Cancer Charity Fraud

In this Monday, May 18, 2015 photo, the headquarters of the Cancer Fund of America is shown in Knoxville, Tenn. A Tennessee man and his family used much of the $187 million it collected for cancer patients through charities such as the Cancer Fund of America to buy themselves cars, gym memberships and take luxury cruise vacations, state and federal officials say. (Paul Efird/Knoxville News Sentinel, via AP)

(Paul Efird)

TRENTON -- The friendly phone calls assured donors their money was going directly toward cancer patients. Instead, authorities said, they paid for cruises and concert tickets for a tight group of family and friends who ran a network of sham charities.

State and federal officials on Wednesday announced a multi-state settlement permanently dissolving two national cancer charities run by a Tennessee man, James Reynolds, Sr.

The organizations, Cancer Fund of America and Cancer Support Services, had been accused of defrauding donors across the country out of $187 million, including more than $6 million from New Jersey residents.

The suit was brought by the Federal Trade Commission and attorneys general in all 50 states.

Acting Attorney General Robert Lougy said Wednesday the settlement "permanently ended a pattern of cruel, deceptive solicitation that went on for years, and targeted countless charitable donors."

Authorities said the charities -- which have been named among "America's worst charities" -- gave donors the false impression that their money was going right to needy cancer patients.

The state Attorney General's Office on Wednesday released two recorded phone calls in which a representative from one charity makes overtures to a donor.

"Your generous donation went a long way to help cancer patients directly with their hospice care and medical supplies," the representative tells the woman on the other end of the line.

Instead, authorities allege, the vast majority of charitable donations funded salaries and luxury items for "a small clique of family members and friends" named to top posts and patronage positions in the organizations.

A 2013 investigation by the Tampa Bay Times, the Center for Investigative Reporting and CNN named several of their charities among the worst in the nation, finding the majority of the "direct support" they provided came in the form of care packages containing shampoo, toothbrushes and children's toys.

The settlement places a $75.8 million judgment against the now-defunct cancer charities, which will be partially paid through the sale of their assets.

Two other connected charities, the Children's Cancer Fund and Breast Cancer Society, reached similar settlements last May.

Lee Moore, a spokesman for the state Attorney General's Office, said the money recovered through the settlement would be donated to reputable cancer charities, "as was the intent of the donating consumers."

An attorney for Reynolds and his charities could not be reached Wednesday.

S.P. Sullivan may be reached at ssullivan@njadvancemedia.com. Follow him on Twitter. Find NJ.com on Facebook.

Correction: This story originally stated that under the multi-state settlement, the two cancer charities and their former president would pay back $75 million. The $75 million judgment means the states and federal agency that brought the suit will be paid through the liquidation of the charities' assets, which will be less than $75 million.