Bankruptcy Today

No Money Down Chapter 13

2011-11-04T20:35:00.000-07:00

Today I decided to become the first and only certified specialist bankruptcy lawyer in Los Angeles County to offer a no money down Chapter 13 plan for qualified wage earners. Up until today, I typically charged my Chapter 13 clients $2,000.00 down. Now, with my new no money down plan, any regular wage earner in need can afford to hire us to save his or her home, stop a wage garnishment, stop an eviction before trial, or stop a repossession. Our Clients still need to pay the Bankruptcy Court Chapter 13 filing fee of $281.00.

I typically charge $4,000.00 for a Chapter 13 bankruptcy case for debtors who work for a company, and $4,500.00 for debtors who are self-employed, though complicated cases may involve additional fees. These fees will now all be paid through the Chapter 13 plan of reorganization at the expense of my clients' creditors.

My firm and I have an extraordinarily high success rate confirming Chapter 13 plans. This and my concern for the average person who is faced with losing his or home and simply does not have thousands of dollars to pay to his or her lawyer up front are the reasons that I have decided to start this new program. To my knowledge, I am the only attorney in Los Angeles County, Orange County, Riverside County, San Bernardino County, Ventura County and Santa Barbara County to offer this no money down Chapter 13 plan. To schedule a free consultation, call me or Sofya Davtyan at 310 271-6223. Sofya is the head of my Chapter 13 department. My 11 lawyer 7 paralegal firm now has 3 offices and is ready to serve you. For more information about me and my firm, see my website www.bankruptcypower.com

SSH Student Update

2011-08-24T17:11:00.000-07:00

Students with loans with Student Loan Express

I have been receiving many phones calls, emails and letters inquiring about the letters that former SSH students that have Student Loan Xpress loans been receiving from AES regarding final settlement. These letters are confusing because they contradict prior letters from AES. The operative letter is the letter that references the “Holman Settlement” dated August 11, 2011. This letter is the correct letter that has each individual student’s settlement. The amount that each individual student must pay was based on the number of certificates received while attending SSH. The payment amount is made up of the following: 1. Loan amount, 2. Interest from the date the loan was funded through February 4, 2008 and 3. loan origination fee. For example, if your loan was $69,900.00 and you received zero certificates, 75 percent was deducted from the total of your loan amount plus interest through February 4, 2008 and the loan origination fee. If you are my client and you have any question regarding the settlement of your Student Loan Xpress loan, please e-mail my Senior Associate Attorney Georgeann Nicol. Her e-mail is georgeann.nicol@bankruptcypower.com. Georgeann is also the attorney handling the settlement of SLX loans for former students that are not part of the class action case.

Students with loans with KeyBank

KeyBank is still insisting on a settlement scheme based solely on flight hours. This scheme is far less favorable to the majority of our clients than the class action settlement approved in the Holman case for former SSH students with Student Loan Xpress loans. 4 of our former SSH students with low flight hours and with loans from KeyBank have settled their loans using KeyBank's formula. The rest of our KeyBank clients are at a standoff with KeyBank, waiting for a better settlement offer or a favorable court ruling to come along. We are still waiting for an Appellate Court ruling on the dismissal of the Pinnacle Law Group's proposed California class action case . We do not know when the Court will rule on the Appeal, but as soon as we know the results on the ruling, we will post it on the blog.

What Is New for Former Students of Silver State Helicopters?

2011-04-20T18:55:00.000-07:00

Our office received numerous phone calls and e-mails regarding an "Order Scheduling Settlement Conference" for May 10, 2011 in the Silver State Helicopters, LLC bankruptcy case that was mailed out by the Court to creditors. This Order does not apply to former SSH students and it does not affect them. It relates to a dispute between the SSH and its major secured creditor Orix.

We are waiting for Student Loan Xpress ("SLX") to send new bills to former SSH students who were covered by the class action settlement agreement with SLX. These bills will reflect the reduced principal and interest amounts set forth in the class action settlement agreement approved by the Judge Merryday. The attorneys for SLX continue to tell me that they do not know when the new bills will be mailed out.

Senior Associate Attorney Georgeann Nicol and I have begun settlement discussions with counsel for SLX regarding clients of ours who were former SSH students who obtained loans from SLX to attend SSH but were not members of the class action. This includes former SSH students who were not enrolled at the time of the filing of the SSH Bankruptcy. At the request of counsel for SLX, these discussions were postponed until after the class action settlement was approved by the Court.

KeyBank continues to be the most difficult bank for us to deal with in connection with the loans that it made to former SSH students.
KeyBank's offer to our clients was based on the number of flight hours that the student had at SSH, not on the flight certifications obtained. This is generally less favorable to our clients than the number of flight certifications standard that was agreed to by SLX in the class action. To date, only four of our clients with KeyBank loans accepted KeyBank’s settlement offer.

The remainder of our former SSH students with KeyBank loans are still waiting for a better offer and / or a favorable ruling from the Ninth Circuit Court of Appeal with regards to the District Court's dismissal of the proposed California class action suit against KeyBank brought by Andrew August and his firm Pinnacle Law Group, LLP.

Comments on the Dischargeability of Student Loans in Bankruptcy

2011-01-31T10:30:00.000-08:00

1. Overview
The Bankruptcy Code provides that student loans are not discharged in any bankruptcy proceeding unless “excepting such debt from discharge would impose an undue hardship on the debtor.” Section 523(a)(8).
The test – undue hardship – is very difficult to meet. It is the debtor’s burden to prove the undue hardship at trial. Undue hardship means an inability to maintain a “minimal standard of living,” essentially forever.
2. The Procedure
To obtain a discharge of student loans, a person must:
a. File a bankruptcy proceeding, chapter 7, 11 or 13, and,
b. During the pending bankruptcy proceeding, file a Complaint against the student loan lender (or lenders) asking the court to “declare” that repayment of the student loan will be an undue hardship on the debtor.
Filing the Complaint begins an adversary proceeding. This is the same thing as litigation outside of bankruptcy. The lender is the “defendant” in the proceeding. The lender will file an “Answer” or other response to the Complaint. The Court will set a status conference and eventually set a trial date. During the interim between the filing of the Complaint and trial will be a “discovery period.” The lender defendant will take the deposition of the debtor and possibly the debtor’s other witnesses. The lender will request documents from the debtor including income and expense records and employment records. The lender may file various motions such as Motion for Summary Judgment.
The time between the filing of the Complaint and trial varies but can be generally estimated to be six months to a year. Trial generally will take a few days. After hearing the debtor’s witnesses and other evidence and the lender’s response and its evidence, the Bankruptcy Court will rule and “declare” whether any or all of the student loans represent an undue hardship to the debtor.
3. Determining Whether There is Undue Hardship
The Bankruptcy Courts use a three prong test called the Brunner Test to determine whether or not there is undue hardship. The Brunner Test (831 F.2d at 396) requires that the debtor prove all of the following:
a. that the debtor cannot maintain, based on current income and expenses, a minimal standard of living for herself and her dependents if forced to repay the loans;
b. that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loans; and
c. that the debtor has made good faith efforts to repay the loans.
3.1 The First Brunner Prong – Inability to Pay Now
The first prong is the easiest to meet. The debtor must offer evidence at trial that repayment of the loan is not possible “based on current income and expenses.” This is established usually by the debtor’s own testimony and personal records. The debtor’s testimony is that he has a job (or does not), makes x amount of money, and that amount is not enough to allow him to maintain a minimal standard of living.
The lender will often argue that the debtor can get a better job, or work more hours, or cut back on expenses, get a less expensive place to live, and thereby pay some of the loans and still maintain a minimal standard of living. A minimal standard of living does not include private schools for children, putting money away for retirement, or supporting other family members or unrelated persons.
3.2 The Second Brunner Prong – Inability to Pay in the Future
To meet the second prong, the debtor must prove at trial that “this state of affairs,” i.e., his current financial condition, will continue forever essentially. The debtor will need evidence at trial that he will not make significantly more in the future than he is making now. The debtor can certainly get on the stand and say that his position is as high as he will ever get however that will generally carry little weight with the judge. This usually requires an expert in the particular industry. This prong obviously involves a lot of speculation but the burden belongs to the debtor. He must prove to the Bankruptcy Court with evidence at trial that things are never going to improve.
The lender will certainly retain an expert who will likely testify that in this particular industry the debtor can be expected to make considerably more in the future.
3.3 The Third Brunner Prong – Good Faith Efforts to Repay the Loan
The debtor must establish at trial that he has made a good faith attempt to repay the loans. The most basic part of this requirement is that the debtor show the court that he has attempted to reach some sort of arrangement with the lender which will permit reduced payments or a period of no payments.
The United States Department of Education, William D. Ford Federal Direct Loan Program offers various repayment options for student loan debtors. One of these is the Income Contingent Repayment Plan.
Systems of bankruptcy are designed to relieve the honest debtor from the weight of indebtedness which has become oppressive, and to permit him to have a fresh start in business or commercial life, freed from the obligation and responsibilities which may have resulted from business misfortunes. Essentially, once a student loan debtor is on an ICR plan, monthly payments are calculated on the basis of adjusted gross income, family size, and total amount of Direct Loan debt. This can give student loan debtors the flexibility and breathing room they need during difficult times. Direct Loan provides a handy calculator for approximating ICR plan payments. The calculator is located at www.ed.gov/offices/OSFAP/DirectLoan/calc.html. The maximum repayment period under an ICR plan is twenty-five years. If a debtor makes payments under an ICR plan for twenty-five years, and there are still amounts left owing, those unpaid amounts are forgiven. More information on ICR plans and other Direct Loan repayment options can be found at www.ed.gov/DirectLoan or by calling 1-800-848-0979.
It is pretty clear that failure to use the Ford Program Options will, by itself, prevent any portion of the student loan from being discharged.
The Ford Program does not apply to many loans. The debtor must attempt to settle or otherwise resolve the issue with the other lenders before seeking a discharge. The debtor will need evidence of these efforts at trial. A statement by the debtor on the witness stand that “I tried” will be given little weight. The debtor needs names and dates and rejection letters are even better.
Some courts have ruled that failure to make payments before filing the bankruptcy case is a factor against the debtor.
4. The “Partial Discharge”
A relatively new development in the discharge of student loans is the “partial discharge.” The Bankruptcy Court is permitted to determine that some portion of the total student loan debt is discharged. This occurs usually when the amount owed is huge, for example a few hundred thousand dollars or more. Applying interest to that amount means that the payments will be several thousand dollars per months for many years. The Bankruptcy Court may decide that x amount of the total is to be repaid and the rest discharged. Remember that the burden is on the debtor to show the court at trial what portion cannot be repaid.

This article was prepared by By: M. Jonathan Hayes and is
Reprinted from the CDCBAA February, 2010 Newsletter

Kilgore v. KeyBank Appeal Briefing Complete

2011-01-12T19:40:00.000-08:00

All of the briefing is complete in the 9th Circuit Court of Appeals in the California proposed class action case on behalf of California residents who attended Silver State Helicopters, obtained student loans from KeyBank to do so, and were still enrolled at SSH at the time that it filed bankruptcy. KeyBank has cited the dismissal of this case in the District Court when threatening its borrowers with collection action. A hearing date is anticipated in March. The ruling in this case, while only binding on California residents, is expected to have influence on KeyBank with respect to its dealings with all of its former SSH student borrowers. For now, KeyBank continues to place collection calls and write collection letters to former SSH students, without suing or seeking arbitration against any of them. If you are my client and you receive a collection call or letter from KeyBank, respond by telling the collector that I represent you and ask the collector to call me at my office: 310 271-6223.

