Grant Connect, LLC

The FTC alleged that the Grant Connect operation used images of the President and the American flag to suggest a government affiliation it did not have, while enrolling buyers in continuity plans and debiting accounts without permission.

Resolved. Refunded, settled, ceased operating, or the claim did not hold up. Kept for the record.

Borrowed authority

The Grant Connect operation sold what it described as a “unique consumer-friendly US government grant program” for searching databases and writing grant proposals.

Its websites used pictures of President Obama, Vice President Biden and the American flag to support the impression that the service was affiliated with the United States government. It was not. The court found the imagery was used to bolster the impression that billions of dollars in free government grants were available quickly and easily.

The other products in the same funnel

The court found the defendants also deceptively marketed dietary supplements with claims unsupported by scientific research, including a false claim of endorsement by Oprah Winfrey; failed to disclose that their credit offers were merely memberships to a costly shopping club; made unsupported claims that people could earn thousands of dollars a month from a work-from-home opportunity; used fake testimonials; and debited bank accounts on a recurring basis without permission.

Running underneath all of it was a failure to disclose that buyers would be enrolled in continuity plans with significant monthly fees, often for unrelated products.

The judgments

In October 2011 Juliette Kimoto, Johnnie Smith and four companies settled under a $29.9 million judgment suspended on specified payments: $45,000 from Smith, more than $90,000 from Kimoto, plus personal assets including jewelry, a piano and a 1967 Chevrolet Camaro. The cash and assets surrendered exceeded $220,000.

In November 2011 the FTC won summary judgment against the remaining 25 individual and corporate defendants, a $29.8 million judgment, with a permanent ban on selling grant-related products, credit-related products, work-from-home and business opportunities, and dietary supplements, and on using continuity programs, testimonials, and preauthorized electronic fund transfers.

In May 2013 the FTC mailed approximately $1.7 million to 22,764 consumers, most recovering nearly 80 percent of what they lost.

What is not established

The consent orders are for settlement purposes only and do not constitute an admission that the law was violated. The summary judgment was a court decision against the remaining defendants.

Sources

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