AG: Charities scammed donors out of millions

Posted at 9:31 AM, Mar 30, 2016
and last updated 2016-03-30 12:57:01-04

Idaho Attorney General Lawrence Wasden says his office, along with federal officials and Attorneys General from 49 states, has obtained a permanent injunction that dissolves two sham cancer charities and imposes restrictions on the president of the sham organizations.

“A settlement filed Tuesday imposes a permanent injunction on Cancer Fund of America Inc. (CFA), and Cancer Support Services Inc. (CSS). The organizations, along with President James Reynolds, Sr. agreed to settle charges that they spent an overwhelming majority of donations purported to help cancer patients on operators, families, friends and fundraisers,” according to an Idaho Attorney General’s Office news release.

State and federal officials filed a complaint in May 2015 focused on four sham charities run by Reynolds and his family members, the release stated.

Wasden and others alleged Reynolds bilked more than $187 million from donors. Of that amount, Wasden and others alleged CFA and CSS were responsible for more than $75 million.

Two other sham charities operated by Reynolds settled last year. The settlement announced Wednesday concludes the largest enforcement action ever taken by the Federal Trade Commission and state charity regulators.

“Let this settlement serve as a warning to other scam charities operating in Idaho and beyond,” Wasden said. “Charity regulators are committed to exposing and stopping those who prey on the public’s compassion then turn around and misappropriate donations. People give their hard-earned money to charities believing they are helping further the organization’s mission, not to subsidize a lavish lifestyle for board members and executives.”

Under the settlement, CFA and CSS will be permanently closed and their assets liquidated. Reynolds will be banned from profiting from charity fundraising or other nonprofit work. He is also banned from making misrepresentations about goods or services.

The settlement also imposes a judgment against CFA, CSS and Reynolds of $75.8 million, a sum equal to the amount consumers donated between 2008 and 2012. The judgment against the organizations will be partially satisfied through the liquidation of assets.

The judgment against Reynolds will be suspended after he surrenders artwork, two pistols and proceeds from the sale of a pontoon boat, the release said.  The full judgment will become due immediately if he is found to have misrepresented his financial condition.

Although consumers were targeted in every state, Wasden said there is not complete information showing how many Idahoans donated to these organizations. A portion of the money collected through the settlement will be distributed to charities that provide assistance to cancer patients.

“Consumers must do their homework when deciding where to donate money,” Wasden said. “Take time to research charitable organizations online and make sure the majority of their revenue supports programs rather than more fundraising, salaries and benefits.”