Fraudulent Grant-matching Company Settles FTC Charges

Grant Search, Inc., of Ashland, Oregon, and Grant Pac, Inc., of Sedalia, Missouri, and their principals are banned from selling any product or service that it purports to provide or assist consumers in obtaining a grant, as part of a settlement with the Federal Trade Commission. In addition, the defendants have agreed to pay $296,000 in consumer redress to settle charges that they engaged in deceptive business practices. The FTC filed charges against the defendants in August 2002, as part of the “Operation No Credit” financial fraud sweep. The complaint alleged that defendants – Steven G. Levine, Sunday Levine, Scott Stettnichs, Grant Search, Inc., and Grant Pac, Inc. – operated a grant-matching business in which they falsely represented that consumers easily could obtain grants from charitable foundations for virtually any reason.

According to the FTC, the defendants advertised through direct mail, classified ads, and on the Internet. The FTC charged that the defendants falsely represented to consumers that charitable grants were easy to obtain if consumers knew where to look and that, for a fee, the defendants would provide consumers with a list of charitable foundations that awarded grants to individuals for virtually any reason. The defendants allegedly also stated that for an additional fee, they would apply to the foundations for the consumer, saving the consumer the paperwork. In fact, the FTC alleged, consumers received outdated lists of foundations and general information on applying for grants.

The FTC also alleged that the defendants offered a 100 percent money back guarantee of the application fee, but failed to disclose the conditions and restrictions on obtaining a refund.

“Operation No Credit” was a joint law enforcement campaign targeting a wide range of credit-related frauds. The cases in this telemarketing sweep encompass a variety of financial frauds that impact consumers’ credit, including typical advance-fee credit cards, credit repair,
payday loan, debt adjustment, and debt negotiation schemes, as well as new credit identity scams.

In addition to the ban and payment of consumer redress, the stipulated judgment for permanent injunction prohibits the defendants from misrepresenting any fact material to a consumer’s decision to purchase a good or service, and from failing to disclose all material conditions and terms of any refund policy. In addition, the settlement prohibits the defendants from violating or assisting others to violate the FTC’s Telemarketing Sales Rule. Specifically, the defendants are prohibited from:

• misrepresenting any material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are offered for sale;
  
  
• making false or misleading statements to induce consumers to pay for any good or service; and
  
  
• failing to disclose all materials terms and conditions about refunds, cancellations, exchange, or repurchase policies.

The settlement also prohibits the defendants from selling, leasing, or transferring their customer lists. The settlement requires the defendants to pay $296,000 to the FTC within 30 days of the entry of the stipulated judgment. If the defendants fail to pay the Commission the redress amount in the time frame stated, the full $2.6+ million judgment will become due immediately. Finally, the settlement contains various recordkeeping requirements to assist the FTC in monitoring the defendants’ compliance.

The Commission vote to authorize staff to file the proposed stipulated judgment for permanent injunction was 5-0. The FTC filed the proposed settlement in the U.S. District Court for the Western District of Missouri on June 27, 2003. The court approved the order on July 7, 2003.

NOTE: This stipulated judgment for permanent injunction is for settlement purposes only and does not constitute an admission by the defendants of a law violation. Stipulated judgments for permanent injunctions have the force of law when signed by the judge.

Copies of the stipulated judgment for permanent injunction and other documents relating to “Operation No Credit” sweep will be available soon from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. X020100)
(Civil Action No. 02-4174-CV-C-NKL)