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Iowa Attorney General Warns College Students: Beware of Counterfeit-Check "Grant Scam"

Posted on the Iowa Attorney General's Website Wednesday, November 26, 2008

Des Moines. Attorney General Tom Miller said Wednesday that a new variation of the "counterfeit-check" scam has appeared that poses a special threat to college students.

"We just received a copy of a letter and a check sent to an Iowa college student in a scam that could have cheated the student out of more than four thousand dollars," Miller said.

The letter claimed to be from "Grant Prospect, Inc.," of Orlando, Florida, and it said the student had been approved for a grant of $50,000. "This Grant is not a loan and you are not expected to pay it back," the letter said, indicating the grant could be used "to pay tuition fees" or other expenses such as a down-payment on a home or medical expenses. (See the copies of the letter and check.)

The letter also enclosed a check for $4,420.62 to be cashed and used "to pay for your Federal and State processing fees." The letter said a $40,000 certified check would be delivered to the student one to two days after the required fees had been paid.

"And, of course, the student gets no ‘grant’ worth tens of thousands of dollars," Miller added.

Miller encouraged families to discuss the scam and warn students about it during the Thanksgiving weekend, when many students are home.

Background and Details

Miller said the "student-grant" variation is just the latest among many schemes designed to trick Iowans into cashing a counterfeit cashier’s or corporate check, and wire thousands of dollars to scammers – never to be recovered.

Hundreds of Iowans have received counterfeit bank cashier’s checks, corporate checks and even U.S. Postal money orders with some explanation for them receiving the check and needing to wire the money – phony sweepstakes schemes, Iowans selling products on-line, even an Iowa photographer being ‘paid in advance’ for doing wedding photography.

The latest letter to an Iowa student actually came from Montreal, Canada, according to its envelope, even though the letter itself said it was from Florida. Miller said scores of telemarketing and counterfeit check schemes have migrated to Canada; con-artists located there work their schemes in the U.S. The purported check was made to appear to be issued by Old World Industries, Inc., of Northbrook, IL.

The letter explained that the grants supposedly "are sponsored by various corporate companies. The sponsors undertake to pay processing fees for winners in return for advertising space."

"There is always a story as to why they are sending you a check – and asking you to wire money back to them," Miller said.

"Wiring money is extremely dangerous," he said. "It usually can’t be traced, perpetrators can’t be caught, and victims are held liable for the money they received and sent away," Miller said.

Miller said his office forwarded the materials to the "Phonebusters" project operated by the Royal Canadian Mounted Police and Canadian provincial police. He said a Montreal-based phone number listed in the letter was still operational today and could be useful to the Canadian authorities in 'busting' the scheme.