BBB Alert: St. Louis Mom Loses $9,000 In Phony Federal Reserve Bank Grant Deal

BBB is warning consumers about a scam involving the Federal Reserve Bank of New York after a St. Louis woman loses $9,000.
June 25, 2014

Victim of Federal Reserve grant scheme
Regina Henderson said she lost $9,000 in a scam that claimed she could be a grant from the Federal Reserve Bank of New York.

St. Louis, Mo., June 25, 2014 – A St. Louis woman who lost $9,000 in a government grant scheme said she ignored several signs that should have alerted her that she was being scammed, Better Business Bureau (BBB) says. 

“I feel like a fool,” said the mother of three. “My common sense just wasn’t kicking in; all I was focused on was that I needed money for my family.”

BBB is warning consumers to be extremely cautious when contacted by anyone offering free grant money, especially if there is a demand for upfront fees.

The woman said the scheme began in November with a phone call from a man who claimed to be with the Federal Reserve Bank of New York. He offered her a $7,000 grant for continuing her education. By the time the ruse ended, nearly three months later, the woman had borrowed money from relatives and friends, her bank and two payday loan companies. She used MoneyGram, Western Union and Green Dot MoneyPak cards to transfer $9,000 to thieves in New York, California and India.

Near the end of her ordeal, she said she was so upset that “I was crying all the time.”
She said that family members, store clerks and alerts on the Green Dot cards all warned her that she might be the victim of a scam. But the warnings were “going in one ear and out the other,” she said.

She said that each time she was asked for more money, the thieves told her that all of her advance fees would be repaid when she got the grant.

Michelle Corey, BBB president and CEO, said government grant scams have been around for years, but recently seem to have become more pervasive in the St. Louis area.

“The federal reserve and the government are not in the practice of giving away unsolicited grant money,” Corey said. “If anybody tries to talk you into paying an advance fee to qualify for a grant, you can be certain that you want no part of it.”

The Federal Reserve Bank of New York first issued a warning on the grant scams in January 2012. Since then, several people from across the nation have reported losing money in the scam.

On its website, the Federal Reserve Bank of New York said it is “NOT involved in any federal grant program. The Federal Reserve Bank of New York does not maintain grant money or any other type of funds/accounts for individuals.”

The woman, who said she lost her job as a result of stress caused by the scam, said she trusted the thieves because they were “so sincere.” She said she was skeptical almost from the beginning, but did not want to take a chance of alienating her callers by asking too many questions. She said it was extremely difficult to cut off communications with the scammers because she felt it ended any hope of receiving the grant money.

She said she decided to step forward in an effort to educate others about similar scams.

“I’m ashamed,” she said, “but I will tell my story to anyone who will listen. I want to try to make sure that nobody else out there gets played like me.”

She said the experience has been devastating. In recent weeks, she has managed to pay back money she borrowed from family members and her bank, but still owes about $1,500 on the payday loans. She said the loan companies have been calling her, threatening to sue her if she does not pay what she owes.

“They should be in jail,” she said of the thieves. But she also says she accepts a large share of the blame. “It’s my fault; I allowed them to do this to me.”

BBB offers the following tips to anyone offered a government grant or other monetary gift from an unknown or suspicious source:

  • Know who you are dealing with. If it is a government agency or a business, research their phone number independently and call them to make sure the offer is legitimate.
  • Do not pay upfront fees in exchange for a grant or loan solicited online or by phone. Oftentimes, scammers will require advance fees to pay for such things as taxes or processing fees. If such a request is made, walk away from the offer.
  • Do not supply any personal information unless you are convinced it is a legitimate offer.
  • Never use MoneyGram, Western Union, Green Dot MoneyPaks or any other hard-to-trace wire or cash transfer systems to deliver money to anyone you do not know.
  • If you have any questions about a grant offer, contact BBB at or by calling 314-645-3300.

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