Cancer charities lied to donors: FTC complaint targets the sickness

Four sham cancer charities have been charged with defrauding consumers out of $187 million dollars. According to a complaint filed by the Federal Trade Commission (FTC) and 58 law enforcement partners, the four so-called charities told donors that donations would be used to help cancer patients when, in fact, donated funds were overwhelming used to benefit the architects of the fraud, and their friends and families. Jessica Rich, Director of the FTC’s Bureau of Consumer Protection called the scheme appalling and said that the “egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support.”

Charities

The complaint names Cancer Fund of America, Inc. (CFA), Cancer Support Services Inc. (CSS), Children’s Cancer Fund of America Inc. (CCFOA), The Breast Cancer Society Inc. (BCS), and several high-ranking members of those organizations as those responsible for the fraudulent scheme. While CCFOA, BCS, and some executives have agreed to settle with the FTC, litigation will continue against CFA, CSS, and CSS’s president.

Fraud

According to the compliant, the charities used telemarketing calls, direct mail, websites, and other materials to portray themselves as legitimate organizations. The charities presented the appearance that they provided direct support to cancer patients through “pain medication, transportation to chemotherapy, and hospice care.” The complaint uses strong language to characterize the nature of the scheme, saying that the organizations “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.”

Spending

The money overwhelmingly did not go to cancer patients. Instead, the money was used largely for lucrative employment opportunities and to pay professional fundraisers who often received 85 percent of the donations. The funds were also used to pay for “cars, trips, luxury cruises, college tuition, gym memberships, jet ski outings, sporting event and concert tickets, and dating site memberships.”

Settlement

For the entities and individuals that agreed to a settlement, the individuals will be banned from charity work and the organizations will be dissolved. The proposed final orders for settlements will include judgments in the amount that the organizations and individuals received from donors when the charities were active between 2008 and 2012. The Commission voted unanimously to approve the filing of the complaint and the proposed orders.