, the four groups spent the vast majority of the donations they received on fund-raising for more donations, reserving a portion for showering the groups’ workers and their friends with large salaries, bonuses and lavish expenses.

The lawsuit also accuses the charities of falsifying financial documents, reporting inflated revenues and overvaluing gift donations like plastic cutlery and Little Debbie snack cakes delivered to cancer patients. Such bookkeeping manipulations may explain how the scheme persisted for years.

Mr. Reynolds and his associates did not respond to messages on Tuesday. By the morning, most of the charities’ websites had gone dark. But the Breast Cancer Society’s page included a note from Mr. Reynolds’s son, James T. Reynolds II, the group’s executive director.

Mr. Taylor added that he thought cancer fund-raising was a favored target for perpetrators of fraud. “If you get a phone call, your response is ‘I know someone who had cancer, or I had cancer,’ ” he said. “Your instinct is to open your wallet.”