RALEIGH, N.C. (Legal Newsline) - North Carolina Attorney General Roy Cooper announced on Friday that attorneys from four states and the Federal Trade Commission have won court orders or settlements to stop an alleged phony government grant scheme.
A network of telemarketers from North Carolina to Utah allegedly used telemarketing and misleading tactics to convince consumers to pay for services that were supposed to help them win grant money from the government. Consumers who paid for the service never won any grants or received any money, Cooper says.
Attorneys from North Carolina, Illinois, Kansas, Minnesota and the Federal Trade Commission have pursued the scheme in federal court in Kansas since 2009. Cooper and the other plaintiffs have now won settlements or court orders to resolve the case against 15 defendants implicated in the scheme.
The alleged scam began with mailings that promised consumers a $25,000 government grant. The consumers were told to call a telephone number where they heard a recorded pitch stating, "$300 billion dollars of free government grant money is available right now to anyone who applies for it," followed by a live telemarketer allegedly urging consumers to pay $59, plus $10 shipping, for a guide on winning grants. Those who bought the guide allegedly received later pitches offering grant research services for $995 and were told that the groups' grant researchers had a "70 percent success rate."
Consumers who paid for grant research allegedly got another pitch asking for $265 per page for grant writing help or $1,000 for grant coaching. Those who made the pitch allegedly encouraged consumers to pay for help applying to multiple grants. No one actually won a grant.
"Don't pay upfront money for help winning grants, no matter what the scammers promise you," Cooper said. "If you spot a grant scam, report it to my office."
Defendants Martin Nossov and Real Estate Buyers Financial Network of Raleigh, N.C., are prohibited from making misrepresentations or misleading consumers and from illegal telemarketing under a permanent injunction. They have also been ordered to pay $5,373,106. Additionally, Alicia Nossov of Raleigh agreed to follow laws that govern fair business practices and telemarketing and will pay $126,894.
Defendants Apex Holdings International, Answer Customers, Grant Writer's Institute, Landmark Publishing Group and Affiliate Strategies, all of Overland Park, Kan., are permanently banned from misrepresenting products and their costs, pitching money-making opportunities and telemarketing under a default judgment. Defendants Jordan Sevy, James Rulison and Brett Blackman, also of Overland Park, worked with the companies and agreed to similar bans. The companies' assets are being liquidated and any proceeds will go to paying the costs of bringing the case and to pay consumer refunds.
Direct Marketing Services of Utah has also been banned from misrepresentation, misleading consumers, telemarketing and pitching money-making opportunities as part of a default judgment and was ordered to pay $3.4 million.
Under a settlement agreement, Wealth Power Systems and Aria Financial Services of Utah are banned from illegal telemarketing, making misrepresentations, marketing grant-related products and services, and misleading consumers. Justin Ely of Utah, who worked with the companies, agreed to a similar ban. The companies will pay $265,000, the total amount of their assets, though if they're found to misrepresent their assets, they will have to pay $3.4 million.
The FTC and the states are trying their case against remaining defendant Meggie Chapman in U.S. District Court in Kansas this week.