Student Loan Xpress Proposed Class Action Settlement Approved

2011-01-12T19:24:00.000-08:00

Judge Merryday has issued his order granting final approval of the proposed class action settlement agreement for students that attended Silver State Helicopters School ("SSH") and obtained student loans from Student Loan Xpress ("SLX") and were still enrolled at SSH at the time that SSH filed bankruptcy. Judge Merryday has not yet entered a final judgment on that order. Class counsel has filed a joint motion with SLX to have Judge Merryday enter judgment ASAP. Class members can expect to receive updated loan information from SLX, including the new reduced amount of their loan balance and their loan payments, in the next 30-60 days. Any questions about this should be addressed to Andrew August: settlementquestions@gmail.com

No Difference

2010-12-04T21:04:00.000-08:00

Many of my clients with loans from Student Loan Xpress recently received a recently informing them that the loan servicer on their loan has been changed from Xpress Loan Servicing (XLS) to American Education Services (AES). This change does not make any meaningful difference to any of my clients. It does not change the owner of the loans. It does not change the terms of the loans. It does not have any affect on the proposed settlement of the class action lawsuit which we are all waiting to have finally approved by Judge Merryday.

The letter that I am referring to begins, "This is to inform you that Xpress Loan Servicing (XLS) will no longer be servicing the following private student loans" and goes on to say that "The new servicer of these loan(s), American Education Services (AES) will be contacting you within the next 30 days."

If you received this letter, don't worry. No action on your part is needed now. If the proposed class action settlement agreement is approved by the court and if and when you begin making payments under that agreement, you will simply send your payment to a different collector.

Settling with Jerry Airola and Thomas Pickett

2010-11-12T00:57:00.000-08:00

James F. Lisowski, Sr., the Chapter 7 Trustee in the Silver State Helicopters, LLC Bankruptcy Case, wants to settle with Jerry Airola and Thomas Pickett and 2 of their companies. Jerry Airola was the founder and CEO of Silver State Helicopters, LLC ("SSH"). Thomas Pickett was the Chief Financial Officer of SSH. On November 3, 2010, Lisowski filed a Motion to Approve Compromise and Settlement Between Trustee and Jerry Airola, Steve Pickett, First American Equity, LLC and Stars and Stripes Heliplex, LLC. The Hearing on the Trustee's Motion is Set for December 8, 2010 at 9:30 am. Former students who attended SSH and who hold Jerry Airola personally reponsible for tens of thousands of dollars in student loans that they are still obligated to repay will be disappointed in the proposed settlement. Those of us waiting for criminal prosecution of Airola and jail time for Airola will not find any comfort in the proposed settlement agreement.

Here are the key terms of the proposed settlement agreement:

1. Commercial property located at 800 South 3110 West Provo, Utah 84601 that is owned by SSH but allegedly subject to a $1,587,049.75 - $1,703,805.48 deed of trust in favor of Jerry Airola will be sold and the proceeds split with 2/3 going to the bankruptcy estate of SSH and 1/3 going to Airola. Several commercial office buildings and hangars are located on the property. The estimated value of the property is approximately $1,500,000.00. The Trustee describes the financial benefit of this and other consideration to be received by the bankruptcy estate as "close to one million dollars." This other consideration to be received by the Trustee includes a $10,000.00 earnest money deposit forfeited by a proposed buyer of the West Provo property and an unsecured, non-priority proof of claim with a face amount of $714,000.00 but no clear value in the bankruptcy of a company called Stars and Stripes, LLC. $1,000,000.00 seems to be a paltry sum compared to the harm done by Airola. Moreover, little or none of this money is likely to go to former students of SSH. The Trustee says in this moving papers that "the likelihood of paying a dividend to unsecured creditors, particularly unsecured creditors, is nonexistent." Former students of SSH who included a priority claim in their proofs of claim, as I did for all of my SSH clients, may or may not fare slightly better.

2. While the Trustee focuses on the close to one million dollars that SSH will receive from the sale of the West Provo property, Airola will personally receive 1/3 of the proceeds from the West Provo property, or approximately $500,000.00. In addition, Airola will be allowed to keep two custom motorcycles manufactured by Orange County Choppers which were the subject of a separate adversary proceeding filed by the Trustee against Airola and Airola will be allowed to keep certain proofs of claim in the SSH bankruptcy.

3. Upon approval of his settlement Motion, the Trustee will dismiss both of his adversary proceedings against Airola.

4. The Settlement agreement provides for a mutual general release of all claims between the Defendants, the Debtor, The Trustee and the Estate. Former SSH CFO Thomas Pickett gets a free ride. He pays nothing to the bankruptcy estate of SSH, but gets a complete release of all claims from the Trustee.

Student Loan Xpress Class Action Settlement Update

2010-10-12T15:57:00.000-07:00

Former SSH Students with loans from Student Loan Xpress have been waiting a long time for Judge Merryday to approve or reject the proposed class action settlement. During this time, a lot of work was being done behind the scenes to try to improve the proposed settlement for the students and to address two concerns that were raised by Judge Merryday. These efforts have now born fruit, and a revised, improved, proposed settlement agreement has been filed with the Court.

Under the terms of the original proposed settlement agreement, 10% of the debt forgiveness level was unconditional immediately upon final approval of the settlement with the remaining 90% being forgiven upon full payment by the student of the remaining amount. Under the new, revised settlement agreement, the unconditional debt forgiveness portion of the settlement has been increased from 10% to 50%. This benefits each and every class member and is of special benefit to class members that may not be able to complete all of the payments called for in the settlement agreement.

Silver State Helicopters, Student Loan Xpress and KeyBank Update

2010-09-17T11:25:00.000-07:00

Here is all of the latest news for clients of mine who attended Silver State Helicopters and have student loans either with Student Loan Xpress or KeyBank

Student Loan Xpress

The long delayed class action settlement pending approval before United States District Court Judge Steven D. Merryday is now once again (in my opinion) moving forward towards approval. The revised settlement agreement will include a change that is favorable to all class members. I am prohibited by written confidentiality agreements from saying anything more specific about this change until the appropriate papers are filed in Court.

Pending before the court now is a Motion to add three additional subclass 3 representatives (former students that received 2 certifications while attending SSH) to resolve a conflict with the existing subclass 3 Representative that has held up the proposed settlement agreement.

KeyBank Litigation

For the latest information regarding the lawsuit filed by Pinnacle Law Group against KeyBank, as well as live links to briefs filed in the appeal in that case, click here: http://www.pinnaclelawgroup.com/news/silver_state_litigation.php

Here is a copy of the September 10, 2010 update posted on the Pinnacle Law Group website:

"Kilgore v. KeyBank
September 10, 2010 Update

On August 30, 2010 Pinnacle Law Group LLP filed the Opening Brief in the United States Court of Appeals for the Ninth Circuit seeking reversal of the District Court's Order dismissing the suit against KeyBank. A copy of the Opening Brief can be found here. On September 3, 2010 the Attorney General of the State of Montana filed an amicus brief ("friend of the court" brief) in support of our appeal. Since then, the Attorney Generals from the States of Idaho, Illinois, Nevada, Oklahoma and Oregon joined in Montana's brief. The Montana brief can be found here. On September 8, 2010 the National Consumer Law Center, the National Association of Consumer Advocates and the National Consumers League also filed an amicus brief in support of our Appeal which can be found here. We are very grateful for this support and believe it speaks volumes about the merit of our Appeal.

KeyBank will file an opposition to our Opening Brief and we will then file a reply brief to their opposition. Thereafter, the Ninth Circuit will set a hearing date on the Appeal (which likely will not happen until 2011). We will continually update this site as events warrant. As mentioned in the "July 2010 Update" (link below), if you have any questions, please contact us at keybanklitigation@gmail.com. However, because we are counsel for the proposed class, we are unable at this time to give you individual advice but we do want to give you an update on the status of the case so you and your lawyer can assess your individual situation. Thank you for your support."

Here is more information and advice from the Pinnacle Group web site (it's July 10, 2010 update) regarding the KeyBank litigation:

"Status of Action Against KeyBank
We are aware that many of you have been receiving letters from KeyBank(either directly or through your personal lawyers) threatening to put you back into collection and/or offering a settlement based on the number of flight hours you had
while enrolled at the school. Because we are counsel for the proposed class, we are unable at this time to give you individual advice as to how to respond to these letters but we do want to give you an update on the status of the case so you and
your lawyer can assess your individual situation. As most of you know, in April the action filed by our office against KeyBank on behalf of all California Silver State Helicopter students whose loans were funded by KeyBank and who were enrolled as of the date of school’s bankruptcy was dismissed by a California federal district court judge. In the settlement letter from KeyBank, its lawyers refer to the 23 page order from the court dismissing the case. What KeyBank fails to tell you, however,is that the court spent the first 15 pages of its opinion explaining how and why we properly
and adequately alleged that KeyBank aided and abetted SSH in violating federal consumer protection regulations and thereby violated California’s consumer protection law. The judge dismissed the case not because KeyBank is innocent of wrongdoing (actually, he concluded the exact opposite based on allegations which
KeyBank cannot refute) but because he believes federal banking law prevents you (as
opposed to the federal government) from suing a national bank. In evaluating your options this is a critical distinction (which presumably is why KeyBank did not disclose it in its letters). We are working on our Opening Brief for the Ninth Circuit Court of Appeal which will be filed on July 30, 2010. As part of the drafting process, we have been consulting with several legal experts on the issue the court relied on to dismiss the case – legally referred to as “federal peemption”. These experts are uniformly confounded by the judge’s ruling which is internally inconsistent and not well reasoned (which is very unusual for this judge who is a very well respected jurist). They believe that he dismissed the case not because he believes we have no case but because he knew this case presents unprecedented threshold legal issues that would almost certainly have been decided in the Ninth Circuit Court of Appeals no matter who prevailed at trial. By ruling the way he did at this point in the case,both the students and KeyBank will now get a final determination on these issues much sooner and with less expense than had we gone to trial and then faced an appeal. Their opinion – which we share – is supported by the fact that the Ninth Circuit is generally considered the most consumer protection oriented circuit court in the federal system and the district court judge has long been viewed a champion of individual rights. Shortly after we file our Opening Brief, several national consumer protection organizations and, hopefully several state attorneys general, will file what are referred to as “friend of the court” briefs (amicus curiae) arguing to the Court of Appeal why the district court judge was wrong and how his ruling, if upheld, will be detrimental for all consumers who borrow money from national banks. While of course we cannot predict how the Court of Appeals will rule, we and the appellate lawyers we are working with are optimistic about obtaining a reversal of the district court’s dismissal. With respect to KeyBank’s settlement proposal, the Bank is approaching settlement from the perspective that what you borrowed is money for flight hours rather than FAA certifications or job opportunities. Based on the information we have reviewed, this approach will result in the large majority of the students having to repay in excess of 80% of their principal loan balance plus most of the accrued interest. Moreover, KeyBank has not offered to reduce the interest rate going forward. By point of reference, the proposed SLX settlement that is before the court provides for between 30% - 75% loan forgiveness (depending on the number of FAA certifications received) and an across the board 3% interest rate reduction as well as a waiver of all interest accrued after SSH filed bankruptcy. If you choose to enter into a settlement with KeyBank, you will likely be forced to give up any right you may have to participate in our class action (this applies only to California students) or in any action that may be brought in any other state in the future if the Court of Appeal rules in our favor on the California action. Also, you will likely be forced to give up any defenses you may now have in the event you are unable to comply with the terms of your settlement agreement and KeyBank has to sue you for breaching the settlement agreement. Given KeyBank’s likely demand that you give up all of your rights, coupled with the miniscule amount of offered forgiveness (for most borrowers), we do not support such a settlement while the appeal is pending. However, before making any decision whether to settle, you should consult with your personal lawyer so that you fully understand your options. Finally, with respect to KeyBank’s letter threatening to end its “voluntary forbearance” and begin reporting your debt to the credit reporting agencies, because the case is still pending, you should have your individual lawyer inform the credit agencies in writing that this is a disputed debt and refer them to the court of appeal case. Also, because KeyBank continues to attempt to force this dispute into binding arbitration, it is very unlikely KeyBank will file a lawsuit against you in court (if they do, we will argue it has waived its arbitration argument). Based on the Master Promissory Notes we have reviewed, KeyBank will have to initiate arbitration against each of you individually with JAMS in each of your respective jurisdictions. KeyBank will have to initiate the arbitration and front 100% of expense of doing so. So be sure you advise your lawyer that you have been served with the arbitration papers. Also, please be sure to contact us immediately so we can provide you and your lawyer with whatever assistance we are able to. If you have any questions, please contact us at keybanklitigation@gmail.com. Again, however, we cannot give advice on an individual basis and even as to the class claims, at this time we represent only California students. Regardless of whether you are a California resident or a resident of another state, we strongly encourage you to contact your state’s Attorney General’s office (usually the department of consumer protection) and urge the AG to take action against KeyBank and support our efforts before the Ninth Circuit."

