Federal lawsuit goes after ‘sham’ cancer charities

DES MOINES - State and federal officials brought a consumer fraud lawsuit Tuesday against four 'sham” cancer charities that bilked consumers for more than $187 million in donations primarily used to enrich the operators' families rather than cancer causes, Iowa Attorney General Tom Miller said.

'This conduct was at the expense of legitimate charities and causes, and the many generous donors who wanted to alleviate suffering by cancer victims,” said Miller, who held a news conference to discuss the lawsuit brought by the Federal Trade Commission and officials in all 50 U.S. states and the District of Columbia.

The complaint said the defendants - including Cancer Fund of America, Children's Cancer Fund of America, Cancer Support Services, the Breast Cancer Society and individual operators - portrayed themselves to donors as legitimate charities with substantial nationwide programs whose primary purposes were to provide direct support to cancer patients, children with cancer, and breast cancer patients.

Miller said his office could not calculate how much money came from Iowans, but as the state represents about 1 percent of the U.S. population, he projected up to $2 million of the contributions came from Iowans.

Nancylee Ziese, a breast cancer survivor from Cedar Rapids, said she was glad to see the federal lawsuit.

'There's a lot of need for money for cancer research and screening,” Ziese said. 'For someone just to pad their pockets? No thank you. I think that's really, really cruel.”

Ziese, a seventy-something who co-founded the Iowa Breast Cancer Action Foundation, said she herself has discovered bogus cancer charities. She recommends researching not-for-profits before writing a check.

According to the lawsuit filed in Arizona, a large majority of consumers' contributions benefitted only the defendants, their families and friends, and professional fundraisers who often received 85 percent or more of every donation.

Miller said about $5 million of the $187 million raised was used for legitimate charitable purposes.

Among the allegations, the lawsuit claimed the defendants or their telemarketers told donors their contributions would be used to provide pain medication to children suffering from cancer, transport cancer patients to chemotherapy appointments and pay for hospice care for cancer patients.

However, the suit branded these claims as false, contending the defendants did not operate programs that provided these services.

The charities spent more money on salaries than on the goods and services they provided to cancer patients, the suit claims. The lawsuit also claims defendants bought luxuries such as cruises, personal watercraft outings, concert tickets, and dating site memberships with donations.

All the expenditures were approved by corporate boards that rubber-stamped the decisions of the individual defendants.

The lawsuit detailed a gifts-in-kind scheme that defendants used to make the corporate defendants seem larger and more effective than they really were, Miller noted.

Five individual defendants have agreed to leave the charity business and stop fundraising, according to settlements filed concurrently with the complaint. The settlements won't be final until approved in federal court.

Miller said he did not think 'a huge percentage” of the money involved will be recovered.

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