FTC: Scam cancer charities kept millions of dollars

Story highlights

  • Court docs show Cancer Fund of America and related charity only used about 2.5% of $75 million raised for charitable causes
  • CNN began reporting on charities more than two years ago
  • The charities have agreed to close their doors as part of an agreement

New York (CNN)During a four year period starting in 2008, executives of two sham cancer charities paid themselves and their fundraisers more than $65 million, according to figures released by the Federal Trade Commission.

Court documents filed by the FTC and the attorneys general of all 50 states show that the Cancer Fund of America and a related charity called Cancer Support Services paid a total of $65.5 million, which represented 86.4% of the $75 million donated to those charities in that same time period. The money went to pay for telemarketing calls, salaries and perks. In all, the government says, the charities donated around 2.5% of their donations to actual charity.
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    "The FTC and our state enforcement partners have ended a pernicious charity fraud that syphoned hundreds of millions of dollars away from well-meaning consumers, legitimate charities, and people with cancer who needed the services the defendants falsely promised," said Jessica Rich of the Federal Trade Commission.
    CNN began reporting on these charities and two other cancer charities more than two years ago. All four were connected to the same man, James Reynolds Sr., of Knoxville, Tennessee. He ran the Cancer Fund of America, his ex-wife, Rose Perkins, ran the Children's Cancer Fund of America. Their son, James Reynolds Junior, ran The Breast Cancer Society. An associate of Reynolds Sr., Kyle Effler, operated Cancer Support Services. All have now agreed to close their doors and not contest the FTC allegations.
    Overall, the FTC says these charities bilked donors out of $187 million. An attorney for James Reynolds Sr. did not respond to CNN's request for comment.
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    The court filings represent the most detailed look yet behind the scenes of the actions of Cancer Fund of America and Cancer Support Services. Scripts for phone calls and follow up letters pleading for money were included.
    One of the letters, signed by James Reynolds Sr., asked for money because "all of our funds are committed" to helping cancer patients.
    When the FTC first brought the case last year, it alleged that most of the money donated went to salaries and personal expenses, including trips to Disney World and payment of relatives who wound up working for the charities.