The U.S. government has charged four cancer charities with misusing more than $187 million in donations, with two agreeing to be dissolved and two fighting the allegations, the Federal Trade Commission said on Tuesday.
The FTC, 50 states and the District of Columbia charged the Cancer Fund of America, Cancer Support Services Inc., the Children's Cancer Fund of America and the Breast Cancer Society Inc. with collecting millions of dollars in donations but doing little to help patients.
The Children's Cancer Fund of America and Breast Cancer Society Inc. settled with the government and agreed to shut down. Three officials from the organizations also settled and agreed to be banned from charitable fundraising.
The Cancer Fund of America opted to fight the government in court, as did the related Cancer Support Services organization and its president, James Reynolds Sr.
WBIR One of the accused charities, Cancer Fund of America, based in Tennessee
According to the federal court complaint, the defendants used the organizations for lucrative employment for family members and friends, and spent consumer donations on cars, trips, luxury cruises, college tuition, gym memberships, jet ski outings, sporting event and concert tickets, and dating site memberships. They hired professional fundraisers who often received 85 percent or more of every donation.
The Center for Investigative Reporting put the Cancer Fund of America second on its America's Worst Charities list. Based on data from December, it said the group raised $86.8 million for charity but gave just 1 percent of that to cancer patients.
The Children's Cancer Fund of America ranked No. 9.
Here is a report on the complaint from local TV station, WBIR:
The FTC said in its complaint that the organizations portrayed themselves as legitimate charities to raise money from telemarketing calls and from the Combined Federal Campaign, which collects from U.S. government employees.
Instead, the complaint said, the groups "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."
Professional fundraisers that they hired sometimes kept 85 percent of what they collected, the FTC said.
The agency said the organizations inflated their revenues to hide their misuse of donations.
The FTC said it had proposed judgments of $65 million against the Breast Cancer Society and $30 million against the Children's Cancer Fund of America, which is what they collected from 2008 to 2012.