SALT LAKE CITY — Four major cancer charities with Utah ties are being charged with conning donors out of a whopping $187 million for personal use.
The heads of the charities named in the complaint — Cancer Fund of America, Cancer Support Services, Children’s Cancer Fund of America and the Breast Cancer Society — allegedly brought in donations by promising the money would go to help cancer patients, but instead used it to fund luxurious trips, cars, gym memberships and extravagant fundraisers — among other things, according to the Federal Trade Commission.
The charges came as a result of a historic joint action by the FTC and attorneys general from all 50 states, as well as the District of Columbia. It’s the first time the FTC has joined forces with representatives from the entire country to file action against fraudulent charities.
“The allegations of fundraising for personal gain in the name of children with cancer and women battling breast cancer are simply shameful,” said Virginia Attorney General Mark Herring in a statement. “I hope it serves as a strong warning for anyone trying to exploit the kindness and generosity of others.”
The complaint alleges charity executives — all of whom are extended members of the same family — raised money through telemarketing, mail and website campaigns. The charities established legitimacy by presenting programs that claimed to provide cancer patients with pain medication, hospice care and transportation to chemotherapy treatments.
Utahns are historically and currently giving, and to hear of allegations of this type, of misuse of funds, you worry about what the implications will be for charities that are following the rules and getting that money where it needs to go.
–Daniel O'Bannon, director of Utah's Division of Consumer Protection
In reality, the charities “operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation, with none of the financial and governance controls that any bona fide charity would have adopted,” according to the charges filed.
“Cancer is a debilitating disease that impacts millions of Americans and their families every year. The defendants’ egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, in a statement.
In fact, Rich told CNN, the charity heads spent 97 percent of total funds raised on themselves, while only 3 percent went towards helping cancer patients.
“Donated funds were used to pay for vehicles, personal consumer goods, college tuition, gym memberships, Jet Ski outings, dating website subscriptions, luxury cruises and tickets to concerts and professional sporting events,” the complaint reads.
The accused also hired professional fundraisers to bring in donations, and used 85 percent of the donations raised to compensate those fundraisers, according to the complaint.
In order to hide their scams, the charities filed “false and misleading” financial statements inflating their revenues with state charities regulators in 35 states, according to the charges. They also reported a combined $223 million in donated gifts, which they claimed to distribute to international beneficiaries.
The charities named in the suit were registered in Utah and had solicited funds from donors in the state. It is for that reason that the Utah attorney general joined the action.
“Utahns are historically and currently giving, and to hear of allegations of this type, of misuse of funds, you worry about what the implications will be for charities that are following the rules and getting that money where it needs to go,” Daniel O’Bannon, director of Utah’s Division of Consumer Protection, told KSL Newsradio’s Doug Wright.
Since the charges were filed, two of the charities — the Breast Cancer Society and the Children’s Cancer Fund of America — announced plans to dissolve, CNN reported. James Reynolds Jr., head of the Breast Cancer Society, could be fined more than $60 million. The head of the Children’s Cancer Fund of America, Rose Perkins, faces $30 million in fines, according to CNN.