Nashville, Tennessee — Tennessee Secretary of State Tre Hargett, Tennessee Attorney General Herbert H. Slatery, III, along with the Federal Trade Commission and agencies from all 50 states have obtained a permanent injunction to dissolve two nationwide sham cancer charities and ban their president from profiting from any charity fundraising in the future under a settlement filed in court today.
Cancer Fund of America Inc. (CFA), Cancer Support Services Inc. (CSS) and their leader, James Reynolds, Sr., agreed to settle charges that CFA and CSS claimed to help cancer patients, but spent the overwhelming majority of donations on their operators, families, friends and fundraisers.
“This settlement is a major victory that concludes an extremely long, but crucial investigation that should send a strong message to those who prey on generous Tennesseans. This type of fraud will not be tolerated in Tennessee or anywhere else,” Secretary Hargett said.
The agencies’ complaint, filed in May 2015, targeted four sham charities run by Reynolds and his family members that allegedly bilked more than $187 million from donors. CFA and CSS were responsible for more than $75 million of that amount. The other two sham charities settled in May 2015. The settlement announced today concludes the largest joint enforcement action ever undertaken by the FTC and state charity regulators.
Under the settlement order, CFA and CSS will be permanently closed and their assets liquidated. Reynolds is banned from profiting from charity fundraising, nonprofit work, serving as a charity’s director or trustee or otherwise managing charitable assets. He is also prohibited from making misrepresentations about goods or services, violating state laws or the FTC’s Telemarketing Sales Rule.
“Today’s settlement is the result of more than a year of hard work by this office and our state and federal colleagues,” General Slatery said. “Our actions today ensure that these sham charities will be closed for good and the operators will never again have the opportunity to swindle millions of dollars from compassionate Tennesseans hoping to help those battling cancer. Apart from taking advantage of well-meaning donors, this type of charity fraud also deprives legitimate charities of much needed support and should not be tolerated in Tennessee or any other state.”
The order imposes a judgment against CFA, CSS and Reynolds, jointly and severally, of $75,825,653, the amount consumers donated to CFA and CSS between 2008 and 2012. The judgment against CFA and CSS will be partially satisfied via liquidation of their assets. The judgment against Reynolds will be suspended upon surrender of certain artwork, two pistols and sale of a pontoon boat. The full judgment will become due immediately if he is found to have misrepresented his financial condition.
The other defendants in the case were CFA’s and CSS’ chief financial officer and CSS’ former president, Kyle Effler; Children’s Cancer Fund of America Inc. (CCFOA) and its president and executive director, Rose Perkins; and The Breast Cancer Society Inc. (BCS) and its executive director and former president, James Reynolds II. Under settlement orders, Effler, Perkins and Reynolds II were banned from fundraising, charity management and oversight of charitable assets. CCFOA and BCS are in receivership and will be dissolved after their assets are liquidated.
People with questions about a charity or professional solicitor operating in the state of Tennessee should contact our Division of Charitable Solicitations and Gaming by calling (615) 741-2555 or going to sos.tn.gov/charitable.