Kansas AG cracks down on "guaranteed" grant scheme
Attorney General Steve Six joined federal officials and two other states recently to stop a group of companies from tricking consumers into paying for grants that don't really exist.
"During this time of economic uncertainty, grant scams are taking advantage of people's hope for financial assistance and scamming them out of hard earned money," Six said. "There is no such thing as a guaranteed grant. But to consumers in financial trouble, the chance for extra income can unfortunately be a huge draw."
Six, the Federal Trade Commission and the attorneys general of North Carolina 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. Consumers who paid the companies have not won any grants or received any money.
A federal judge agreed Wednesday to freeze the companies' assets and order an immediate halt to the defendants' illegal activities. Six, 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.
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 obtain grant money. 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.
Six 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 "Seventy percent success rate in receiving grant funding" for customers. Consumers who pay the additional fee do not obtain 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 7 percent 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.
"Scammers like these are using the bad economy to try to get rich at your expense," Six said. "Beware of anyone who promises to help you win a grant if you pay them first."
To report a grant scam to Six's office, call 1(800) 432-2310 or submit a consumer complaint form online at www.ksag.org.