Sometimes, your most valuable asset is a sense of skepticism, especially when people are telling you things you want to hear.
That's what Kim Mallard discovered after a Las Vegas-based company came calling, offering access to grants from government agencies and nonprofit foundations in exchange for a fee — a pitch that the Federal Trade Commission and state attorneys general have repeatedly warned consumers to avoid.
Mallard, who owns Hickory Station Pizzeria and Grill in Bel Air, said she got a call this summer from a man who said he helps small-business owners apply for grant money.
He told her she could qualify for money that she would not have to pay back, including funds from federal economic stimulus programs. As a woman, and as a minority, she would definitely be eligible for financial support, Mallard said she was told.
Mallard was intrigued. She said she could use the money because she's in the midst of a renovation and wants to replace some equipment in her restaurant. "And of course, everybody's hurting with the low-economy situation," she said.
Mallard said she gave him information about her business, such as her revenue, the number of employees and her business license number. When the man called back, he said he had identified $265,000 in grants between federally subsidized grant money and private foundations.
Then came the catch: a service contract, which detailed his fees. The total price came to $9,600, and she needed to put down at least one-third as a nonrefundable deposit, Mallard said.
"That's where there was a red flag," she said. "If you are a nonprofit, then why do I have to put up the money first?"
He wouldn't give her the names of any of the organizations that offer those grants. Neither would he offer any names of previous clients as references.
"That's when I said, 'I need to do a whole lot of research before you get a single penny from me,'" she said.
This story didn't surprise Edie Cartwright, spokeswoman for the Nevada attorney general's office. Her office frequently fields calls about such pitches.
"If you get calls from a grant company that says, 'Send money,' that's a scam," she said.
Cartwright said private foundations cannot donate to for-profit businesses — only to charities.
Nevada is home to a number of these kinds of operations because state laws make it easy to set up businesses and hide one's identity, Cartwright said. The attorney general may investigate if enough complaints are filed. Often, investigators find that the Nevada addresses are just mail drops and that the companies are based overseas.
The Federal Trade Commission warns consumers not to give bank account or credit card information to anyone they don't know, and not to pay for a "free" government grant. Telephone technology allows callers to appear to be calling from a different phone number on caller ID.
Anyone who has been a victim of a "government grant" scam should file a complaint with the FTC online at http://www.ftc.gov, or call 1-877-FTC-HELP.
Mallard said she's glad she realized it was a scam before she became a victim, but there's another happy outcome to this experience. Now she's hunting to see whether she can apply for business assistance on her own.
"It's very, very hard, tedious work," Mallard said, "but I am going to try that route and see if I can get some help and improve my business."