FTC Takes Down Scammers, Who Then Go Unpunished

The FTC has sued four phony cancer charities for fraud. The Tennessee- and Arizona-based charities are run by James T. Reynolds, who hired family members and then spent nearly all donations on themselves.

In soliciting donations, the charities said they spent 100 percent of proceeds on services like hospice care, transporting patients to and from chemotherapy sessions and buying pain medication for children. “These were lies,” the complaint said, noting that the charities spent less than 3 percent of donations on cancer patients.

“Some charities use donations to send children with cancer to Disney World,” said Mark Hammond, secretary of state for South Carolina, whose office joined the investigation of the groups in 2012. “In this case, the Children’s Cancer Fund of America used donations to send themselves to Disney World.”

The other charities connected to Mr. Reynolds and named in the suit were Cancer Support Services, Children’s Cancer Fund of America and the Breast Cancer Society. According to government officials, the four groups spent the vast majority of the donations they received on fund-raising for more donations, reserving a portion for showering the groups’ workers and their friends with large salaries, bonuses and lavish expenses.

The response from the son of the scammer?

“Charities — including some of the world’s best-known and reputable organizations — are increasingly facing the scrutiny of government regulators,” he wrote. “Unfortunately, as our operations expanded — all with the goal of serving more patients — the threat of litigation from our government increased as well.”

Yes, this crook is repeating the old Republican mantra about too much government regulation! Every time a conservative whines about government regulation these are the kinds of criminals they're working so hard to protect.

What did the scams do?

The charities hired telemarketers to collect $20 donations from people across the country, telling consumers that they provided financial aid and other support to cancer patients, including pain medication, transportation to chemotherapy visits and hospice care.

But little money made it to cancer patients, as the groups "operated as personal fiefdoms characterized by rampant nepotism, flagrant conflicts of interest, and excessive insider compensation" with none of the controls used by bona fide charities, the FTC said Tuesday. 

What will happen to these crooks?

The settlement agreement imposed hefty judgments based on the amount of money donated to the charities between 2008 and 2012. But because of Perkins' "inability to pay," her $30 million judgment would be suspended entirely. The $65.5 million judgment against Reynolds II would be suspended after he pays $75,000.

Effler, former president of Cancer Support Services, faced a $41 million judgment that would be forgiven after paying $60,000.

Nothing. Nothing! No jail time. No whopping big fines. No confiscation of their ill-gotten gains. A couple of them will have to pay back less than a tenth of one percent of the money they stole from millions of charitable Americans. And it's incredible. How could they spend almost $200 million and have nothing of value left over? No expensive houses or cars that could be sold off? No diamond necklaces? No money sitting in bank accounts in the Caymans?

What's crazy is that government prosecutors send people away for decades for selling dime bags of dope, yet people who steal literally millions of dollars from millions of Americans just get to walk away scot-free, the only punishment being the termination of their scam and a ban against fundraising. (Which will be essentially be impossible to enforce.)

How can Americans of good will protect themselves from scammers like this?

The FTC recommends that when considering a donation, look for a long-standing charity with a good reputation and avoid any group that uses high-pressure tactics or is reluctant to provide detailed documentation on how the money is spent.

The problem is, these crooks do everything they can to make themselves appear to be something they're not. Most of these scammers pick a name that's almost identical to a legitimate charity, or they just lie. When you ask questions how the money is spent, they'll just lie. If you ask for detailed documentation how can you possibly tell whether it's legitimate? How can you tell whether the numbers on their website are lies? Simple: you can't.

The FTC won't say this because of the howls of agony from the charitable community this simple truth would raise, but regular citizens have absolutely no way to tell whether a charity is legitimate.

So don't even try. When some "charity" calls you for money, hang up. Don't even bother to talk to them. Don't try to be polite. Even if they say they're from a charity you know and trust. They're almost certainly lying, or trying to steal your credit card number or your personal information or case your house. It's just not worth the risk.

The only way we can protect ourselves is to never respond to charities soliciting by telephone, email or direct mail. Only give money to charities you know, and only do so directly, on your own initiative. Never give your credit card or any personal information to an unsolicited caller. If enough people do this eventually the scammers will give up and move to greener pastures.

Furthermore, you should closely examine the legitimate charities that you support to make sure that you actually approve of what they're doing. For example, Susan G. Komen  for the Cure spends more on fundraising and administration than they do on breast cancer research. They spend 40% of their money on "public health education," which consists mostly of people wearing pink t-shirts at public events. Is this really the most efficient use of your donation?

Telemarketing and Internet scams are really hurting legitimate charities. As long as well-meaning suckers fork over their cash and credit cards, they'll keep doing it.

The only way we can stop them is to quit answering their phone calls and emails.