Status of California KeyBank Litigation and KeyBank Settlements

2010-07-04T15:58:00.000-07:00

Here is the latest word from our friends Andrew August and Kevin Rooney at Pinnacle Law Group regarding the status of the proposed class action case that they filed in California against KeyBank:

"As we mentioned last week, the District Court granted KeyBank's Motion to Dismiss. While this was extremely disappointing, the District Court went out of its way to spend two-thirds of its written opinion holding that we adequately alleged KeyBank engaged in unlawful and unfair acts and practices under California’s Unfair Competition Law by aiding and abetting Silver State’s violation of the Holder Rule, a federal consumer protection regulation. However, the Judge felt constrained to dismiss the entire case on the ground of federal conflict preemption.

On April 21, 2010 we filed a Notice of Appeal to the Ninth Circuit Court of Appeal of the District Court's ruling granting KeyBank's Motion to Dismiss. We and several amicus curiae ("friends of the court") with whom we will be working are confident this part of the decision will be reversed and KeyBank will be held to answer at minimum for its aiding and abetting Silver State's unlawful conduct."

For my former SSH student clients with KeyBank loans, I continue to work client by client to settle the cases of clients with relatively low flight hours who have received reasonable offers to settle, or who I can get reasonable offers for. For those clients that have 175 flight hours or more and are currently being offered nothing off the principal of their loans and 50% off the interest from the loan start date to the date of settlement, I continue to fight on and hope that a better offer or a better litigation result will come.

New Letter From KeyBank

2010-06-22T21:30:00.000-07:00

All former Silver State Helicopters students with outstanding loans from KeyBank can expect to receive a letter from KeyBank, typically dated June 15, 2010, based on the following template:

KeyBank
4910 Tiedeman Road
Brooklyn, OH 44144

Name
Address

Student Loan Acct#

Dear __________________:

KeyBank is corresponding with you regarding the loans that you obtained to attend Silver State Helicopters. In connection with certain legal proceedings brought in California against KeyBank and other student lenders concerning the closure of Silver State, KeyBank voluntarily suspended collection and reporting activity on your account. The California law suit against KeyBank has been dismissed. A federal judge has determined that KeyBank has no liability to student borrowers for any failures of Silver State to deliver the educational program.

This letter is to advise you that your account will be removed from forbearance and applicable collection activity will resume, including credit bureau reporting. If your account is delinquent, payment arrangements should me made as soon as possible, but not later than July 15, 2010 if you wish to avoid collection activity.

KeyBank understands the difficulty that Silver State's closure caused to many students, particularly those enrolled at the time of closure. KeyBank stopped making loans to Silver State students nearly three years before the school closed. Many KeyBank loan borrowers obtained all or substantial portions of the training contemplated as the SSH program was 18 months long in duration. KeyBank expects students to accept financial responsibility for his/her individual decision to attend SSH and the training they actually received.

If you received less than the flight hours contained in the student agreement, KeyBank may entertain a reduction in your total debt. If you would like KeyBank to entertain a reduction to your debt or you need to discuss payment arrangements, you must contact us at 1-877-593-6608.

Key Education Resources

I have discussed this letter with many of my clients. I have also discussed it with Scott O'Connell of Nixon Peabody, counsel for KeyBank. Here are a few points for all of my KeyBank clients to note regarding the June 15, KeyBank letter:

1. I have informed counsel for KeyBank that all settlement negotiations for my clients are to go through me. Counsel for KeyBank understands this and has so instructed his client. If I represent you on the SSH matter, you do not need to call the 1-877-593-6608 Key Educational Risk Management telephone number. If I do not represent you on the SSH matter, you may hire other counsel to negotiate with KeyBank or you may proceed on your own.

2. It is true that the proposed class action filed in Northern California by Pinnacle Law Group has been dismissed by a federal judge. This dismissal, however, is on appeal. Andy August of Pinnacle Law Group has told me that he believes that he will prevail on the appeal. I expect to publish another blog update about this appeal in the near future. Please note that this proposed class action is for California residents only. I am not aware of any pending action against KeyBank on behalf of former students of SSH who do not reside in California.

3. Please note that the letter states that "collection activity will resume, including credit bureau reporting," but it does not state that the borrower will be sued, not does it state that arbitration proceedings will be started against the borrower.

4. Unlike Student Loan Xpress, which focused on the number of flight certifications that former student borrowers received from Silver State Helicopters ("SSH"), KeyBank has focused on the number of flight hours that its former SSH student borrowers received while attending SSH. SSH contracts typically provided for (amongst other things) 175 flight hours. This is the context for the statement in the June 15 KeyBank letter, "If you received less than the flight hours contained in the student agreement, KeyBank may entertain a reduction in your total debt."
This focus on flight hours is generally less favorable for my clients than a focus on flight certifications achieved, but there are exceptions.

5. While the written confidentiality agreement between myself and counsel for KeyBank regarding settlement negotiations is still in effect, I can now reveal the 2 part formerly secret formula by which KeyBank has based its offers to my California clients and by which KeyBank apparently now intends to base offers to all former SSH students with KeyBank loans throughout the country:

Part a: The # of your flight hours @ SSH/175 x your principal loan balance = the proposed reduced amount of the principal part of your loan balance if the # of your flight hours is less than 175. If the number of your flight hours is 175 or more, there is no offer of a principal reduction.

Part b: Interest on the promissory note is cut in half from the start of accrual of interest to the date of acceptance of the KeyBank offer.

This revelation is made after my discussion with opposing counsel, after receipt of 42 proposed settlement letters, and after KeyBank's disclosures as set forth in the Jne 15, 2010 letters. There is no guarantee that KeyBank will continue to use this formula in the future, but I believe that it will.

One thing that is NOT part of the KeyBank settelement formula for now is financial hardship. Nevertheless, I am collecting financial hardship information from my KeyBank clients in anticipation that this may change at some time in the future. In my opinion, KeyBank's current unwillingness to consider the financial hardship of the borrower and the resulting difficulty that KeyBank would have to collect on its debt is both unfair and unwise.

If you are one of my KeyBank clients and you are interested in receiving a settlement offer from KeyBank based on the number of your flight hours @ SSH, please e-mail me with your flight hours and a copy of your flight log. If you are suffering from financial hardship, please write to me about this as well. I will follow up for you.

If you are one of my clients that do not want to accept any such offer, this will leave you with the choice of paying as KeyBank demands or having KeyBank place you in collection. No one can guarantee that you will get better results later. Personally, I would not accept any settlement that did not give me a substantial principal reduction.

Whatever choice you make, I will continue to use my best efforts on your behalf.

Status On Proposed Class Action Settlement With Student Loan Xpress

2010-06-07T16:10:00.000-07:00

Judge Merryday still has not ruled on the proposed class action settlement agreement submitted for his approval on March 22, 2010.

KeyBank Settlement Offers Go Out to 42 Clients

2010-06-07T15:00:00.000-07:00

On Friday, June 4, 2010 I e-mailed individual settlement offers from KeyBank, National Association and Great Lakes Educational Loan Services (collectively "KeyBank") to 42 of my clients who obtained loans from KeyBank to attend Silver State Helicopters School. I anticipate e-mailing individual settlement offers to additional clients of mine with KeyBank loans as soon as I receive these offers from KeyBank's counsel Nixon Peabody, LLP. These offers and the negotiations leading up to them are covered by a written confidentiality agreement. If you received one of these offers, you should call me @ 310 271-6223 to receive my advice regarding the settlement offer.

HOUSE PANEL CONSIDERS BILL TO DISCHARGE PRIVATE STUDENT LOANS IN BANKRUPTCY

2010-04-22T19:19:00.000-07:00

The House Judiciary Subcommittee on Commercial and Administrative Law today weighed a bill to amend the Bankruptcy Code to allow private student loans to be discharged. Witnesses at the hearing today on H.R. 5043, the "Private Student Loan Bankruptcy Fairness Act of 2010," included Deanne Loonin of the National Consumer Law Center, John A. Hupalo of the investment firm Samuel A. Ramirez & Co., Inc., consumer Valisha Cooks and Adrian M. Lapas representing the National Association of Consumer Bankruptcy Attorneys. This proposed change in the law, if enacted by Congress, would make the private student loans that my clients obtained from Student Loan Xpress and KeyBank to attend SSH dischargeable in bankruptcy.

Bad News

2010-04-12T21:29:00.000-07:00

United States District Court Judge Thelton E Henderson signed a 23 page Order today Granting KeyBank's Motion to Dismiss Third Amended Complaint in the Northern District of California case entitled Matthew C. Kilgore et al. v KeyBank National Association, et al., Case No. C08-2958 TEH today. The judge dismissed the case with prejudice. This means that the case is lost, unless an appeal later reverses the judge. This is the same lawsuit in which Pinnacle Law Group sued Student Loan Xpress and AES and then later dismissed SLX after entering into the proposed class action settlement that is now awaiting approval or rejection by Judge Merryday in Florida.

Plaintiffs and their counsel sought to stop KeyBank and its loan services provider Great Lakes Educational Loan Services ("Great Lakes") from collecting the loans or reporting the loan balances to credit reporting agencies. Plaintiffs had 6 claims for relief, all of which were thrown out by Judge Henderson.

