TOPEKA – (August 26, 2011) – Kansas Attorney General Derek Schmidt today announced that his office, along with the Federal Trade Commission (FTC) and three other state attorneys general, has shut down a fraudulent Kansas-based operation that allegedly falsely promised consumers “guaranteed” grants from the federal government.
The defendants’ scheme began in Paola, Kan., with the creation of five separate Kansas corporations, all mostly controlled by Kansas resident Brett Blackman. Beginning in 2007, consumers across the country reported receiving postcards indicating they were entitled to $25,000 in free government grant money. Consumers who called a phone number on the card were pitched a $59 book titled “Professional Grant Writer ‘The Definitive Guide to Grant Writing Success.’” The complaint alleged that the defendants then called consumers who bought the book, trying to get them to pay hundreds of dollars or more for grant research, writing, or coaching services, while claiming unsubstantiated success rates of 70 percent or higher in securing grant funding for individuals.
In July 2009, the Kansas Attorney General’s Office, along with the FTC and the attorneys general of Minnesota and North Carolina, filed a complaint against Grant Writers Institute, LLC, and several related entities. The complaint alleged that the defendants’ false and deceptive claims that consumers are guaranteed or highly likely to receive grants violated federal law, state consumer protection laws, and the FTC’s Telemarketing Sales Rule. The Attorney General of Illinois later joined the action.
In late July 2011, the court imposed a $27.2 million judgment against the corporations to pay refunds to defrauded consumers. The corporations are banned from marketing money-making opportunities and from telemarketing. The corporations also are prohibited from making misrepresentations when offering products for sale, and required to substantiate claims and disclose information such as fees, costs, and terms and conditions related to any cancellation or refund policy. This week, the court imposed an additional $5.3 million judgment against certain telemarketers named in the complaint.
Schmidt said consumers will be notified if sufficient funds become available for refunds.