Lawsuit nets cancer centers $2.5 million

Listen to this article

Cancer centers across the country will receive $2.5 million after settlements of a lawsuit against sham cancer charities.

The Cancer Fund of America Inc., The Breast Cancer Society Inc., Cancer Support Services Inc. and the Children’s Cancer Fund of America, along with founder James Reynolds, were the subject of a lawsuit brought in May 2015, according to a news release from S.C. Secretary of State Mark Hammond’s office. The settlements established a receiver who seized and liquidated all corporate and personal assets of the organizations, and those associated with the groups received lifetime bans from charitable or fundraising activities, according to the release.

Hammond’s office said the suit marked the first time that agencies from all 50 states, the District of Columbia and the Federal Trade Commission joined forces to go after sham charities.

“I am proud that our office was able to participate in this landmark enforcement action and pleased that the recovered money will be used to serve cancer patients as the donors intended,” Hammond said. “I hope that this case will stand as a warning to those who exploit donors’ goodwill and put them on notice that charity fraud will not be tolerated in South Carolina or any other state.”

The lawsuit alleged that the groups bilked donors out of more than $187 million between 2008 and 2012. Only 3% of those funds was directed to cancer patients, arriving in the form of “care packages” containing religious DVDs, MoonPies and random items of clothing, Hammond’s office said. Cancer Fund of America also falsely claimed to supply pain medication and transportation to chemotherapy treatments.

The allegations against the organizations have been documented in The New York Times, the Tampa Bay Times, on CNN and by Reuters. CNN reported that the Cancer Fund of America tentatively agreed to dissolve in February 2016.

The lawsuit also charged that the leaders of the four organizations used the donated funds to pay themselves exorbitant salaries and buy jewelry while taking trips to destinations including Thailand, Las Vegas and Disney World, according to Hammond’s office.

Hammond’s office said the money will be transferred to Rockefeller Philanthropy Advisors. Under an agreement with the lawsuit plaintiffs, that organization will distribute the funds to selected programs targeting breast and pediatric cancer. Those programs will be determined through an invitation-only process limited to National Cancer Institute-designated Cancer Care Centers.

“We are pleased to be part of this landmark process of ensuring that the philanthropic intent of donors is coming to fruition despite the conduct of bad actors,” RPA CEO Melissa Berman said.