A full explanation of the judge's ruling will be posted later. For now, I quote the judge's conclusion: "Defendants' motion to dismiss is GRANTED. Plaintiffs first, second and sixth causes of action are dismissed for failure to state a claim, and their third, fourth and fifth claims are dismissed on federal preemption. The TAC (third amended complaint) is DISMISSED without leave to amend. The clerk shall enter judgment and close the file. IT IS SO ORDERED."

I spoke to Andy August of Pinnacle Law Group about this loss tonight and he described this loss as "the greatest disappointment" of his career.

For my clients throughout the country with KeyBank loans, this is not the end. I will continue my efforts on your behalf. For my clients with SLX loans, this loss for students with KeyBank loans underlines one of the reasons for the proposed settlement with SLX: the fact that when you do not settle, you risk a total loss in court.

A False Claim

2010-04-02T18:21:00.000-07:00

Someone opposed to the proposed class action settlement has asserted that the SLX SSH loans are no longer collectible because CIT Group (SLX’s parent company) has “written off” the SSH loans. This assertion is a false claim. I spoke with class counsel Andy August about this today. Here are his thoughts:

"This assertion is not true and is dangerously misleading. The person who made the accusation is neither a lawyer nor accountant and clearly lacks an understanding of the requirements for Securities and Exchange Commission filings, accounting, tax or federal securities laws. Regrettably, this assertion was made without prior consultation with Class Counsel (or any other lawyer, apparently).

From the very beginning of Class Counsels’ involvement in the case Class Counsel closely monitored CIT’s SEC filings regarding its SSH loan portfolio. Class Counsel has also been in touch with the lawyers who have filed securities class actions on behalf of investors in CIT. For example, everyone who attended and participated in the initial mediation in August 2008 knew that CIT had established a loss reserve for the SSH loans in excess of $120 million. In fact, this amount was one of the factual bases for the negotiations that followed. Class Counsel has monitored every subsequent SEC filing and nothing in any of the filings or the fact that CIT filed bankruptcy (SLX did not file bankruptcy) alters SLX’s ability to attempt to collect every dollar owed to it under the loans.

Class counsel has consulted with securities, accounting, bankruptcy and tax experts who have unanimously advised that CIT’s most recent filings, which treat the loans as “non-accrual” loans, have no effect whatsoever on SLX’s ability to collect from you the full amount of the loans if they prevail. The following is a lay explanation obtained by Mr. August of why a lender, under the circumstances present here, may make a change in how a loan is accounted on its books. It explains that “non-accrual” is not the same as walking away from a loan and that characterizing a loan portfolio as in “non-accrual”, has no impact on a lender’s ability to collect in any way:

Normally, the lender will treat itself as receiving income as interest comes due—accrues—on the loan. Under normal circumstances, the lender can expect to actually receive the cash in a very short period of time afterward. When a borrower defaults and does not pay its interest, and the default continues for several months, the lender will reach the point where it begins to doubt if it will ever receive the cash for the interest that is accruing. At that point, it does not make business sense and, in fact, is in many cases against federal securities laws, to keep acting as if the lender were receiving income. As a result, the lender places the loan on “nonaccrual”, and stops posting income from the loan. This is a bookkeeping and accounting action only. It does not mean the lender will not attempt to collect every nickel of money due to it.

Because there has been no collection activity on the SSH loans for more than two years, CIT is obligated to treat the loans as “non-accrual” loans in its SEC filings. However, CIT’s compliance with federal “Fresh Start Accounting” rules does nothing to change the realities of SLX’s ability to collect the SSH loans. Please do not think or believe otherwise."

I agree with Andy August's analysis. In my own bankruptcy practice, I have seen many instances of banks collecting on or selling old debts that others described as having been "written off."

As of today, Judge Merryday has neither approved of nor rejected the proposed settlement, nor has he given any indication of when he will issue his ruling. I will post complete information about his ruling as soon as the ruling is made.

A Strange Letter

2010-03-26T02:08:00.001-07:00

Many of my clients reported receiving a strange letter stating that their loan was being sold by Student Loan Xpress, Inc. to Student Loan Xpress, Inc. My investigation shows that this letter was sent in error by AES and that it has no effect whatsoever on the proposed class action settlement agreement.

Proposed Class Action Settlement for Former SSH Students with Loans from Student Loan Xpress Loans is "Under Submission"

2010-03-26T01:59:00.000-07:00

The hearing on the proposed class action settlement agreement took place on Monday, March 21 in Florida, but no ruling has been made yet. I spoke this week with Andy August of Pinnacle Law Group, one of the class counsel lawyers that attended the hearing on Monday. I also spoke with Robert Stone, one of SLX's lawyers that attended the hearing. Both reported that the judge heard argument and testimony for and against the settlement, and expressed concerns regarding several issues, including the interest rate reduction under the settlement agreement, the debt forgiveness schedule, and the tax treatment of any debt forgiveness. In the end, the judge said that he was taking the matter under submission. A ruling either approving or disapproving the proposed class action settlement is expected in the near future. The judge did not say when he would issue his ruling.

KeyBank Update

2010-03-26T01:00:00.000-07:00

This is a status update for all of my clients with KeyBank loans. I have signed a confidentiality agreement with counsel for KeyBank and am renewing my attempts to negotiate a proposed settlement agreement that I can recommend to you. I do not have any such agreement yet. Meanwhile, Andy August of Pinnacle Law Group is litigating a California Class Action Case against KeyBank. There is a hearing on KeyBank's Motion to Dismiss set for Monday, March 29, 2010. Although this action is limited to California students, if it is successful, it may help me to help former SSH students with KeyBank loans throughout the country.

Dispute Resolution Process

2010-01-27T23:50:00.000-08:00

I have noticed that the settlement administrator, counsel for SLX and class counsel have not yet resolved any of the disputes that have arisen so far regarding my clients' ratings. Instead, my clients get e-mails back from silverstatesettlement@gardencitygroup.com saying only that "we are investigating" or "the investigation is continuing." Many of my clients are concerned that these disputes will not be resolved before the February 13, 2010 deadline. It is now apparent that some of these disputes will not be resolved until after the February 13, 2010 deadline. I discussed this matter yesterday and today with class counsel Andy August and Kevin Rooney. Andy August assured me that the Settlement Administrator, counsel for SLX and Class Counsel are in the process of resolving the disputes that have been submitted regarding the number of certifications and the incorrect assignment to the settlement subclasses. There is a detailed settlement dispute process outlined in the Settlement Agreement. It generally works as follows:

1. Student’s Notice states more certifications than actually received while at Silver State (i.e., includes other certifications obtained before or after attendance at SSH);
2. Student contacts settlementquestions@gmail.com and is directed to follow instructions on the FAQs by submitting appropriate evidence to the Settlement Administrator (with a cover letter signed “under penalty of perjury”);
3. Student sends information and cover letter to the Settlement Administrator at Silverstatesettlement@gardencitygroup.com and sends hard copy to:

Silver State Loan Settlement Administrator
P.O. Box 9462
Dublin, Ohio 43107-4562

Be sure to send a copy to Class Counsel at the settlementquestions@gmail.com

4. Settlement Administrator sends e-mails back to student that "we are investigating" or "the investigation is continuing."
5. The Settlement Administrator then sends your evidence to both the Class Counsel and to SLX’s lawyers.
6. If SLX disagrees with the evidence submitted by the student, then the Class Counsel and SLX’s lawyers “meet and confer” about each student’s challenge. This will be done on an on-going basis. If there is no disagreement, the student is re-classified. If there is a disagreement, the Class Action lawyers will represent your interest before Judge William Cahill who will have the final say.

Many of these disputes may be resolved before the February 13, 2010 deadline, especially if you have submitted your evidence already or do so immediately. Some of these disputes will not be resolved until after the February 13, 2010 deadline.

You will not have to make any payments under the Settlement Agreement until you receive a “Reduced Monthly Repayment Notice” from SLX/AES which should reflect your proper classification by showing the proper amount due (it will not show a change in the number of certifications).

Here is the relevant part of the settlement agreement in its entirety:

"10. Dispute Resolution Procedure. If a Class Member disagrees with the number of FAA certifications, the corresponding percentage of unconditional debt forgiveness and conditional debt forgiveness being provided, or the amount of his/her Debt, the following dispute resolution procedure shall be used:

10.1 The Class Member shall send to the Settlement Administrator a written statement
signed under penalty of perjury setting forth the basis of the Class Member’s dispute and submitting his/her evidence or documentation to support that assertion (including any written statements from witnesses supporting the person’s position, log books, flight records, correspondence with Silver State, SLX, or AES, FAA records regarding the number of FAA Certifications obtained, and any other evidentiary material) (“Disputed Claim”). To be timely,the Class Member must send the Disputed Claim so that it is received by the Settlement Administrator on or before the Disputed Claim Deadline. No Disputed Claims received after the Disputed Claim Deadline shall be considered. No evidence or documentation received after the
Disputed Claim Deadline submitted in support of a Disputed Claim received prior to the Disputed Claim Deadline shall be considered.

10.2 The Settlement Administrator shall provide a copy of each Disputed Claim,
including any evidence or documentation submitted in connection therewith, to Class Counsel and to Counsel for SLX within ten (10) days of its receipt.

10.3 SLX’s counsel and Class Counsel shall meet and confer on the Disputed Claims.

If Class Counsel and SLX’s counsel agree as to the resolution of the Disputed Claims, their agreement shall control.

10.4 If SLX’s counsel and Class Counsel cannot reach agreement on the resolution of
the Disputed Claims, such Disputed Claims shall be submitted to retired California Superior Court Judge William J. Cahill (Ret.) of JAMS for resolution on or before ninety (90) days after the Notice Date [December 30, 2009]. SLX may submit evidence to Judge Cahill regarding any such Disputed Claim(s), with a copy to Class Counsel, by that same date. All Disputed Claims shall be decided by Judge Cahill without a hearing, unless such a hearing is requested by Judge Cahill, in which case, the participants may partic ipate by telephone. The parties shall request that Judge Cahill decide all Disputed Claims within thirty (30) days of their submission. The decision of Judge Cahill shall be final, non-appealable and binding on the Class Member and SLX. Judge Cahill’s fees, if any, shall be split equally between SLX and Class Counsel."

In every case that I have seen in which SLX made an error regarding the FAA certifications received by my clients, SLX has charged former students for certifications that they received before they attended SSH or after SSH filed bankruptcy. This certification information appears in section 7 of the Settlement Notices. It is important that every class member check the Notice carefully to see if he or she has been credited with the proper number of certifications and placed in the proper subclass.

Silver State Helicopters / Student Loan Xpress Class Action Settlement Conference Call 2 This Saturday @ 4:00 PM Pacific Time

2010-01-27T23:16:00.001-08:00

My last conference call on the SSH/SLX Class Action Settlement was a spirited one, with 135 participants! The vast majority have decided to take my advice and accept the benefits under the proposed class action settlement. Every day since then, I have answered numerous e-mails and spoken to many clients about the proposed settlement agreement. Due to popular demand, I am going to do another conference call this Saturday, January 30 from 4:00 pm to 6:00 pm Pacific Time.

To participate in this conference call, use the Conference Dial-in Number:
(641) 715-3200. When prompted, enter the following access code: 323990 followed by the # key.

Once connected to the conference, you will be able to talk and have access to the touch tone commands listed below.

