FTC: Family raised $187M for cancer, spent it on themselves

It's being called the largest charity fraud case ever. Four charities that have raised nearly $200 million in donations to support cancer patients are being accused of swindling donors.

While most of the charities were based in Tennessee, one was run out of a Mesa warehouse.

The Breast Cancer Society had its headquarters in Mesa for several years.

The Federal Trade Commission shut it and three other related charities down, saying the operators were spending donations on their own lavish lifestyle.

James Reynolds II was the executive director of the Mesa-based charity. The government is now calling him, his family, and their associates, scam artists.

>>READ: Executive Director's letter to patients and supporters

The Mesa office now sits dark, empty, abandoned after the agency shut it down, along with the Cancer Fund of America, The Children's Cancer Fund of America, and Cancer Support Services.

"It's really sad and pathetic to think that anyone could use a disease like cancer which affects so many millions of people out here, from young kids to our parents, and someone could use that to raise money to support their lifestyle, it's frankly unconscionable," said Arizona Attorney General Mark Brnovich.

According to his LinkedIn page, Reynolds II has been running the Breast Cancer Society in Mesa since 2008.

The FTC says from 2008-2012 the charities raised $187 million in donations through telemarketing.

"We're such a giving people that very often people try to prey upon that," said Brnovich.

According to the FTC, only 3% of the money ended up helping cancer patients. Instead the Reynolds family and their associates are accused of using the donations on themselves; buying cars, luxury items, gym memberships, luxury cruises, dating website subscriptions, jet ski's, and other entertainment experiences.

"The folks with the Arizona connections have all settled; they've agreed to pay fines and fees associated with their conduct," he said.

The charities have been shut down, their assets will be liquidated, and the FTC wants the alleged fraudsters to pay nearly $140 million in judgments.

The director of the Breast Cancer Society is ordered to pay more than 65 million alone but swindled donors won't get any of the money back.

The FTC says whatever the government collects will go to investigative costs, and a portion may go to legitimate charities.

Websites for all the charities have been taken down. The Executive Director of the Mesa charity posted a letter denying wrongdoing. The letter goes on to say, "While the organization, its officers and directors have not been found guilty of any allegations of wrong-doing, and the government has not proven otherwise, our Board of Directors has decided that it does not help those who we seek to serve, and those who remain in need, for us to engage in a highly publicized, expensive, and distracting legal battle around our fundraising practices."

This is the first time that attorney generals in all 50 states, in conjunction with the FTC, have taken joint action against fraudulent charities.
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