America's second-worst charity agrees to shut down

Remember Cancer Fund of America?

It came in at No. 2 on the list of America’s Worst Charities in 2013, when the Tampa Bay Times, The Center for Investigative Reporting and CNN teamed up to find the most wasteful charities in the country.

Back then, here’s what we said about the charity:

While Cancer Fund provides care packages that contain shampoo and toothbrushes, the people in charge have personally made millions of dollars and used donations as venture capital to build a charity empire. Less than 2 cents of every dollar raised has gone to direct cash aid for patients or families, records show.

For years, Cancer Fund founder James T. Reynolds Sr. and his family have obscured that fact with accounting tricks, deceptive marketing campaigns and lies.

Now, after years under federal investigation, it looks like Reynolds will shut down his Knoxville, Tennessee-based charity.

Citing documents filed in U.S. District Court in Phoenix, CNN reported Monday night that Reynolds has agreed to go out of business and allow the charity he started to be operated by a court-appointed receiver for the time being.

The agreement, which still must be approved by state officials, stems from a civil complaint filed last May by the Federal Trade Commission in concert with attorneys general in all 50 states. That complaint accused Reynolds and some of his family members of building a network of “sham charities” designed to enrich officers at the expense of sick women and children.

According to the complaint, donations intended for the sick paid for “extravagant insider benefits,” including cars, college tuition, gym memberships, concert tickets, a Caribbean cruise and trips to Las Vegas and other touristy locales.

“Some charities send children to Disney World,” South Carolina Secretary of State Mark Hammond said at a Washington, D.C., news conference when the complaint was announced. “These charities sent themselves to Disney World.”

According to the complaint, Cancer Fund and other affiliated charities raised $187 million over four years, yet spent almost 90 percent of the contributions on for-profit telemarketers and the “steady lucrative employment” of Cancer Fund founder James Reynolds Sr., his ex-wife, his son and dozens of members of their extended family.

Details in the 148-page complaint mirror what we uncovered in a yearlong investigation published in 2013.

Cancer Fund collected millions of dollars in cash donations. But patients rarely got help with treatment. Instead, they got care packages filled with DVDs, toiletries and other low-cost goods. Almost all the cash collected went to pay for-profit telemarketers and the charities’ employees.

Salaries in 2011 topped $8 million – 13 times more than patients received in cash. Nearly $1 million went to Reynolds family members.

We found that the network’s programs are overstated at best.

“Urgent pain medication” supposedly provided to critically ill cancer patients amounted to nothing more than over-the-counter ibuprofen, regulators determined. A program to drive patients to chemotherapy, touted by the charity in mailings, didn’t even exist.

One Reynolds family charity, Breast Cancer Society, told the IRS that it shipped $36 million worth of medical supplies overseas in 2011. But the two companies named as suppliers of the donated goods said they have no record of dealing with the group.

Over the past 20 years, Cancer Fund has run afoul of regulators in at least six states, paying more than $525,000 to settle charges that include lying to donors.