From what I've been able to find out, there've been three different hoaxes in the last decade about campaigns to "arm the homeless" by giving out free guns.
The earliest one I could find out about happened in Columbus, Ohio back in December 1993. According to http://www.hoboes.com/pub/Firearms/Organizations/Arm%20the%20Homeless, three kids from Ohio State University started the whole thing. They rented a post office box, snapped some pictures of a guy in a Santa Claus suit standing next to a donation box, and sent the photos to local news outlets along with a press release. The press release claimed to be from an "Arm the Homeless Coalition" that wanted to "provide arms, ammunition and firearms safety training" to people living on the street.
The hoax was designed well. Probably too well. The press release explained that this Arm the Homeless Coalition used "rigorous screening" to make sure it was giving out guns "on the basis of need, mental and emotional stability, and potential value to society."
Just stop and think about that for a minute. If there really was any such thing as this coalition, isn't that exactly what you'd expect them to say about their program? It's such a great example of the kind of logic that only sounds reassuring to people that already agree with the conclusion. To anybody else, it just makes the idea sound scarier.
When the story first came out, real organizations to help the homeless fell all over themselves as they rushed to condemn the idea. The good folks at City Hall couldn't remember giving out any permits for such a group to collect money on the street, so they issued a stern warning to "cease and desist any fund-raising activity immediately."
Within a few days, the real story was out. There was no coalition, just some college kids trying to make some kind of point about poverty, violence, guns and the media. The main thing they managed to do was get a lot of people very angry with them. The local newspaper made sure to print their names and home addresses in more than one story. The university brought them in to talk about disciplinary action. Nobody much cared that they were art students calling what they'd done an "art project."
After all that, the idea stayed out of sight for almost three years, but then it surfaced again in California, in October 1996, as reported at http://www.sniggle.net/ath.php. This time it only took one guy to pull it off. A young man calling himself "J. Robert Dobbs" sent out press releases and managed to get interviewed on a local TV news show.
The most embarrassing part for the TV news people was that they called the police to ask about the "Arm the Homeless" group, and it took less than 24 hours for the cops to find out the whole thing was fake, and "J. Robert Dobbs" was really someone named David Gross. By that time, they'd already put the story on the air. Almost makes me wonder if someone lost their job over that one.
The most recent "Arm the Homeless" hoax got started by an actual newspaper in Phoenix, Arizona running an April Fools Day joke on April 1, 1999 (http://www.phoenixnewtimes.com/issues/1999-04-01/feature2.html). The "Phoenix New Times" story used the completely opposite strategy from the creepy-calm logic of the original press release back in 1993. They played up the hype, tabloid style.
It still worked. Even better than the previous hoaxes. The story got picked up by the San Francisco Weekly. The Associated Press wire service asked about it, and so did local radio stations. Even the national CBS News organization was interested. One of the producers for "60 Minutes II" called and asked for an exclusive.
This time the real story came out a week later, when the newspaper confessed to making the whole thing up, and put together a long article to talk about the many different responses they got (http://www.phoenixnewtimes.com/issues/1999-04-08/news.html).
They called it "Disarm the Clueless," and that seems to sum things up pretty well.