In one of the largest cases of its kind, the Federal Trade Commission last year accused James T. Reynolds Sr. and others of engaging in a “massive, nationwide fraud” involving “sham charities.”
Court documents filed this month say Reynolds agreed to temporarily hand over control of Knoxville-based Cancer Fund of America and Cancer Support Services to a receiver while a settlement is pending.
The complaint says the charities spent less than 3 percent of contributions from individual donors on the cash and goods sent to cancer patients and nonprofits in the United States.
Cancer Fund of America’s direct patient aid program consisted of giving out boxes of “seemingly random items” that typically included Carnation Instant Breakfast drink, adult briefs and bed pads and things like sample-sized soaps, Little Debbie snack cakes and blank seasonal greeting cards, according to the complaint.
Individuals received the same items regardless of age, gender or clothing size. The complaint says the charity did not consult with medical professionals about the usefulness of the items to cancer patients.
“Reynolds’ explanation for buying Little Debbie Snack Cakes for cancer patients was because ‘they make people happy.’ He justified a switch to purchasing Moon Pies because they ‘make you happier,'” the complaint says.
Cancer Support Services also claimed to provide services to cancer patients, including hospice care, but actually existed solely to raise money for Cancer Fund of America, according to the complaint.
Reynolds’ son and ex-wife previously agreed to settlements involving two other related charities—the Children’s Cancer Fund of America, based in Powell; and the Breast Cancer Society, based in Mesa, Arizona.
A longtime associate who was the former president of Cancer Support Services also settled.
According to the complaint, the four charities raised more than $187 million between 2008 and 2012. Donor contributions financed personal loans; paid for trips to Las Vegas, New York and Disney World; and purchased cars, college tuition, gym memberships, Jet Ski outings, dating website subscriptions and luxury cruises.
The settlement with Reynolds, Cancer Fund of America and Cancer Support Services will not be made public until after it is approved by all plaintiffs. That includes the attorneys general of all 50 states and the District of Columbia as well as the Federal Trade Commission.
An attorney for Reynolds did not return a call and email from The Associated Press.