From the News Sentinel:
Telemarketers told donors all over the country their gifts to a Knoxville-based charity would provide pain medication to children suffering from cancer, help transport patients to chemotherapy appointments and pay for hospice care for those dying of the disease.
Instead, a pittance of the $187 million raised by the Cancer Fund of America and its affiliated nonprofits over five years went to patient care packages made up of sample-size soaps, Little Debbie snack cakes, Carnation Instant Breakfast drinks, plastic cutlery, women’s makeup, iPod Nano covers, blank seasonal greeting cards and batteries.
The rest of the money raised — more than 87 cents of every dollar — went to pay the telemarketing companies that solicited the donations and to fund salaries, lavish trips and personal loans for founder James T. Reynolds Sr., his family and his employees.
They bought meals at Hooters, items from Victoria’s Secret and tickets for concerts and sporting events. Employees received gym memberships, dating website subscriptions and college tuition.
The nonprofit paid for board members and employees to take extravagant “training” trips on Carnival Cruises in the Caribbean and at Walt Disney World in Florida.
The charity even paid for a baby sitter to come along.
That’s according to the Federal Trade Commission and agencies in all 50 states, all of which filed a joint lawsuit Monday against the four “sham charities” and the people who run them. Each is accused of eight counts of fraud, misleading state charity regulators and violating telemarketing rules.
The government negotiated settlements totaling more than $200 million with two of the charities and three individuals — Reynolds’ ex-wife, his son and a close business associate of Reynolds.
But the case against Reynolds, the family patriarch who founded the Cancer Fund and originated its wide-reaching scheme in 1987, remains unresolved and will likely play out in court, said Tennessee Secretary of State Tre Hargett. Reynolds said Monday that his charity has been under federal investigation for more than four years.
Note: News release below.