Jury Verdict Submission & Research

Cancer Fund of America, Inc. (CFA), Cancer Support Services, Inc. (CSS), Children's Cancer Fund of America, Inc. (CCFA), and The *** Cancer Society in America (BCSA) solicited charitable donations that would allegedly go towards cancer research and support for persons diagnosed with cancer. The charities solicited funds through telemarketing calls, direct mail solicitations, and websites. However, in contrast to what the charities claimed, they were actually sham charities operated by several related individuals, including James Reynolds, Sr., James Reynolds, II and Rose Perkins. Between 2008 and 2012, over $ 187,000,000 was raised by the four charities, but 87.9% of donor contributions went directly to the corporations' officers and directors and their family and friends. Less than three percent of contributions actually went towards the stated purpose of helping cancer patients. In addition, the charities and their operators hid their high fundraising and administration costs from donors by using an accounting scheme involving the shipment of drugs and goods to developing countries. The charities improperly reported over $ 223,000,000 in nonexistent revenue and program spending related to the accounting scheme in their financial statements and government filings.

On April 1, 2016, the Federal Trade Commission (FTC), all fifty states, and the District of Columbia filed suit against CFA, CSS, CCFA, BCSA, CFA officer James Reynolds, Sr., CCFA officer Rose Perkins, and BCSA officer James Reynolds II in the United States District Court for the District of Arizona. The FTC stated the suit was the largest joint enforcement action ever undertaken by the FTC and state charity regulators. The plaintiffs asserted the defendants engaged in deceptive acts or practices by making false and misleading claims in charitable solicitations in violation of the Federal Trade Commission Act, 15 U.S.C.S. $ S 45, the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C.S. §§ 6101-6108, and the Unfair and Deceptive Acts and Practices and Charitable Solicitations laws of each state.

The plaintiffs reached an agreement with CCFA and BCSA shortly after the complaint was filed. According to a Law360 article, CCFA and Perkins agreed to pay back over $ 30,000,000 and BCSA and Reynolds II agreed to return $ 65,500,000, and both corporations agreed to liquidate all assets. On April 1, 2016, Judge Neil V. Wake entered a stipulated order appointing a liquidating receiver over CFA and CSS and ordered the receiver to take all steps necessary to cause CFA and CSS to be dissolved and to cease to exist as corporate entities.
Also on April 1, 2016, Judge Wake entered a stipulated order for permanent injunction and monetary judgment against CFA, CSS and Reynolds, Sr. Reynolds was permanently restrained and enjoined from engaging in activities relating to charitable contributions and fundraising. Reynolds, CFA, CSS and related individuals were permanently restrained and enjoined from making material misrepresentations in connection with the sale of consumer goods or services and from violating any provision of the Telemarketing Sales Rule Compliance, 16 C.F.R. Part 310. The defendants were enjoined from violating any of the state laws at issue and were required to cooperate fully with any investigation relating to the transactions or occurrences that were the subject of the complaint.

For more information on this case, including counsel information, see our complete jury verdict summary on Lexis Advance: Federal Trade Commission, et al. v. Cancer Fund of America, Inc. also d/b/a *** Cancer Financial Assistance Fund, a Delaware corporation, et al; 2016 Jury Verdicts LEXIS 1963

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