€168m charity funds squandered in US

A Tennessee man and his family used much of the $187m (€168m) it collected for cancer patients to buy themselves cars, and take luxury cruise holidays, pay for college tuition and employ family members with six-figure salaries, federal officials have alleged in one of the largest charity fraud cases ever, involving all 50 states.

The joint action by the Federal Trade Commission and the states says James T Reynolds Sr, his ex-wife and son raised the money through their various charities: The Cancer Fund of America in Knoxville, Tennessee, and its affiliated Cancer Support Services; The Breast Cancer Society in Mesa, Arizona; and the Children’s Cancer Fund of America in Powell, Tennessee.

The charities hired telemarketers to collect $20 donations from people across the country, telling consumers they provided financial aid and other support to cancer patients, including pain medication, transportation to chemotherapy visits and hospice care.

However, little money made it to cancer patients, as the groups “operated as personal fiefdoms characterised by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation” with none of the controls used by bona fide charities, the commission said.

While litigation against Reynolds Sr and the Cancer Fund of America is ongoing, the settlement agreements with Reynolds’s son, ex-wife and a long-time associate of the family, Kyle Effler, says that much of the money has already been spent. The agreement bans the three from fundraising and closed down their organisations.

“The money is mostly gone,” said Jessica Rich, director of the Federal Trade Commission Bureau of Consumer Protection. Rich declined to say whether a separate criminal investigation might be underway, noting only that the regulatory agency doesn’t have that authority.

None of the groups returned phonecalls and emails asking for comment.

The Breast Cancer Society, which agreed to cease operations as part of the settlement agreement, posted a lengthy statement online attributed to its executive director — Reynolds’s son, James T Reynolds II — that blamed increased government scrutiny for the charity’s downfall.

The commission says 36 states alleged that the defendants filed “false and misleading” financial statements with state charities.


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