Participant Feature Keys
*3 Exit - exit the call
*4 Instructions - conference instructions
*6 Mute/Unmute - caller controlled muting

This conference call will be a chance for all of my clients to ask me questions about the proposed settlement agreement and my reasons for recommending it.

Of course, all of my clients are always free to contact me personally by e-mail and by telephone. Many of you have already done so. In addition, I will continue to post FAQs about the settlement, and link to class counsels' FAQs re the settlement.

Silver State Helicopters / Student Loan Xpress Class Action Settlement Conference Call This Saturday @ 1:00 PM Pacific Time

2010-01-07T14:09:00.000-08:00

I have set up a conference call for all of my SSH clients with questions about the proposed class action settlement for former students of SSH who were still enrolled @ SSH on February 4, 2008 and whose student loans are now owned by SLX. This conference call will take place from 1:00 - 3:00 pm Pacific Time this Saturday, January 9, 2010. To participate in this conference call, use the Conference Dial-in Number: (641) 715-3200. When prompted, enter the following access code: 323990 followed by the # key.

Once connected to the conference, you will be able to talk and have access to the touch tone commands listed below.

Participant Feature Keys
*3 Exit - exit the call
*4 Instructions - conference instructions
*6 Mute/Unmute - caller controlled muting

This conference call will be a chance for all of my clients to ask me questions about the proposed settlement agreement and my reasons for recommending it. Senior Assocate Attorney Georgeann Nicol will be joining me in hosting this conference call.

Of course, all of my clients are always free to contact me personally by e-mail and by telephone. Many of you have already done so. In addition, I will continue to post FAQs about the settlement, and link to class counsels' FAQs re the settlement.

What Is The Secret Password?

2010-01-05T09:23:00.000-08:00

Class Action Counsel has posted a good set of class action frequently asked questions and answers @ http://www.jameshoyer.com/class_settlement.html

These FAQs are updated periodically, and are also set forth @ http://www.pinnaclelawgroup.com/news/silver_state_faqs.php

If you are a class member or potential class member and you want the secret password to access these FAQs, send an e-mail to settlementquestions@gmail.com.

SSH / Student Loan Xpress Class Action Settlement Notices Have Been Mailed Out

2010-01-04T18:32:00.000-08:00

10 Page Class Action Settlement Notices have been mailed out to all eligible class members. If you were a student enrolled at Silver State Helicopters on February 4, 2008 and you received a loan from Student Loan Express, you should receive this notice on or before January 11, 2009. If you have not received it, please send an e-mail to the settlement administrator at silverstatesettlement@gardencitygroup.com. Include your full name, current address, loan number, and social security number and say, "Please e-mail me a copy of my class action settlement notice."

There are 4 versions of the settlement notice. The first version is for students that all parties agree are in the class. The second vesion is for their co-signers. As to these students and their co-signers, as the notice says, "You do not need to take any action at this time in order to receive the benefits available under the settlement."

The third version is for students as to which the parties are uncertain as to whether or not the student was still enrolled at Silver State as of February 4, 2008. The fourth version is for their co-signers. These students and their co-signers must file a proof of claim by February 13, 2010 to receive the benefits under the settlement.

Here is how you can tell if you are required to fill in a claim form:

1. Section 1 of your Notice, "Why did I get this Notice," will say, "The Court sent you this Notice because you are a former student of Silver State, and your student loan is owned by SLX, but the parties have not been able to determine whether you were still enrolled at Silver State on February 4, 2008.

2. Section 13 of your Notice, "What do I have to do to participate in the settlement?," will say, "To qualify for settlement benefits, you or your co-signer must send in a claim form. A claim form is enclosed with this Notice. It must be completed and returned under penalty of perjury so that it is received by the Settlement Administrator by February 13, 2009."

3. A claim form will be attached to the Notice.

It is important that you read the Notice carefully!

The heart of the settlement agreement is a schedule which provides debt forgiveness based on the total number of FAA Certifications Received at Silver State.
0 Certifications = 75% debt forgiveness
1 Certification = 60% debt forgiveness

Most of my clients fit in one of these 2 categories.

2 Certifications = 47.5% debt forgiveness
3 Certifications = 30% debt forgiveness
4 Certifications = 20% debt forgiveness

Additional benefits of the settlement agreement as outlined in the Notice include the following:

Interest Forgiveness
"All interest that would have accrued on your loan between February 4, 2008 until shortly after final approval of the settlement will be forgiven."

Lower Interest Rates
"Interest on your restructured loan will accrue at the lower of either (a) your existing interest rate or (b) an new interest rate that is 3% lower that your existing rate, but that cannot be lower that 6%. Your new interest rate will remain a variable interest rate."

Early Repayment Refund
"If you timely pay off your restructured loan within five years of when the first payment is due, you will receive a refund equal to 2.5% of your original loan amount reduced by the debt forgiveness under the settlement."

Effect On Your Credit Report
"SLX has agreet to request that credit reporting agencies (Equifax, Experian, Innovis and TransUnion) remove any previous reports by SLX or its agents about your loan. But, if you fail to make your lower monthly payments after the settlement is approved or exclude yourself from the settlement, then SLX may make additonal reports."

From Today's Herald -Zeitung Newspaper in New Braunfels, Texas

2009-12-29T16:55:00.000-08:00

Settlement offered to Silver State students

By Chris Cobb
The Herald-Zeitung
Published December 29, 2009

Some measure of relief could soon be landing in the mailboxes of former students of Silver State Helicopters.

The nationwide flight school had plans to relocate its headquarters to New Braunfels before abruptly going bankrupt in February 2008 — cutting short flight training for thousands of students across the county who had already paid as much as $70,000 up-front through student loans.

After more than a year of bankruptcy proceedings in various states, a settlement offer to Silver State students from their largest lender is being mailed out this week, an attorney representing a number of the former trainees said Monday.

An agreement between 12 states was struck in October with Student Loan Xpress, which lent money to some 2,300 Silver State students nationwide, and is expected to have the company erase nearly $113 million in student debt.

The deal would forgive up to 75 percent of the loan amount for Silver State students who borrowed money from Student Loan Xpress.

Now that it is court approved, students can expect detailed notices explaining the settlement to arrive in early January, according to Michael Berger, a California-based bankruptcy attorney.

“I feel bad for people to have to pay anything, and I know that can be a great hardship,” Berger said. “But I think if they don’t take this deal, there’s a really good chance they could be stuck with 100 percent of the debt.”

Student Loan Xpress was the largest of three lenders used by Silver State’s more than 3,000 trainees — including nearly 50 in New Braunfels.

CitiBank had already forgiven 100 percent of the outstanding Silver State loans, although Citibank only represented around 100 students, Berger said.

A settlement is not expected any time soon with Key Bank, the third lender, according to Berger.

Although Texas was not one of the states that helped broker the settlement with Student Loan Xpress, it will still apply to Texas students.

“The settlement is written so that it applies to students in all states,” Berger said.

The settlement is only for students who were enrolled in Silver State when it went bankrupt.

The amount forgiven is based on a sliding scale, depending on whether a student received certification. If they did not receive any, 75 percent of their debt would be forgiven.

“I think it’s the best that can be done under the circumstances,” Berger said.

Silver State operated 34 campuses in 17 states.

It ran the air traffic control tower in New Braunfels, as well as a flight school.

Its bankruptcy in February 2008 cost the City of New Braunfels hundreds of thousands of dollars in unpaid fuel sales the company had been buying on credit, and left dozens of students and former employees wondering what to do next.

The large-scale legal battle over its bankruptcy has been going on ever since, with students waiting to hear if they might get some relief after paying thousands for training they would never receive.

“Everybody has just kind of been in limbo,” said Derrick Smith, president of Veracity Aviation, a helicopter flight school he started in New Braunfels after the bankruptcy. “No one has really known what’s going on.”

For the majority of students who borrowed from Student Loan Xpress, they might be getting some of their money back.

“It’s a drag to pay anything because they never got to be helicopter pilots,” Berger said. “But we think this is the best deal they’re going to get.”

SLX Class Action Settlement Q and A

2009-12-29T00:03:00.000-08:00

Q. When will I receive Notice of the Class Action Settlement?

A. Notices are being mailed out now. They are expected to be sent out by an independent administrator between December 28 and December 30, 2009. If you are my client and you have not received notice of the settlement by January 7, 2009 and you believe that you are a member of the class, you should e-mail me @ michael.berger@bankruptcypower.com and I will follow up for you.

Q. How has Michael Berger and his law firm been involved in the negotiation of the proposed class action settlement with Student Loan Xpress?

A. I have worked closely with class action counsel on this matter throughout the last 18 months. My work began before the first class action lawsuit was filed. I have strategized and consulted extensively with class action counsel and assisted them per their request, in the district court, in the bankruptcy court, and in the protracted negotiations with Student Loan Xpress.

Q. Why was this case settled in the District Court in Tampa, Florida and not in the Nevada Bankruptcy Court?

A. James, Hoyer filed the first Silver State Helicopters / Student Loan Xpress case in the District Court in Tampa, Florida on behalf of a former SSH student representing himself and all SLX/SSH students. Pinnacle Law Group filed a case in the District Court in San Francisco on behalf of all California KeyBank/SLX/SSH students. Thereafter, Class Counsel strategized with each other and with me about which venue would be the most favorable to the students’ legal positions. After thoughtful consideration of all issues and after discussing this at length with each other, we all decided that bankruptcy court was the least desirable forum. There were several reasons for this. First, all of the lawyers were concerned that we would be unable to get the bankruptcy court to exercise jurisdiction over a creditor versus creditor action that did not involve the debtor (SSH). Second, bankruptcy courts are usually unfamiliar with the very complex nuances of class action lawsuits because they very rarely see such cases. Third, we very likely would have been unable to have a jury trial on any of the issues because the ability to have a jury trial in bankruptcy court is very limited. Fourth, based on the state law legal issues in the case, the bankruptcy court would have been a far less appropriate forum to deal with these issues (as distinct from pure questions of bankruptcy law). Finally, and most importantly, we believed that the individual federal district court judges that were assigned to the cases filed by Pinnacle Law Group and the James, Hoyer firms would be more sympathetic to your interests than the bankruptcy court.

Although I initially told you that I would consider filing an adversary proceeding on behalf of my clients in the bankruptcy court, I become convinced over time that this was not the best way to pursue this matter. At the time that I made this proposal, there were no class actions on file in any court with regard to the SSH matter. After many hours of discussions with class action counsel as well as my own extensive legal and factual research about the best place to take your fight to the banks, I became convinced that bankruptcy court was not the best forum. After seeing how things played out, I am now convinced more than ever that I engaged in the correct analysis and made the correct decision.

Q. How did the settlement come about? What was the process?

A. Andrew August and Keven Rooney of Pinnacle Law Group and I began negotiations with SLX's counsel in mid-2008. After numerous telephone calls, e-mails, letters and in person meetings, we were approached by SLX’s counsel who inquired if we were interested in participating in a mediation to seek a negotiated settlement of the case. We agreed and the parties agreed to use Judge William Cahill (Ret.) in San Francisco to facilitate settlement discussions. In September 2008 we had our first mediation session with Judge Cahill. A Class Representative and Dan Reed were present and part of the mediation team. I attended by phone from Los Angeles. Although there was initial agreement on using FAA certifications as a basis for the settlement (largely because the information with the FAA was objectively verifiable) after more than 12 hours, we could not reach any common ground on the amount of debt forgiveness, interest rate reduction or other essential terms and we therefore adjourned the mediation. We then sent SLX a letter stating that we no longer were interested in discussing settlement given its unacceptable and intransigent positions on these crucial issues. In response to this letter, Judge Cahill contacted the parties and persuaded the parties to attend a second mediation session in November 2008. At this session, which also lasted in excess of 12 hours, progress was made but still no agreement was reached. The parties returned in December 2008 for a third session but again, no agreement was reached. Judge Cahill thereafter presented what he thought was a fair settlement for all parties and presented it to the counsel. Only then were the material terms agreed to.

