Schuette Achieves Shutdown of Two National Sham Charities

March 30, 2016

LANSING – Michigan Attorney General Bill Schuette, along with the Federal Trade Commission and agencies from all 50 states, have obtained a permanent injunction to dissolve two national 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 president, James Reynolds, Sr., agreed to settle charges that CFA and CSS claimed to help cancer patients, but instead, spent the overwhelming majority of donations on their operators, families and friends, and fundraisers.

In May 2015, Schuette and his law enforcement partners 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. 

“Giving to a charity should leave you with a good feeling, a feeling that you are helping others, not a concern that the donation you have made is going to fund someone’s lavish lifestyle,” said Schuette. “Today’s agreement helps ensure that the charitable donations of Michigan residents are used as intended by their donors and for the good of society.” 

Settlement Details include Closure, Surrender of Assets

Under the settlement order, CFA and CSS will be permanently closed and their assets liquidated. Reynolds is banned from profiting from charity fundraising and nonprofit work, and from serving as a charity’s director or trustee or otherwise managing charitable assets. He is also prohibited from making misrepresentations about goods or services, and violating the FTC’s Telemarketing Sales Rule and state laws. 

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’s chief financial officer and CSS’s 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, and CCFOA and BCS are in receivership and will be dissolved after their assets are liquidated. 

Stipulated orders have the force of law when approved and signed by the District Court judge. 

Attorney General's Responsibility to Protect and Preserve Charities

The Attorney General's office has the primary responsibility for ensuring that charitable assets are being used for the purpose for which they were donated and that organizations are acting as responsible stewards of these assets.  To fulfill this mandate, the Attorney General's Charitable Trust Section registers charitable trusts, registers charities to solicit funds, monitors charitable assets, and oversees any changes that may occur in a charitable entity's form or existence.  The Charitable Trust Section also serves as an important repository of publicly available information about charities, and protects citizens from illegal scams posing as legitimate charities.  

The Department of Attorney General also compiles an annual Professional Fundraising Charitable Solicitation Report and has a searchable database of soliciting charities.

Visit the Attorney General's website for more information on the the Attorney General's oversight of charitable solicitation in Michigan.