The Federal Trade Commission (FTC) had recently named two cancer charities based in Tennessee as ‘shams’. The two charities, named Cancer Fund of America and Cancer Support Services, have reached a settlement in an enormous fraud case, including their president, by reaching an agreement to pay $75.8 million and also dissolving the businesses.
Tracy Thorleifson, the attorney representing the FTC, revealed that it is still unclear the amount of settlement that the government will be able to recover.
Furthermore, she stated that the amount recovered by the government will not be anywhere close to the settlement amount, which is the amount that was received in donation by the two charities from public during 2008-2012. In 2015, a lawsuit was filed against the two charities in which James T. Reynolds Sr. and others were blamed for using the charity money, meant for helping cancer patients, to finance six-figure remunerations and lavish holidays. This has turned out to be the biggest ever joint action taken by the FTC and state charity regulators.
Subsequent to being first informed about the objection, Reynolds started spending money extravagantly, according to court documents. Under the settlement terms, the left over assets of Reynolds will be sold to recover the settlement amount. The FTC revealed that less than 3% of the total amount of donations was used to help cancer patients and nonprofit organizations in the United States in cash.
Furthermore, though Cancer Support Services allegedly offered services to cancer patients, in reality the actual purpose of its existence was to collect funds for Cancer Fund of America. The funds that will be received after the dissolution of the two charities and selling off Reynolds’ assets will be first used to cover court expenditures. After that, attorneys will be paid and the remaining amount will go for supporting cancer charities.