Free Money? Don't Think So

December 21, 2004
Multi-million-dollar advertising and a new book by author Matthew Lesko are peppered with exaggerations and half-truths about government grants, according to a report released by the New York State Consumer Protection Board ("CPB").

In its report, "Secrets Revealed! How Misleading Advertising Is Feeding a Nationwide Boom in Government Grant Scams," CPB says Lesko and others are feeding a growing number of government-grant scams now hurting consumers across the country.

"Lesko is now promoting a new book, 'Free Money to Pay Your Bills,' by claiming that the federal government has more than $350 billion in 'hidden money' that ordinary people can use to pay their credit-card bills and 'get out of debt.' That claim is simply not true," said CPB Chairman and Executive Director Teresa A. Santiago.

Santiago said, "Privately, this company admits there is no 'free money to pay your bills' despite advertising contrary information on radio, late-night TV and Internet advertising. This myth has helped to create a growing industry of books, tapes, web sites and, unfortunately, many, many scam artists who say they can help consumers find 'hidden money' from the government."

The CPB is now helping New York consumers victimized in several ongoing government-grant scams. These include at least four telemarketing networks that falsely "guarantee" government grants to consumers in exchange for an upfront fee of roughly $250. Many of these scam victims said they were aware of Lesko's advertising claims.

The Federal Trade Commission and other agencies recently reached a half-million-dollar settlement with a telemarketer accused of deceptive practices in its telemarketing.

Lesko's book offers useful information about scholarships and other programs and his company offers refunds to dissatisfied customers, Santiago noted. "Many other government-grant offers are outright scams, offering no benefit whatsoever to consumers," she said.

These scams and other grant offers have benefited -- in some cases, directly -- from the business practices of Mr. Lesko's Maryland-based company, Information USA Inc. For example, Information USA compiles and sells direct-marketing lists with the names, addresses and other information of Lesko's customers. These lists have been used by other companies to sell services such as debt repair, and, in at least two cases, Lesko customer lists were sold to outright scams involving government-grant offers.

Two companies -- Grant PAC and Grant Search Inc. -- were charged with deceptive practices in a $2.6 million complaint by the Federal Trade Commission. The firms both purchased customer lists from Lesko and other government-grant publishers.

Another buyer of Lesko customer lists is a Rochester, N.Y. company called National Grants Conferences. The seminars and high-priced products sold by National Grants Conferences has been the source of numerous consumer complaints for several years.

The report also cites a New York City publisher, FPH Communications, for misinformation in at least one of its grant guides. Consumer who bought this paperback guide are now being targeted by grant-scheme telemarketers. FPH says it sell its customer lists to other direct marketers.

In releasing a report on the activities of Lesko and other government-grant companies, Santiago said the CPB hopes to dispel the myths that the government is handing out -- or "hiding" -- billions of dollars that can be used to pay personal expenses. Lesko even advertises that these grants can help someone "stay out of debt forever."

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