Cancer Charities Exec Stole $187 Million for Personal Use
Donors who have given money to four of the largest cancer charities in the United States may have unknowingly been financing the lavish lifestyle of the C.E.O. who runs them—paying for luxury cruises, elite gym memberships instead of treatment for cancer patients.
That’s according to a suit filed Tuesday by the Federal Trade Commission as well as attorneys general in all 50 states, which alleges that James Reynolds deceived and defrauded donors out of more than $187 million between four of his charities—including the Cancer Fund of America, Cancer Support Services, Children’s Cancer Fund of America and the Breast Cancer Society.
Related: Medicare Recovers Nearly $28 Billion in Fraud Since 1997
The complaint says that the scheme started in the 1980’s. The charities told donors via telemarketing calls that their money would go toward medicine and transportation for cancer patients. However, most of the money actually went toward Reynolds’ personal indulges.
The complaint says that between 2008 and 2012, only three percent of donations actually went to cancer patients.
The FTC also accuses the organizations of cooking their books and reporting inflated revenues as well as “gifts in kind” that they said they distributed internationally.
The FTC said two of the charities—the Children’s Cancer Fund of America and the Breast Cancer Society plan to settle the charges out of court. The Associated Press reported that the Breast Cancer Society, posted a statement on its website Tuesday blaming increased government scrutiny for the charity's downfall.
"While the organization, its officers and directors have not been found guilty of any allegations of wrongdoing, and the government has not proven otherwise, our board of directors has decided that it does not help those who we seek to serve, and those who remain in need, for us to engage in a highly publicized, expensive, and distracting legal battle around our fundraising practices," the statement said.
Several executives who were also involved in the sccheme, including Reynolds’ son, have agreed to a settlement, which bans them from working in fundraising or charities. The two charities that settled, Breast Cancer Society and the Children’ Cancer Fund of America will be dissolved.
The settlement also orders a $65,664,360 judgment, which is the amount consumers donated between 2008 and 2012. Reynolds junior’s judgment will be for suspended once he pays $75,000. Meanwhile the legal proceedings for Reynolds’ senior and the two remaining charities are ongoing.
Economists See More Growth Ahead
Most business economists in the U.S. expect the economy to keep chugging along over the next three months, with rising corporate sales driving additional hiring and wage increases for workers.
The tax cuts, however, don’t seem to be playing a role in hiring and investment plans. And the trade conflicts stirred up by the Trump administration are having a negative influence, with the majority of economists at goods-producing firms who replied to the most recent survey by the National Association for Business Economics saying that their companies were putting investments on hold as they wait to see how things play out.
New Tax on Non-Profits Hits Public Universities
The Republican tax bill signed into law late last year imposed a 21 percent tax on employees at non-profits who earn more than $1 million a year. According to data from the Chronicle of Higher Education cited by Bloomberg, there were 12 presidents of public universities who received compensation of at least $1 million in 2017, with James Ramsey of the University of Louisville topping the list at $4.3 million. Endowment managers could also get hit with the tax, as could football coaches, some of whom earn substantially more than the presidents of their institutions.
Government Revenues Drop as Tax Cuts Kick In
Corporate tax receipts in June were 33 percent lower than a year ago, according to data released by the Treasury Department Thursday, as companies made smaller estimated payments due to the reduction in their tax rates. Total receipts were down 7 percent, while payroll taxes were 5 percent lower compared to June 2017.
“June receipts to US government were our first mostly-clear look at the revenue effects of the new tax law, with lots of estimated payments and little noise from the 2017 tax year,” The Wall Street Journal’s Richard Rubin tweeted Friday.
Surprisingly, the deficit was smaller in June compared to a year ago, narrowing to $74.86 billion from $90.23 billion last year. The drop was driven by a 9 percent reduction in government outlays that reflected accounting changes rather than any real changes in spending, Rubin said in the Journal.
“More broadly, the federal deficit is swelling as government spending outpaces revenues,” Rubin wrote. “The budget gap totaled $607.1 billion in the first nine months of the 2018 fiscal year, 16% larger than the same point a year earlier.”
Kyle Pomerleau of the Tax Foundation pointed out that the drop in corporate tax receipts is a permanent feature of the Republican tax cuts, tweeting: “Even in a Trump dream world in which these cuts paid for themselves, corporate tax collections would remain below baseline forever. It would be higher income and payroll receipts that made up the difference.”
Deficit Jumps in Trump’s First Fiscal Year
The federal budget deficit rose by 16 percent in the first nine months of the 2018 fiscal year, which began last October. The shortfall came to $607 billion, compared to $523 billion in the same period the year before, according to a U.S. Treasury report released Thursday and reported by Bloomberg. Both revenue and spending rose, but spending rose faster. Revenues came to $2.54 trillion, up 1.3 percent from the same nine-month period in 2017, while spending came to $3.15 trillion, up 3.9 percent.
Where’s the Obamacare Navigator Funding for 2019, PA Insurance Commissioner Asks
Pennsylvania’s insurance commissioner sent a letter this week to Health and Human Services Secretary Alex Azar and Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma requesting that they “immediately release the funding details for the Navigator program for the upcoming open enrollment period for 2019.” Navigators are the state and local groups that help people sign up for Affordable Care Act plans.
“In years past, grant applications and new funding opportunities were released by CMS in April, CMS required Navigator organizations to apply by June and approved applications and new funding by late August,” Pennsylvania’s Jessica Altman wrote. “The current lack of guidance has put Navigator organizations – and states - far behind in their planning and creates an inability for the Navigator organizations to design a successful plan for helping people enroll during the 2019 open enrollment period.”