For minority residents in Minneapolis, Minn., the offer sounded like just what they needed to buy their own home.
Pay a $500 fee, attend a seminar and receive a housing grant from one of the region’s most respected foundations.
But, as Minnesota state Sen. Sandy Pappas put it, “there is no such thing as free money.”
“As the old saying goes,” Pappas said in a written statement, “if something sounds too good to be true, it probably is.”
The program is a scam that is now under investigation by the Minnesota Attorney General, Pappas said.
“This is an unfortunate educational opportunity for all of us in the community,” she said.
The alleged operator of the scam has only been identified as a man from Arkansas who, according to Pappas, convinced 24 people from the Minneapolis area that an organization known as The St. Paul Foundation had hundreds of thousands of dollars in grant money available for home ownership.
For a $500 fee, the man said he could get the potential homeowners money for their purchases.
But while the St. Paul Foundation is real, the grant program is not.
“We would never charge a fee for a grant application and we do not make individual homeownership grants,” Carleen Rhodes, president of the St. Paul Foundation, said in a statement.
“We are very sorry that people in Minnesota have been victims of this scam, and feel terrible that the foundation’s name and reputation were used to play on people’s dreams of homeownership,” she said.
The foundation said that the scam operator apparently altered one of its housing grant forms, misrepresented himself as an agent of the foundation and fraudulently collected more than $30,000 from people in Minnesota by collecting fees ranging from $86 to $3,000.
The foundation said that in January the operator of the scam first staged seminars with groups of people. He claimed the foundation had a fund to help people of color buy homes. For a fee, he would process their applications.
While grant money was available for diversity projects, there were no homeownership grants, Pappas said.
As a result of the scam the St. Paul Foundation is making all of its online forms and brochures tamper-resistant, is cooperating with the Attorney General’s office and alerting the community through individual outreach, the media and its own publications.
State Sen. Steve Kelly helped uncover the scam along with Pappas after constituents complained.
“I am angered that this scam has occurred here,” Kelly said in a statement. “I hope the public is able to learn from his experience, and that other potential scam artists get the message loud and clear: We won’t tolerate our citizens being taken advantage of.”
Though Kelly and Pappas said they believe the scam operator has fled the area the St. Paul Foundation is not as sure.
The foundation said that the individual struck again in mid-April, working with a local mortgage broker who believed the offer was legitimate.
