Four organizations claimed to help cancer patients and allegedly drained off more than $187 million to pay for lavish salaries, luxury vacations and other goods.
The organizations are the Cancer Fund of America (CFA), Cancer Support Services (CSS), the Children's Cancer Fund of America (CCFOA) and the Breast Cancer Society (BCS).
AdvertisementThe US Federal Trade Commission (FTC) and law enforcement officials from all 50 US states charged the organizations with being "sham charities" that stuffed the vast majority of donations in the pockets of directors, family, friends and fundraisers, according to documents filed in the southwest state of Arizona.
"This is one of the largest actions brought to date by enforcers against charity fraud," the FTC said in a statement.
The organizations, all led by relatives and their close friends, claimed that the funds would be put towards cancer patients' medication and hospital bills. However, the funding was used for lucrative employment for family members and friends in a scheme that began in 1987. Professional fundraisers often received 85 percent or more of every donation. It alleged that the donations were spent on cars, trips, luxury cruises, college tuition, gym memberships, jet ski outings, sporting event and concert tickets, and dating site memberships.
To hide the expenses and high salaries, the organizations inflated their revenue by reporting in-kind donations totaling more than $223 million made in other countries, but were in fact only pass-through agents for those goods.
Meanwhile only three percent of donations made it to cancer patients.
"Cancer is a debilitating disease that impacts millions of Americans and their families every year. The defendants' egregious scheme effectively deprived legitimate cancer charities and cancer patients of much-needed funds and support," said Jessica Rich, Director of the FTC's Bureau of Consumer Protection.