Bogus Cancer Charities: Where Was the IRS? Tax Attorney Rob Wood Discusses the Cancer Charity Mess

As previously reported on LBN, complaint by the Federal Trade Commission complaint has brought to light a group of bogus cancer charities run by a family in Tennessee. James Reynolds and his family collected over $187 million and spent most of the money on themselves. It is one of the largest charity fraud cases ever and involves all fifty states. Tax attorney Rob Wood discusses the case, also the subject of his Forbes article “Appalling $187 Million Cancer Charity Fraud Case Settles -- When 97% Of Money Isn't For Charity.”

Rob Wood

Rob Wood

An obvious question is, where was the IRS during the twenty-five years the scams were going on? As to that, Wood can’t say. But the situation is at least a potential black eye for the IRS. Wood notes that this comes at a time when there is discussion of alleged abuses of the Clinton Foundation, although Wood says there is no doubt that the Foundation is doing good work. However, the cancer charities are an appalling story, where the focus was on soliciting from average people, to get “twenty dollars here and twenty dollars there.” And of all the funds raised, 97% never got to any charity.

Wood says that CNN covered some of this story a year ago, so “it’s been on people’s radar.” The settlement reached is disturbing because it is not as harsh as some people think it should be, with people who carried out the scams getting off with paying small sums of money compared to the millions they took in. The total payback by all of the people involved is about $150,000, and no prison time is involved.

It’s not clear whether it is still possible for some authority to prosecute the family and seek prison sentences for them. Wood suspects it is not possible. It is astonishing that the people involved got away with this for so many years, in all fifty states, and are getting off with what amounts to a slap on the wrist.

Wood says that, while the tax code is far too complicated, what is not complicated about it is the recognition of real charities. Charities “should be relatively tightly controlled.” In the case of the cancer charities, they did not follow any guidelines for charities, and no one seemed to notice. Private inurements are not allowed by the IRS. This story should be talked about for a long time, Wood believes.

For more information on the subject, please refer to Mr. Wood’s article in Forbes. Robert Wood is a tax attorney with Wood, LLP in San Francisco, California and spoke with The Tax Law Channel, an affiliate of The Legal Broadcast Network.  The Legal Broadcast Network is a featured network of the Sequence Media Group.

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