Scam of the day – May 23, 2015 – FTC shuts down huge charity scams

Earlier this week, the Federal Trade Commission in cooperation with law enforcement officials from all fifty states and the District of Columbia filed a complaint in federal court against four phony charities and the people operating them accusing the charities of misapplying hundreds of millions of dollars of donations and using all but 3% of the donations for their own individual benefit.  The charities named are the Cancer Fund of America, the Cancer Support Services, Inc, the Children’s Cancer Fund of America, Inc and the Breast Cancer Society, Inc.  Also charged were officers of these charities, James Reynolds, Sr., Kyle Effler, Rose Perkins and James Reynolds II.  According to the FTC’s complaint, the funds collected from people thinking they were helping people with cancer went to huge salaries to the charities’ insiders along with payments for cars, luxury cruises, college tuition, gym memberships, ski outings, tickets to sporting and entertainment events and even dating site memberships.

The Children’s Cancer Fund of America and the Breast Cancer Society, Inc along with their principals Rose Perkins, James Reynolds II and Kyle Effler have all agreed to settle the charges.  As part of the settlements The Children’s Cancer Fund of America will pay $30,079.82 to the FTC which represents charitable donations made between 2008 and 2012.  The Breast Cancer Society, Inc.  will pay $65,564.36 which represents donations made between 2008 and 2013.  In both cases, this money will be turned over to legitimate charities.  Litigation will go on against the other charities and individuals charged.

TIPS

There are many lessons for all of us as individuals interested in making charitable donations.  The first lesson is that merely because the name makes a charity sound legitimate does not make it so.  Second, when you are considering making a donation to a charity, it is important to investigate the charity to find out whether it is an outright scam or whether it is one where very little of the money donated goes toward the announced charitable purposes of the charity.  You can find the answers to both of those questions by going to www.charitynavigator.org, which, by the way rated these charities extremely low.