CONCORD, NH – Attorney General Joseph A. Foster joined with the U.S. Federal Trade Commission and law enforcement officials from all 50 states in a complaint charging four cancer charities and their operators with bilking more than $187 million from consumers.
The defendants told donors their money would help cancer patients, including children and women suffering from breast cancer, but the overwhelming majority of donations benefitted only the perpetrators, their families and friends, and professional fundraisers.
“Thousands of families in New Hampshire are touched by cancer. The defendants’ activities effectively deprived legitimate cancer charities and cancer patients of much-needed funds. The defendants took in millions of dollars in donations meant to help cancer patients, but spent it on themselves and their fundraisers. It is time to end this scheme,” Foster said.
The complaint also alleges that the defendants used the organizations for lucrative employment for family members and friends, and spent consumer donations on cars, trips, luxury cruises, college tuition, gym memberships, jet ski outings, sporting event and concert tickets, and dating site memberships. They hired professional fundraisers who often received 85 percent or more of every donation.
The federal court complaint names Cancer Fund of America, Inc., Cancer Support Services, Inc., Children’s Cancer Fund of America, Inc., and The Breast Cancer Society, Inc. as well as several of its officers. New Hampshire and the other plaintiffs today also filed stipulated judgments with Children’s Cancer Fund, The Breast Cancer Society and their officers. Those two corporations have agreed to pay damages and to liquidate. The officers will also pay damages and be banned from fundraising and charity management. Litigation will proceed against Cancer Fund of America, Cancer Support Services and its president, James T. Reynolds Sr.
This is not the first time that New Hampshire has pursued Cancer Fund of America. In 1991 the Attorney General reached a consent decree in which Cancer Fund of America agreed to reimburse New Hampshire residents who had contributed to that organization. Cancer Fund of America also agreed to pay the State $36,000 in costs, plus pay $17,000 to the Norris Cotton Cancer Center.
According to the current complaint, the defendants used telemarketing calls, direct mail, websites, and other materials to portray themselves as legitimate charities with substantial programs that provided direct support to cancer patients in the United States, such as providing patients with pain medication, transportation to chemotherapy, and hospice care. In fact, the complaint alleges that these claims were deceptive and that the charities “operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation, with none of the financial and governance controls that any bona fide charity would have adopted.”
The complaint claims that, to hide their high administrative and fundraising costs from donors and regulators, the defendants falsely inflated their revenues by reporting in publicly filed financial documents over $223 million in donated “gifts in kind” which they claimed to distribute to international recipients. In fact, the defendants were merely pass-through agents for such goods. By reporting the inflated “gift in kind” donations, defendants created the illusion that they were larger and more efficient with donors’ dollars than they actually were. Thirty-six states alleged that the defendants filed false and misleading financial statements with state charities regulators.
“This lawsuit against Cancer Fund of America in 2015 reflects our continuing commitment to take action against individuals and entities that purport to raise funds for charitable purposes but instead do so for personal gain. We want New Hampshire citizens to feel confident when they make donations to the many good charities in this state. Still, people should pay attention and do their own research before they give,” Foster said.
Anyone who has questions about a charity can check the website of the Charitable Trusts Unit or call 271-3591.
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