The public hype over the amount of money available from the American Recovery and Reinvestment Act of 2009 has led to numerous scams promising assistance in obtaining "free government money" – when often the only money that changes hands is from the pockets of unsuspecting applicants.
As with emails from foreign princes promising a share of untold riches, caution and common sense needs to be applied. The Act does provide the availability of large amounts of financial assistance, but as with just about all aspects of government work, the application process is public and paperwork intensive. There is no pool of cash being handed out on street corners or its electronic equivalent: unknown Internet sites. In fact, all of the money is being made available through government websites.
Here are some helpful reminders in dealing not just with The Act, but other business settings as well:
1. There is no hidden government money. Be wary of any offer that promises to help you obtain money not otherwise available to the public. Law enforcement officials often compare these types of frauds to those involving "secret" high-yield bank notes or similar investments – so secret that banks or the government will deny they exist, or so say the perpetrator. Only those "in the know" can benefit and, for a fee, the perpetrator promises to let you in on the deal. Once the "fee" is paid, the perpetrator is gone – and so is the money. Of course, much of the stimulus money is specifically targeted at certain sectors of the economy, but it is publicly available to all in those sectors.
2. You do not have to give the government money in order to get money. Lottery scams tell people that all they have to do is pay taxes before obtaining the coming riches. The Act does not require upfront fees to qualify for grants.
3. Beware of hidden costs and fees. Something as innocuous as a telephone call may carry unsuspecting charges. In these scams, the telephone call itself is the goal because it may carry a charge of hundreds or even thousands of dollars a minute. Even smaller charges on the Internet turn out to be fraudulent when nothing is received in return.
4. Be extremely cautious in revealing bank account or other sensitive information. Again, scam artists will use any means, including The Act, to engage in identity theft. The state and federal governments do not seek this type of information at the front end of the grant process.
Information regarding grants is available on the Internet, but one should use the government-sponsored sites – such as those ending in ".gov" for the federal government. Also, The Act provides additional resources for the investigation of frauds involving stimulus money.
The primary investigative agencies are the "inspector generals" of each agency of the government. For example, a fraud involving stimulus money for health care would fall under the jurisdiction of the Inspector General for the U.S. Department of Health and Human Services. But money lost on a scam likely will fall under the jurisdiction of most law enforcement offices, including local police and sheriff’s departments.
Steven Biskupic is a partner in the Litigation Practice Group at Michael Best & Friedrich LLP and former U.S. Attorney for the Eastern District of Wisconsin.