Thursday, May 29, 2008

Helping the FBI With Its Criminal Investigation of SSH

Many of our clients have received a letter and a questionnaire from the Federal Bureau of Investigation (FBI). The letter is from Maureen Seitz, Victim Specialist at the Las Vegas Branch of the FBI and references the FBI's Case Number 318E-LV040690. The letter states in pertinent part, "Your name was referred to the FBI's Victim Assistance Progaram as being a possible victim of a federal crime. We appreciate your assistance and cooperation while we are investigating this case. . . . The case is currently under investigation. This can be a lengthy process and we request your continued patience while we conduct a thorough investigation. Enclosed is a questionnaire concerning your association with Silver State Helicopters. Please fully answer the questions, however if you cannot or choose not to answer specific questions, please leave them blank. Thank you for your assistance and participation"

I called the FBI to make sure that this letter is authentic and spoke with Maureen Seitz. The letter is authentic and the FBI criminal investigation of SSH is real and ongoing. Maureen told me that the FBI will be continuing to contact former SSH students, including my clients. I reccomend that you cooperate 100% with the FBI criminal investigation of SSH. Criminal prosecution of the individuals and companies responsible for the SSH scam may be of great help to our clients and to all others in a similar situation. As stated in the FBI's letter, one of your rights as a crime victim is "the right to full and timely restitution as provided in law." Criminal sentencing of SSH Defendants may include an order that restitution be made. We look forward to continuing to cooperate with the FBI, the Federal Trade Commission, The United States Department of Justice, The Attorney General's office in many of the different states involved, and all other law enforcement agencies actively investigating SSH.

Tuesday, May 13, 2008

Notice of Appearance Filed Today

Today we filed a Notice of Appearance and Request for Service of Notices and Pleadings with the Bankruptcy Court in the SSH case. Attached to our Notice was a complete list of all clients that we represent in this case. We check the docket in the SSH case several times a week to keep on top of all developments in the case. The docket in the Silver State Helicopters, LLC case reflects 600 separate entries from the bankruptcy petition filing date of February 4, 2008 through today, May 13, 2008.

Sunday, May 11, 2008

Running, Racing, Riding, and Raising Funds for Charity

Working on the SSH case has already required strength and endurance to go along with our determination and intelligence. Much more will be required. In April and May, my Associate Attorneys and I continued the athletic efforts that bring us balance, happiness, health and fitness. On April 5, 2008, Senior Associate Attorney Georgeann Nicol ran the St. Louis Marathon and acted as a pacer to help other runners meet their goals. On April 21, 2008, I ran the Boston Marathon, my fifth Boston Marathon. On May 10, Associate Attorney Ayana Guy made her road racing debut at the Revlon 5K Run/Walk for Women in Los Angeles. This event is dedicated to raising money to fight women's cancers.

Looking forward to June, Senior Associate Attorney Georgeann Nicol will once again be riding her bicycle 545 miles from San Francisco to Los Angeles as a participant in AIDS/Lifecycle 7. This event takes place June 1-7, and is always a part of Georgeann's calendar. Georgeann has personally raised hundreds of thousand of dollars to fight AIDS. I am proud to say that my law firm is one of the many contributors to AIDS/Lifecycle.

Continuing Education

Next week, 2 important bankruptcy conferences will be taking place in California. I will be attending the 20th Annual California Bankruptcy Forum in Indian Wells, California. This 3 day conference begins on Friday, May 16, 2008 and concludes on Sunday, May 18, 2008. This conference gathers together hundreds of bankruptcy attorneys and bankruptcy judges and their guests and gives them a forum to learn and socialize together. I attended last year's event in Napa, California, and it was both great fun and great education. I will use this year's event to discuss the SSH bankruptcy with other bankruptcy experts, Trustees, and Judges.

Also next week, in Los Angeles, California, Senior Associate Attorney Gail Higgins will be attending the National Association of Consumer Bankruptcy Attorneys (NACBA) 16th Annual Convention. NACBA's Annual Convention provides a unique opportunity to network and trade ideas with colleagues from around the country.

Instructor Gail Higgins

Senior Associate Attorney Gail Higgins is once again teaching bankruptcy law at UCLA Extension in the mornings, and then coming to work with us in the afternoons. Instructor Gail 's intensive course in bankruptcy is part of UCLA Extension's Paralegal Training Program. Classes began on Wednesday, May 7 and will conclude on Monday, May 12. Several of Gail's students have expressed an interest in assisting us on the SSH matter.

Friday, May 09, 2008

Disputing Your AES Accounts Part 2

Several of our SSH clients asked for a further explanation as to how one of our SSH clients got Transunion to remove AES from his credit report. Here is the explanation, direct from our client: "It was actually really simple. I went to on a whim just to check my credit, and in the process I saw the “Dispute” option and decided to give it a try. I just followed the step by step process it provided for each of the credit bureaus and chose the option “fraudulent account” for each of the 3 AES accounts, certainly seemed to be the most reasonable option. I didn’t leave any additional comments or anything and it just said it would provide a response sometime in the following 30 days. Like I said, it was a simple process. However, TransUnion so far, has been the only bureau to delete the AES accounts, the other two have not even provided a response and it is over the 30 day limit, so I may be out of luck on those two.

Hope that helps,

Wednesday, May 07, 2008

ABC 7 News San Francisco Tonight

ABC 7 News San Francisco is running a story on the SSH bankruptcy tonight @ 6:00 pm. I was interviewed via satellite for this story by ABC reporter Rene Koury. Several of our SSH clients were interviewed for the story as well, including James Edwards of San Francisco, CA and David Ross of Walnut Creek, CA.

