AG cracks down on “guaranteed” government grant scheme
Release date: 7/23/2009
Scheme based in Kansas and NC charges consumers but doesn’t win grants
Raleigh: Attorney General Roy Cooper joined federal officials and two other states this week to stop a group of companies from tricking consumers into paying for government grants that don’t really exist.
“Grant scams use people’s hopes for money in hard times to bilk them out of hundreds or thousands of dollars,” Cooper said. “Consumers who get caught up in these schemes never see one dime of grant money.”
Cooper, the Federal Trade Commission and the attorneys general of Kansas and Minnesota filed suit Monday in US District Court in Kansas against six companies and five individuals for using misleading tactics to convince consumers to pay for services that are supposed to help them obtain grant money from the government. Consumers who paid the companies have not won any grants or received any money.
A federal judge ruled from the bench late Wednesday, agreeing to freeze the companies’ assets and order an immediate halt to their illegal activities. Cooper, the FTC and the other state attorneys general are also asking the court to order a permanent ban on the defendants’ unlawful grant scheme, force them to give up any profits obtained illegally, and award refunds to consumers and civil penalties to the states.
The lawsuit alleges that Affiliate Strategies, Landmark Publishing Group, Grant Writers Institute, Answer Customers, Apex Holdings, all of Overland Park, Kansas, and three individuals, Brett Blackman, Jordan Sevy, and James Rulison, violated state and federal laws on deceptive business practices and telemarketing. These defendants work together through an interrelated network of companies to sell grant services to consumers through mass mailings and telemarketing calls.
Also involved in the scheme and named as defendants in the suit are Real Estate Buyers Financial Network of Raleigh and individuals Martin Nossov and Alicia Nossov.
As alleged in the complaint, the group first uses mailings that promise consumers a guaranteed $25,000 grant from the government to pitch a guide on how to win grants. Consumers who get the mailing are instructed to call a telephone number where they hear a recorded pitch that alludes to the recent federal economic stimulus package and claims that, “Three hundred billion dollars of free government grant money is available right now to anyone who applies for it.” At the end of the call, a live telemarketer urges consumers to buy the grant guide for $59 plus $10 shipping and handling.
Cooper and the other plaintiffs contend that people who buy the guide then get follow up pitches from the defendant companies using the names Grant Writers Institute and Grant Writers Research Network. The follow up pitches offer grant research services that typically cost $995. Consumers are told that the groups’ grant researchers have a “70% success rate in receiving grant funding” for customers. Consumers who pay the additional fee do not get help winning a grant as promised but instead receive a list of grants, contests, loans, and social welfare programs.
The lawsuit alleges that consumers who pay for grant research services then receive yet another pitch, this time asking them to pay approximately $265 per page for grant writing services or approximately $1,000 for grant coaching services. Telemarketers who make the pitch promise that these grant writing and coaching services “have a 70% success rate, which is extremely high, but it’s not perfect, and it makes sense that some people go for 3 or 4” grants. Consumers who opt to apply for multiple grants have to pay even more in fees.
A total of 18 consumers from North Carolina and other states complained to Cooper’s office about the scheme. One North Carolina consumer wound up losing more than $3,500 and never received any grant money.
This is the fourth case the Attorney General’s Consumer Protection Division has pursued against phony grant schemes in the past three years. Tips about how to avoid grant scams
are available at www.ncdoj.gov
“Scammers like these are using this bad economy to try to get rich at your expense,” Cooper said. “Beware of anyone who promises to help you win a grant if you pay them first.”