CHARLESTON – Attorney General Patrick Morrisey has announced a permanent injunction to dissolve two nationwide sham cancer charities.
The settlement is in cooperation with the Federal Trade Commission and agencies from all 50 states, plus the District of Columbia. It also bans the charities’ president from profiting from any future charity fundraising.
Cancer Fund of America Inc., Cancer Support Services Inc. and their leader, James Reynolds Sr., agreed to settle charges the sham charities claimed to help cancer patients, but instead, spent the majority of donations on their operators, families, friends and fundraisers.
According to a release from state Secretary of State Natalie Tennant’s office, more money was spent on salaries, cruises, jet ski outings and concert tickets than on goods and services for cancer patients.
The settlement requires permanent closure of the two charities with a receiver liquidating assets as part of an estimated $75.8 million judgment against Reynolds and the charities.
“Charitable organizations serve a vital role in today’s society,” Morrisey said. “Their success depends upon trust. That’s why my office is committed to enforcing the law and punishing any group whose actions erode that confidence.”
The West Virginia Attorney General’s Office, in addition to its role as an independent plaintiff, also represented Secretary of State Natalie Tennant’s office in a dual capacity with respect to claims it had against CFA and CSS.
The FTC, Morrisey and their state partners targeted four sham charities run by Reynolds and his family.
The complaint, filed in May, alleged the sham charities bilked more than $187 million from donors, more than $75 million of which was collected by CFA and CSS.
The settlement concludes the largest joint enforcement action ever undertaken by the FTC and state charity regulators. Other sham charities identified in the case settled last spring.
The settlement order bans Reynolds profiting from charity fundraising and nonprofit work. It also prohibits his future service as a charity’s director, trustee or manager of charitable assets, as well barring him from making misrepresentations about goods or services, and violating the FTC’s Telemarketing Sales Rule and state laws.
The estimated $75.8 million judgment will be partially satisfied via liquidation of CFA and CSS assets, along with the surrender of Reynolds’ pontoon boat, two pistols and certain artwork.
Full satisfaction will be based upon Reynolds’ financial condition.