Saturday, May 03, 2008

From The Higher Ed Watch Blog

Fueling Sham Trade Schools
Stephen Burd -
May 1, 2008 - 1:20am
We have written a lot recently about Silver State Helicopters, a Nevada-based company that left the 2,500 students who attended its flight academies in the lurch when it shut its doors without warning on Super Bowl Sunday and filed for bankruptcy liquidation.
As we noted yesterday, Silver States' entire existence depended on the willingness of loan companies -- in this case, the infamous Student Loan Xpress and the Pennsylvania Higher Education Assistance Agency (PHEAA) through its national brand American Education Services -- to make and service high-cost private loans to help students cover the $70,000 cost that they were required to pay up front to attend the unlicensed and unaccredited flight schools. Unfortunately, Silver State students are now stuck repaying these private loans for training they did not ultimately receive.
Silver State is hardly an isolated case.
There has been in recent years a proliferation of unlicensed and unaccredited trade schools that do not participate in the federal student aid programs and therefore go largely unregulated. Their growth has been fueled by lenders that have willingly and irresponsibly "partnered" with these institutions to provide expensive private loans to the at-risk students these schools tend to attract. The lenders have then turned around and, like subprime mortgage lenders, securitized the loans, shifting the risk of the loans onto unsuspecting investors.
Reviving Trade School Scams
These practices first came to light several years ago when dozens of unaccredited computer training schools unexpectedly shut down, leaving their students without training and with heavy private loan debt. Just like Silver State, these schools (owned by now-defunct chains such as Ameritrain, Solid Computer Decisions, and The Academy Schools, among others) had forged sweetheart deals with the loan giants Sallie Mae and Key Bank to provide their students with tens of thousands of dollars of private loans to cover the full cost of tuition upfront before any classes were provided.
Consumer lawyer Tom Domonoske exposed these deals in an article entitled "The Finance Industry Fuels Revival of Trade School Scams," which ran in late 2003 in the trade journal The Consumer Advocate but received little attention at the time. In the article, Domonoske explained how the easy availability of private loans helped disreputable schools thrive by allowing them to attract students without having to worry about being regulated by the federal government.
In the late 1980's and the early 1990's, the federal government was forced to take emergency actions to crack down on an explosion of fly-by-night trade schools set up solely for the purpose of reaping profits from the federal student aid programs. To avoid another student loan-proprietary school debacle, policymakers began requiring schools that participate in the federal student loan program to demonstrate, among other things, that they are financially stable. The schools must show that they do not pose a danger of closing precipitously.
But disreputable trade school owners found a way to around these rules -- by staying out of the federal aid programs and pushing private loans to their students. Meanwhile, lenders, Domonoske wrote, have proved more than willing to provide "liquidity" to these sham schools. "[T]he current problem of school closures in the computer training field would not exist if entities like Sallie Mae and Key Bank were applying similar restrictions" to those of the government, Domonoske wrote at the time.
The Loan Industry's Complicity
Under pressure from consumer advocates, Sallie Mae eventually agreed to stop serving unlicensed schools. But Key Bank apparently continues to do so. And, in light of the Silver State Helicopters case, other lenders, like Student Loan Xpress and the non-profit state agency, PHEAA, appear to have picked up the slack.
Why would lenders ever agree to make such risky loans in the first place? Don't loan providers pay a price for making loans to students attending sham schools? Not if they securitize the loans and get them off their books. As Domonoske puts it:
"Key Bank's willingness to fund bad loans seems at first glance to be counterproductive for its own bottom line. However, Key Bank does not intend to hold all the loans during their repayment period; instead it pools and sells the loans to investors. Through a process called "asset-backed securitization," Key Bank obtains full value for the loans by selling them to an investment trust. It sells the loans as if they were honest and legitimate transactions solicited by schools that were acting properly...Consequently, the investors pay full value without a disclosure of the inherent defects in the loan."
In other words, by providing huge private loans to students attending unlicensed, unaccredited schools and then securitizing the debt, the lenders have not only caused great harm to students but have also deliberately misled investors.
As policymakers consider a bail out the student loan industry from the credit crunch beyond legislation passed in the Senate yesterday, they need to remember that lenders have brought a good part of these problems onto themselves. Lenders have dumped lots of bad private student loans onto the marketplace, knowing full well that much of this debt was likely to go into default. Is it any wonder that investors are now wary of student loans?

Friday, May 02, 2008

Working on the Proofs of Claim and the Adversary Proceeding Complaint

In May, we are focusing on preparing the proofs of claim for all 1289 of our SSH clients (not including cosigners) and on the preparation of our Adversary Proceeding Complaint against the lenders. We would greatly appreciate keeping requests for status reports and individual calls or letter to the lenders to a minimum so that that we can focus on this important task. We will be contacting each and every one of our 1289 SSH clients to go over his or her proof of claim.

Thursday, May 01, 2008

Disputing Your AES Accounts

Earlier today, I received the following e-mail from one of my clients:

"Hey Michael,

About 3 weeks ago I went in and disputed the AES accounts on all 3 of my credit reports and I just got an email back from TransUnion confirming that they have deleted all 3 of the AES accounts on my credit report. I wanted to let you know about this because I think it shows that something positive is happening and I know that your firm has a lot to do with that. I really appreciate your hard work and am getting more and more excited about the end result which is our ultimate goal of a full release of the debt. Hope all is well! Thanks again, Jason." I called Jason to get his permission to share this e-mail and to get the details of how he disputed the entries from AES. Jason went online and disputed the AES entries with Equifax, Experian and TransUnion. If any of our other SSH clients out there want to try this, please e-mail me and let me know if it works for you. I know that many of you have had difficulty getting other loans because the loans that you obtained to attend SSH are still on your credit records.