For the next 10 months Class Counsel, myself, Dan Reed and Counsel for SLX negotiated the details of the written settlement agreement and related documents. Thereafter Attorneys General of a Multi-State Task force investigating SSH reviewed the settlement agreement and negotiated additional modifications as well as their own agreement.

Although SLX expressly denies any wrongdoing in the settlement, the amount of debt forgiveness achieved (more than $112 million dollars in principal alone) is to the best of our knowledge unprecedented in the world of student loan modification. While we do not know for certain SLX’s reasoning for agreeing to the terms of this settlement or its agreement with the Attorneys General, it is reasonable to assume SLX considered the factual allegations made in the course of our lawsuit including its failure to conduct adequate due diligence into SLX before making the loans, not ensuring the education and training was being provided before disbursing the loan proceeds to SLX and not adequately monitoring the students’ progress.

Q What role did Michael Berger and/or Dan Reed play in negotiating the terms of the settlement?

A. I played in integral role in our successful battle with the SSH Trustee to obtain a complete copy of the SSH computer system and in negotiating and drafting the terms of the settlement agreement dealing with the bankruptcy issues. I met and negotiated with counsel for SLX both with and without other Plaintiff's counsel. Dan Reed attended the mediation in San Francisco that eventually resulted in the settlement and has assisted Class Counsel in negotiating and drafting the settlement agreement and advising his personal clients on the terms of the settlement.

Q Can you discharge your student loan obligation to Student Loan Xpress by filing bankruptcy?

A. In a word, no. In general, student loans can NOT be discharged in bankruptcy absent a very difficult to make showing of "undue hardship." After extensive research, all Plaintiff's counsel agree that the Student Loan Xpress loans are in fact student loans that are NOT discharged by the mere filing of a bankruptcy. To even attempt to discharge these loans in bankruptcy, the debtor must file a separate Adversary Proceeding (a lawsuit against the lender within the bankruptcy case)and prove that repaying the debt would constitute "undue hardship." An example of undue hardship would be that the debtor is permanently disabled and will never be able to repay the loan. Temporary unemployment or low income is NOT undue hardship.

I recently reviewed a bankruptcy court decision in Texas involving a Silver State Helicopters student who went to the trouble and expense of filing an Adversary Proceeding to try to discharge his SLX loan. The court granted summary judgment against the SSH student and denied his request to discharge the debt to SLX.

While we have succeeded in several instances in winning these cases for students who attended other schools and were unable to work due to permanent physical or mental problems, in each case we charged a fee $10,000.00 in addition to the $2,000.00 fee for the bankruptcy itself. We also paid expert witnesses to document the disability. It was not cheap, easy or quick. These adversary proceedings are separate lawsuits within the bankruptcy case, and require all the work of a separate lawsuit including, but not limited to, the preparation of a summons, notice of status conference and complaint, discovery, including written interrogatories, requests for production of documents, requests for admission and depositions, status conferences, mediations, pre-trial and trial. Numerous motions may be involved as well. In short, don't count on bankruptcy getting you out of your debt to SLX. For a free, expert, personalized analysis as to whether or not you can meet this undue hardship standard, call me.

Q. What has Michael Berger been doing with regards to the SSH bankruptcy cases?

A. I have monitored both SSH bankruptcy cases from the very start. In addition to filing proofs of claim for all of my clients, I have reviewed all of the documents filed in the 2 cases and in the related adversary proceeding cases. To date, more than 1710 documents have been filed in the lead SSH case. I have been in regular contact with counsel for the Trustee and have reviewed all of the Proofs of Claim filed in the 2 cases.

Q. What is my proof of claim in the SSH bankruptcy worth?

A. My best estimate is that each one of the former SSH students proof of claim will be worth somewhere between $0 and $3,000.00. No one else has been willing to provide a dollar estimate. I am in regular contact with Tony Zmaila, the attorney for the Trustee. I review documents filed in the SSH bankruptcy cases every day. Here is where we stand: (a) Most assets of the estate have already been liquidated for the benefit of the secured lender Orix (b)Orix, the secured lender, has received most of its money back, but is still owed several million dollars (c) the bankruptcy estate is currently administratively insolvent, meaning that there is not enough money to pay all of the claims for legal fees, trustees fees, administrative rent, etc. that must be paid before any distribution is made to unsecured creditors; (d) The Trustee and Trustee's counsel have not objected to any of the former student's proof of claims because there is no point in doing so unless there is going to be any money for unsecured creditors; (e)Legal costs continue to rise, with additional recoveries for the estate being uncertain; (f) There is not telling if and when any distribution to creditors will be made; (g) There are more than $450,000,000 in unsecured claims against the SSH estate; If any distribution is made to former SSH students, priority claims will be paid before general unsecured claims. Unlike most of the proofs of claims prepared by other attorneys or by former students on their own, the proofs of claim that I prepared for my clients all included a priority claim for the maximum amount allowed for services paid for but not received: $2,425.00. It is this priority claim that is largely responsible for the high end of the range that I have set forth hereinabove. Priority claims are paid ahead of general unsecured claims.

Q. Which is worth more to me, the discount that the class action settlement gives me on my student loan or my proof of claim?

A. This is an easy question. Based on all of the information that is available to me,the value of the discount on the student loan far exceeds the value of the proof of claim in every case. As an example, if you received no certifications (75% discount) or one flight certification (60% discount) and you owe $70,000.00 to SLX, the savings to you before considering additional discounts for early payments or reduced interest rates is between $42,000 and $52,500.00. The value of your proof of claim is somewhere between $0 and $3,000.00. Giving up your proof of claim for this discount, something that is required under the proposed SLX class action agreement, is a good deal for you and is somthing that I would do myself if I was in your situation.

Q. Will the Bankruptcy of CIT Group have an effect on the proposed settlement?

A. No one knows. My best guess is that it will not have any impact on the proposed settlement.

Q. If SLX files bankruptcy, will that wipe out my debt to SLX?

A. No. The debt would then be payable to the bankruptcy estate of SLX. It is possible that the debt could be sold to a third party that would then try to collect the debt.

Q. Do I have to accept the proposed settlement if I am a class action member?

A. No, you can accept it or opt out of it. I recommend that you accept it, but if you are my client I will do my best for you either way. The problem with opting out is that you are betting that you can do better than all of plaintiffs' counsel and the attorney generals from 12 states have been able to do. Counsel for SLX has specifically stated that they will NOT offer more favorable terms to those that opt out. You will have to face the very real risk of being sued individually and the very real risk of SLX getting a judgment against you for the full amount of principal + attorneys fees and costs, with no discount.

Q. If I opt out of the class action settlment now, can I come back and accept it later?

A. No.

Q. If I am your client in the SSH matter, what is included in your representation of me and what is not included?

A. Included matters include (a) all negotiations with your SSH student loan lenders, regardless of whether it is SLX, KeyBank, Citibank, or as it is in a few cases, Sallie Mae or Deutsche Bank; (b) the filing and defense of your proof of claim in the Bankruptcy Court; (c) the monitoring of the SSH bankruptcy, and, if appropriate, any other action taken in the SSH bankruptcy case; (d) advice regarding the class action cases and my cooperation with class action counsel; (e) my cooperation with all governmental agencies investigation SSH, Airola, Pickett, EOS, and all related entities; (f) my ongoing efforts to get relief for you any way that I can, including political appeals; and, if appropriate, group litigation against KeyBank. For now, I am cooperating with class action counsel in its litigation against KeyBank, but I have reserved the right to file my own separate action if class action counsel is unable to achieve satisfactory results.

Matters that are not included in the $800.00 flat fee that each one of my SSH clients paid me: (a) The filing a personal bankruptcy for the former student (For this service, I charge an additional fee of $2,000.00 + 299.00 filing fee. This service is only available for my California clients);
(b) The filing of an Adversary Proceeding against your student loan lender within a bankruptcy proceeding (This is not recommended absent a showing of undue hardship and is subject to the payment of a $10,000.00 flat fee if I believe that you can in fact satisfy the undue hardship standard); (c) The defense of a lawsuit against you by your student loan lender (this is a real possibility for those who opt out of the class action settlement).

Q. Why should I agree to pay anything at all to SLX?

A. Because of the very real risk that if you turn down this settlement offer, you will may to pay much more later. I know that some of you feel that you should not have to pay any money to SLX. I am very proud and happy to have helped to achieve 100% debt forgiveness for my Citibank clients, and I sincerely wish that I could have done this for my SLX clients too. This simply was not possible in this case, despite my best efforts and the best efforts of class action counsel, other
Plaintiffs' counsel, and the attorney generals of 12 states. Each lender had separate facts. Thousands of documents have been reviewed, but there has been no "smoking gun" that would make it likely in my opinon that we could ever do better than the settlement offer that we now have. This case poses very unique risks for all parties. Many of the legal issues are novel ones that could be decided against you. Indeed, as my KeyBank clients are aware, KeyBank has refused to make any real settlement offer because it believes it will prevail on the legal issues (which are being litigated in the California federal district court and the 9th Circuit Court of Appeals by Pinnacle Law Group). Most importantly, the reality is that even if we prevailed at a trial, I cannot say the outcome would have been better because a judge could conclude that almost all of the students received some tangible or intangible benefit for which they should have to pay money. For all of these reasons, I strongly advise you to participate in the settlement.

Q. Is Michael Berger receiving any fee from SLX in connection with the proposed settlement?

A. No.

Q. How can I contact class action counsel to ask them questions about the settlement agreement?

A. Send your questions to settlementquestions@gmail.com.

Q. Will Michael Berger be attending any of the Town Hall Meetings to Discuss and Explain the Settlement Agreement?

A. Yes, I will be attending the Town Hall Meeting currently scheduled for Sunday, January 10, 2009 at 2:00 pm at the Long Bach Marriot Hotel, 4700 Airport Plaza Drive, Long Beach, CA 90815. I will answer questions at the meeting and will stay as long as needed after the meeting until each and every student attending has my answer to any question that he or she has.

Questions About The Class Action Settlement

2009-11-24T22:32:00.000-08:00

All former students of Silver State Helicopters with questions about the proposed class action settlement with Student Loan Xpress are invited to e-mail their questions to settlementquestions@gmail.com. This is a special e-mail address set up by class action counsel for this purpose. In addition, in person meetings with former SSH students and class action counsel are being set up for January, 2010 for Fort Lauderdale, Jacksonville, Melbourne, Oakland, Long Beach, Las Vegas, Salt Lake City and Poughkeepsie. I will be answering questions and giving my opinions at the Long Beach, CA meeting.

All clients of mine with questions about the proposed settlement are invited to contact me directly. Many of you have all ready done so. Every class member will have a chance to opt out of the proposed settlement agreement. If you do not like the agreement and think that you can do better, you will NOT be forced to accept the proposed settlement. You should wait until you have received all relevant information before you make this decision.

