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May 20 - Family Raises $187m For Cancer Patients, Blows It All On Life Of Luxury Instead
A Tennessee man and his family collected $187 million in charity donations intended for cancer patients, but instead blew it funding their own life of luxury.
The family ran a string of charities which hired telemarketers to collect $20 donations from people across the country, on the basis that those donations would fund essentials like pain medication, tr@nsportation to chemotherapy visits and hospice care for people with cancer.
But according to federal officials, the donations went on expensive cars, gym memberships, luxury cruises, college tuition and six-figure salaries for the family themselves.
In the largest charity fraud case ever filed, involving all 50 states, a joint action by the Federal Trade Commission and the states is pursuing James T. Reynolds Sr., his ex-wife and son for fraud within their many charities. These include: The Cancer Fund of America in Knoxville, Tennessee, and its affiliated Cancer Support Services; The Breast Cancer Society in Mesa, Arizona; and the Children’s Cancer Fund of America in Powell, Tennessee.
According to a statement by the FTC on Tuesday, the charities:
“operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation”
So how did the charities get away with the gig for so long? The Associated Press reports:
According to the complaint, the organizations hid their high administration costs from donors and regulators. The groups filed public financial documents saying they had taken in more than $223 million “gifts in kind,” which would be distributed to international recipients. Investigators say that number was inflated and helped to create the illusion that the groups were being more efficient with donated money than they actually were. According to the FTC, 36 states alleged that the defendants filed “false and misleading” financial statements with state charities.
And anyone in hope of compensation for their losses is in for a big disappointment too.
While Perkins and Reynolds were hit with a settlement offer of $30m and $65.5, respectively – neither could pay.
As Jessica Rich, director of the FTC Bureau of Consumer Protection states:
“The money is mostly gone.”
As the family have long since blown their ill-gotten gains, the remaining charities are being liquidated for assets which will be managed through the individual states.
The case comes at a particularly pertinent moment, just months after a groundbreaking ten-year study by The Tampa Bay Times and the Center for Investigative Reporting exposed a number of high profile US charities for failing to pa$s on donations to people in need.
The teams crunched the numbers of over 11,100 US charities. They compared the funds raised through soliciting for donations, to the amount of that money which actually ends up handed over as cash aid to the recipients – and found a startling figure.
Of almost $1 billion raised over the decade, just $43.9m ended up as direct cash aid. More than $900m funded soliciting for the donations.
Among these 10 worst offenders, some spend less than 1% of cash donation on the cause or people for whom the charity purports to raise money. As you see, several of the Perkins/Reynolds bogus charities appear on this list.
While these charities may not have been maintaining a privileged existence for one family – it could be argued they are functioning as businesses rather than charities. That instead of raising donations to serve their stated purpose, they are funneling 99% of that money to simply sustaining their own payroll and privileges.
Isn’t the difference between the Perkins/Reynolds affair and business as usual for elements of our third sector little more than a matter of scale?
It is vital that charity remain a last resort, to capture those unfortunate to be fall through the holes in our welfare system. It is not, and should not, be about feathering anyone’s nest – whatever scale of luxury the nest.
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