A Tennessee family is accused of raising $187 million in a scam that included four sham cancer charities with fundraising tentacles stretched across the country.
The Federal Trade Commission charged that Knoxville-based James T. Reynolds Sr. and his family and associates operated the charities and used telemarketers to raise huge sums of money that went to pay for lavish vacations, personal loans and high salaries for those in the charity, reported the
Knoxville News-Sentinel. Agencies all 50 states and the District of Columbia joined the action.
Each of the charities have been charged with eight counts of fraud, misleading state charity regulators and violating telemarketing rules. Government regulators have agreed on settlements of more than $200 million with Reynolds' ex-wife, his son and a close business associate of Reynolds, noted the News-Sentinel.
Charges against James Reynolds, Sr., have not been resolved and will likely go to court, Tennessee Secretary of State Tre Hargett said on Monday.
"I don't feel I did anything wrong," the elder Reynolds told the
Wall Street Journal before adding that his attorney instructed him not to talk specifically about the case.
The federal complaint charged that Cancer Fund of America Inc. and the three other charities run by the Reynolds family solicited donations using telemarketers and through direct mail and websites, said the Journal.
The pitch for the charities included claims that the money would help people suffering from cancer, but most of the funds went to the telemarketing companies and the schemers, government regulator charged.
"This case illustrates why consumers should be vigilant about who they give money to," said Chuck Harwood, who runs the Seattle FTC office, which handled the investigation. "This stops that."
The FTC charged that the defendants spent some of the donated funds on cars, luxury travel, college tuition, dating-site memberships for family, friends and employees.
H. Art Taylor, president of the Better Business Bureau's Wise Giving Alliance told the Knoxville News-Sentinel, that Reynolds' charities' spending was among the worse he had seen in his career.
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