For former SSH students that are not in the class, it is important for you to know that class counsel do NOT represent you. You will not be covered by the class action settlement. This applies also to all class members who reject the proposed settlement. You will want to have the best possible legal representation to help you in resolving your ongoing SSH problems. I represent many students in this category. I am still signing up a limited number of former SSH students, including students that left SSH prior to its bankruptcy filing, students that are currently in bankruptcy, students with Loans from KeyBank, and students that paid off their SLX loans.

Court Grants Preliminary Approval of Class Action Settlement With Student Loan Express

2009-11-19T11:13:00.000-08:00

Earlier today, United States District Court Judge Steven D. Merryday signed an Order granting preliminary approval to the proposed class action settlement with Student Loan Xpress. A copy of the docket entry is set forth herein:

The following transaction was entered on 11/19/2009 at 2:04 PM EST and filed on 11/19/2009
Case Name: Holman v. Liberty Bank, N.A.
Case Number: 8:08-cv-305
Filer:
Document Number: 87

Docket Text:
ORDER granting [78], [82], [83]--motions re approval of class action settlement, approval of the manner and form of notice to class members, approval of the claim form, approval and establishment of proposed schedule for final confirmation of settlement, preliminary injunction to preclude parallel action, a conditional certification of the class for settlement purposes, and appointment of lead counsel for the settlement class and class representative; retaining jurisdiction of this matter for all purposes; directing that notice to class members shall be mailed by 12/30/2009; providing that class members file claims or objections by 2/13/2010; providing that filings supporting settlement or responding to objections shall be filed by 3/15/2010; scheduling a fairness hearing for 3/22/2009 at 8:30 a.m. Signed by Judge Steven D. Merryday on 11/19/2009. (BK)

A full copy of the Judge's Order is set forth herein:

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
MICHAEL HOLMAN, et al., on behalf of
themselves and all others similarly
situated,
Plaintiffs,
v. CASE NO.: 8:08-cv-305-T-23MAP
STUDENT LOAN XPRESS, INC.,
Defendant.
__________________________________/
ORDER AND PRELIMINARY INJUNCTION
The parties jointly move for (1) preliminary approval of a class action settlement,
(2) approval of the “manner and form of notice” to class members, (3) approval of the
claim form, and (4) approval and establishment of a proposed schedule for final
confirmation of the class action settlement (Doc. 78). Additionally, the parties move for
(5) a preliminary injunction to preclude any parallel action pending review of the
proposed settlement (Doc. 82), (6) a conditional certification of the class for settlement
purposes, and (7) the appointment of both lead counsel for the settlement class and
class representatives (Doc. 83).
Background
1. General Allegations
The plaintiffs sue, on behalf of themselves and others similarly situated, the
defendant, Student Loan Xpress, Inc., for (1) a violation of the Ohio Retail and
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 1 of 13
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Installment Sales Act, Sections 1317.01-.99, Ohio Revised Code, (2) aiding and
abetting fraud, and (3) negligent misrepresentation (Doc. 77).
The plaintiffs’ claims derive from the defendant’s partnership with Silver State
Helicopters, LLC (“Silver State”), an unaccredited helicopter flight training school. The
plaintiffs allege that Silver State promised each student a flight instructor certification
within eighteen months of the student’s enrollment. Silver State charged a total tuition
of approximately $70,000. The defendant worked with Silver State and solicited a
private loan application from each student in order to facilitate the student’s enrollment
in Silver State. After approving a student’s loan application, the defendant disbursed
the total loan amount to Silver State. However, rather than investing the money in
either equipment or faculty for helicopter flight training, each executive officer of Silver
State misappropriated the money for the officer’s personal use. As a result, Silver
State’s business functioned like a “ponzi scheme”—Silver State educated the school’s
first group of students by recruiting additional students. Silver State perpetrated the
scheme by misrepresenting or concealing (1) “anticipated tuition costs,”
(2) “employment opportunities,” (3) “the time frame for receiving [Federal Aviation
Administration (“FAA”)] ratings;” (4) Silver State’s “capability to provide adequate
equipment, proper training[,] and sufficient maintenance;” and (5) Silver State’s
“intended and actual use of the loan proceeds.” (Doc. 77)
To facilitate Silver State’s scheme, the defendant solicited loan applications
during each Silver State recruiting event. In order to insulate itself from liability, the
defendant purposefully failed to notify each student that the loan agreement was subject
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 2 of 13
1 Notice is required by the Federal Trade Commission’s (“FTC”) “Holder Rule.” See 16 C.F.R. §
433.3.3.
2 Excluded from the class is “(i) any borrower or co[-]signer whose loan has a zero balance as of
the Preliminary Approval Order date; (ii) any borrower or co[-]signer who would have no balance owing on
the loan as of the Preliminary Approval Order Date as a result of the unconditional and conditional debt
forgiveness made available under the settlement; (iii) any borrower or co[-]signer who has a Chapter 7, 11
or[,] 13 case pending as of the Preliminary Approval Order Date, and the corresponding borrow or co[-
]signer or such person; (iv) any borrower or co[-]signer who validly requests exclusion therefrom in
accordance with the procedures ordered by the Court; (v) any borrower or co[-]signer who executed a
release to resolve his/her potential claims against [the defendant] arising out of Silver State on or before
the Preliminary Approval Order Date, and the corresponding borrower or co[-]signer of such person; and
(vi) any borrower or co[-]signer included on a government list of known or suspected terrorists or other
individuals, entities or organizations of concern, including persons appearing on the United States
Department of the Treasury, Office of Foreign Assets Control List of Specially Designated Nationals and
Blocked Persons, and the corresponding borrower or co[-]signer of such person.” (Doc. 78-2, § 1.8)
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to any defense applicable to Silver State for failing to provide the promised educational
service.1 (Doc. 77) Omitting notice from the loan agreement allowed the defendant to
argue that the defendant was not subject to any defense arising from Silver State’s
failure to educate a student. In exchange for the defendant’s facilitating and
disregarding Silver State’s fraudulent scheme, the defendant collected a substantial
profit from the high interest rate on each student loan. On February 4, 2008, Silver
State ceased operating and filed for bankruptcy. When Silver State closed, many
students had obtained loans in order to pay Silver State’s full tuition, but only a small
percentage had received the promised education.
2. The Proposed Class & Subclass
The plaintiffs seek conditional certification of a class for settlement purposes. The
proposed class includes “(a) all persons who obtained a loan originated by Liberty Bank
to finance the payment of tuition to Silver State, whose loan is held by [the defendant]
as of the Preliminary Approval Order Date, and who were enrolled at Silver State as of
February 4, 2008[,] and (b) all persons who co[-]signed such loans.” (Doc. 78-2, § 1.8)2
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 3 of 13
3 “Subclass One” includes each class member that received no FAA certification, “Subclass Two”
includes each class member that received an FAA certification, “Subclass Three” includes each class
member that received two FAA certifications, “Subclass Four” includes each class member that received
three FAA certifications, “Subclass Five” includes each class member that received four FAA certifications,
and “Subclass Six” includes each class member that co-signed a loan. (Doc. 78-2, § 1.62-1.67)
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Pursuant to Rule 23(c)(5), Federal Rules of Civil Procedure, the proposed class is
divided into six subclasses “based on the number of Federal Aviation Administration
(“FAA”) certifications or ratings a student received before Silver State closed.”3
(Doc. 83)
Discussion
1. Conditional Class Certification
“A class may be certified ‘solely for purposes of settlement [if] a settlement is
reached before a litigated determination of the class certification issue.’” Borcea v.
Carnival Corp., 238 F.R.D. 664, 671 (S.D. Fla. 2006) (quoting Woodward v. NOR-AM
Chem. Co., 1996 WL 1063670, *14 (S.D. Ala. 1996)); see also Amchem Products, Inc.
v. Windsor, 521 U.S. 591, 618-20 (1997). However, the requirements of Rule 23,
Federal Rules of Civil Procedure, that serve “to protect absentees by blocking
unwarranted or overbroad class definitions [ ]demand undiluted, even heightened,
attention in the settlement context.” 521 U.S. at 620. The plaintiffs bear the burden of
establishing that each requirement of Rule 23(a) and at least one requirement of Rule
23(b) is satisfied. Rutstein v. Avis Rent-A-Car Sys., 211 F.3d 1228, 1233 (11th
Cir. 2000). Rule 23(a) permits class certification only if:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class; (3) the claims or
defenses of the representative parties are typical of the claims or defenses of
the class; and (4) the representative parties will fairly and adequately protect
the interests of the class.
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 4 of 13
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The numerosity requirement of Rule 23(a) is satisfied by the impracticability of
joinder, which is generally presumed if a putative class amounts to more than forty
individuals. Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546, 1553 (11th Cir. 1986); see
also Jones v. Firestone Tire and Rubber Co., Inc., 977 F.2d 527, 534 (11th Cir. 1992)
(finding that fewer than twenty-one individuals is generally inadequate). Commonality is
satisfied by the existence of “‘at least one issue affecting all or a significant number of
proposed class members.’” Fresco v. Auto Data Direct, Inc., 2007 WL 2330895, *2
(S.D. Fla. 2007) (quoting Fabricant v. Sears Roebuck, 202 F.R.D. 310, 313 (S.D. Fla.
2001)). Typicality is satisfied by showing the existence of “‘a sufficient nexus . . .
between the claims of the named representative and those of the class at large.”
Hines v. Widnall, 334 F.3d 1253, 1256 (11th Cir. 2003); Murray v. Auslander, 244 F.3d
807, 811 (11th Cir. 2001) (finding that “[a] class representative must possess the same
interest and suffer the same injury as the class members in order to be typical under
Rule 23(a)(3).”). Finally, class counsel and the class representatives are adequate
representatives of the class if (1) “‘plaintiffs’ counsel are qualified, experienced, and
generally able to conduct the proposed litigation’” and (2) the plaintiffs lack “‘interests
antagonistic to those of the rest of the class.’” Kirkpatrick v. J.C. Bradford & Co., 827
F.2d 718, 726 (11th Cir. 1987) (quoting Griffin v. Carlin, 755 F.2d 1516, 1532 (11th
Cir. 1985)).
In this action, the proposed settlement class satisfies the requirements of
Rule 23(a). The proposed class includes approximately 2,900 individuals. Each
individual was enrolled at Silver State as of February 4, 2008, when Silver State ceased
operating. The alleged harm to each individual arises from Silver State’s closure, and
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 5 of 13
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each individual’s promissory note contains the same choice of law provision. The
plaintiffs share the same interest, legal claim, and alleged injury as the proposed class
and subclass. (Doc. 83) Furthermore, each named plaintiff’s interest aligns with the
that of the proposed class and a division of the proposed subclass. Specifically, each
plaintiff (1) was either a student at Silver State when Silver State ceased operating or
co-signed a loan for a student at Silver State and (2) “vigorously pursued relief” in
reaching the settlement agreement on behalf of the entire class. (Doc. 83) The
plaintiffs’ counsel (the proposed class counsel) understands the plaintiffs’ claim,
possesses experience handling consumer and class action litigation, and stands “ready,
willing, and able to devote the resources necessary to litigate this case vigorously.”
(Doc. 83)
Rule 23(b) defines each type of permissible class action. Relevant to this action
is Rule 23(b)(3), which permits class certification upon a finding that “the questions of
law or fact common to class members predominate over any questions affecting only
individual members, and that a class action is superior to other available methods for
fairly and efficiently adjudicating the controversy.” Essentially, the rule requires a
determination of “whether proposed class[] [is] sufficiently cohesive to warrant
adjudication by representation.” 521 U.S. at 623.
In this action, the proposed settlement class is sufficiently cohesive and common
issues of fact and law predominate over any individual issue. Each individual was a
student at Silver State and obtained a loan, which the defendant holds, from Liberty
Bank. Each individual suffered the same alleged injury, in that no individual received a
complete education, at the time that Silver State ceased operating. Each individual
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 6 of 13
4 Contact information for the settlement administrator is provided in the notice to class members.
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seeks relief under the same legal theory and each individual’s promissory note contains
the same choice of law provision. To date, each action filed on behalf of a former Silver
State student is a collective or class action seeking relief for a financial obligation the
student incurred in exchange for a service that Silver State failed to deliver. As a
practical matter, requiring multiple actions by each student or several groups of students
would be financially burdensome and judicially inefficient.
Accordingly, the proposed class is CONDITIONALLY CERTIFIED for settlement
purposes. The settlement class includes “(a) all persons who obtained a loan originated
by Liberty Bank to finance the payment of tuition to Silver State, whose loan is held by
[the defendant] as of the Preliminary Approval Order Date, and who were enrolled at
Silver State as of February 4, 2008[,] and (b) all persons who co[-]signed such loans.”
In the event that the settlement fails to receive final approval, conditional certification is
revoked and the plaintiffs must move for class certification for the purpose of litigation.
Any member may request exclusion from the settlement class by contacting the
settlement administrator.4 The request shall include the member’s (1) full name,
(2) current address, (3) telephone number, (4) SLX loan number, and (4) signed
statement requesting exclusion from the settlement class in this action. Failure to timely
request exclusion from the class will render binding as to each class member any
judgment concerning the proposed settlement in this action.
Any member not requesting exclusion may object in writing to any term of the
proposed settlement or to class certification by contacting the settlement administrator.
An objection shall include the objecting member’s (1) full name, (2) current address,
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 7 of 13
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(3) telephone number, (4) SLX loan number, (5) objection; (6) notice of an intent to
appear that the final fairness hearing, if the member wishes to present the member’s
objection; and (6) any evidence or supporting document for the court’s consideration.
Any objecting member that notifies the settlement administrator of an intent to appear
must include the name, address, and telephone number of the objecting member’s
attorney (if applicable). Failure to notify will preclude, except for good cause shown, the
objecting member from presenting the objection at the final fairness hearing.
2. Appointment of Class Counsel & Class Representatives
Rule 23(g), Federal Rules of Civil Procedure, requires the appointment of class
counsel upon certification of a class. In appointing class counsel, the factors
considered are (1) “the work counsel has done in identifying or investigating potential
claims in the action;” (2) “counsel’s experience in handing class actions, other complex
litigation, and the types of claims asserted in the action;” (3) “counsel’s knowledge of the
applicable law;” and (4) “the resources that counsel will commit to representing the
class.” Considering the plaintiffs’ motion (Doc. 83), counsel’s experience with complex
litigation, counsel’s knowledge of the claim and applicable law, and counsel’s
committing the necessary time and resources to this matter, Christopher Casper of
James, Hoyer, Newcomer & Smiljanich, P.A. and Kevin F. Rooney of the Pinnacle Law
Group, LLP, are appointed as class counsel.
The plaintiffs, Michael Holman, Robert Perrotta, Kevin Wilhemy, Matthew Arnold,
Christopher Korte, and Deborah Pechacek, are appointed to represent the class.
Additionally, Robert Perrotta is appointed to represent “Subclass One,” Michael Holman
is appointed to represent “Subclass Two,” Kevin Wilhemy is appointed to represent
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 8 of 13
5 The defendant’s defenses include, for example, (1) preemption of the plaintiffs’ claims under the
National Bank Act, (2) the lack of a private right of action under the FTC Holder Rule, and (3) “numerous
complex individualized issues of liability, causation[,] and damages” that predominate over issues common
the proposed class. (Doc. 78, pp. 26-28)
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“Subclass Three,” Matthew Arnold is appointed to represent “Subclass Four,”
Christopher Korte is appointed to represent “Subclass Five,” and Deborah Pechacek is
appointed to represent “Subclass Six.”
3. Preliminary Settlement Approval
Rule 23(e), Federal Rules of Civil Procedure, permits approval of a class action
settlement if the settlement is “fair, reasonable, and adequate.” See Strube v. Am.
Equity Inv. Life Ins. Co., 226 F.R.D. 688, 697 (M.D. Fla. 2005) (Fawsett, J.). Approval is
generally a two-step process in which a “preliminary determination on the fairness,
reasonableness, and adequacy of the proposed settlement terms” is reached. See
DAVID F. HERR, ANNOTATED MANUAL FOR COMPLEX LITIGATION § 21.632 (4th ed. 2008).
The factors considered are (1) the influence of fraud or collusion on the parties’
reaching a settlement, (2) “the likelihood of success at trial,” (3) “the range of possible
recovery,” (4) “the complexity, expense[,] and duration of litigation, (5) “the substance
and amount of opposition to the settlement,” and (6) “the stage of proceedings at which
the settlement was achieved.” Bennet v. Behring Corp., 737 F.2d 982, 986 (11th
Cir. 1984).
In this action, no apparent fraud or collusion influenced the parties’ reaching a
settlement. The settlement is the product of both an arm’s length, “protracted and
contentious” negotiation with a mediator and two “mediator’s proposals.” (Doc. 78)
Success at trial is uncertain because the defendant possesses legal and factual
defenses to the plaintiffs’ claims as well as several grounds for challenging class
certification.5 The range of possible recovery under the proposed settlement is
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 9 of 13
6 The parties assert (Doc. 78) that twelve state attorneys general support the settlement. Also
supporting the settlement are two attorneys retained by two groups of Silver State students and various
class members. (Doc. 78, at 32) (Doc. 79).
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substantial and includes (1) conditional and unconditional debt forgiveness based on the
number of FAA certifications that a student received, (2) an early re-payment refund;
(3) a freeze on interest accrual from February 4, 2008, until final settlement approval;
(4) a reduced monthly re-payment rate, (5) amended reports to credit rating agencies;
(6) the payment of any attorneys’ fee, cost, or expense; (7) additional compensation to
each class representative not to exceed $5,000.00 per class representative; and (8) the
payment of any cost of notice to the class or of settlement administration. (Doc. 78-2,
§ 3.3) The combined conditional and unconditional debt forgiveness ranges from
seventy-five percent for a member of Subclass One to twenty percent for a member of
Subclass Five. The total unconditional debt forgiveness amounts to more than
$11,000,000.00 (Doc. 78-2, § 3.3.3) and the total conditional debt forgiveness amounts
to more than $100,000,000.00 (Doc. 78-2, § 3.3.4).
Furthermore, full litigation of this case would be lengthy, expensive, and highly
complex. The aggregate outstanding debt of the settlement class exceeds
$175,000,000.00 and class counsel has already incurred $100,000.00 in expenses. In
light of the high stakes involved, both parties are highly motivated to “aggressively” and
“vigorously” litigate this case. (Doc. 78, at 32) Additionally, substantial support exists
for the settlement,6 and the parties reached a settlement only after extensive
investigation, research, and negotiation.
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 10 of 13
7 Shealy v. Student Loan Express, Inc., No. 3:08-cv-03057-JFA (D.S.C. 2008); Hyatt v. Student
Loan Express, Inc., No. C09-1324-TSZ (W.D. Wa. 2009); Kilgore v. KeyBank National Assoc., No. C-08-
02958 (N.D. Cal. 2009); Mason v. KeyBank National Assoc., No. A 565943; Caney v. Airola, ADV 2008-
141 (Feb. 15, 2008) (settled); Elrod v. Airola, No. 08-A-10868-1 (July 25, 2008) (settled).
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Accordingly, the proposed settlement is preliminarily approved as a “fair,
reasonable, and adequate” compromise of the plaintiffs’ claim.
4. Preliminary Injunction
Pursuant to Rule 23(d), Federal Rules of Civil Procedure, and the All-Writs Act,
28 U.S.C. § 1651, the parties move (Doc. 82) for a preliminary injunction to preclude
any parallel or overlapping action pending final approval of the proposed settlement.
The All-Writs Act provides authority “to enjoin a party to litigation before it from
prosecuting an action in contravention of a settlement agreement over which the district
court has retained jurisdiction.” Henson v. Ciba-Geigy Corp., 261 F.3d 1065, 1068
(11th Cir. 2001); Demint v. Nationsbank Corp., 208 F.R.D. 639, 644 n.8 (M.D. Fla.
2002). Accordingly, “[f]ederal courts may invoke the authority conferred by the All-Writs
Act to enjoin parties from separate litigation to protect the integrity of a judgment
entered in a class action and to avoid re[-]litigation of issues . . . .” 208 F.R.D. at 644
n.8. In the context of a conditional class certification and an impending settlement,
“[t]he threat to the federal court’s jurisdiction posed by parallel state actions is
particularly significant . . . . “ In re Diet Drugs, 282 F.3d 220, 236 (3rd Cir. 2002)
(describing complex litigation as “especially vulnerable to parallel state actions that may
‘frustrate the district court’s efforts to craft a settlement in the multi-district litigation
before it’ . . . thereby destroying the ability to achieve the benefits of consolidation.”)
(citation omitted).
In this instance, the defendant faces several actions7 by former Silver State
students and a high probability exists that additional actions will be filed. (Doc. 82)
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 11 of 13
- 12 -
Accordingly, a preliminary injunction enjoining any overlapping or parallel action is
necessary to preserve this court’s jurisdiction to administer and enter final judgment on
the proposed settlement agreement.
5. Notice to Class Members
Rule 23(c)(2)(B), Federal Rules of Civil Procedure, requires notice to members
of a class certified under 23(b)(3). Notice must consist of the “best notice that is
practicable under the circumstances.” Furthermore, notice “must clearly and concisely
state in plain, easily understood language:”
(i) the nature of the action;(ii) the definition of the class certified; (iii) the class
claims, issues, or defenses; (iv) that a class member may enter an
appearance through an attorney if the member so desires; (v) that the court
will exclude from the class any member who requests exclusion; (vi) the time
and manner for requesting exclusion; and (vii) the binding effect of a class
judgment on members under Rule 23(c)(3).
In this action, the parties submit the proposed notice material for review and approval.
(Doc. 78-1, Ex. 1-6) The proposed notice and claim form appear to state all of the
required information in a relatively clear and concise manner and otherwise satisfy the
requirements of Rule 23(c). The parties’ proposed method of notice consists of the
settlement administrator’s mailing notice by first class mail to the most current mailing
address of each member of the settlement class. (Doc. 78)
Because the proposed method of notice is reasonable and the notice material
meets the requirements of Rule 23(c), the “manner and form” of notice to class
members is approved.
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 12 of 13
- 13 -
Conclusion
Accordingly, the parties motions’ (Docs. 78, 82, & 83) are GRANTED. The
plaintiffs, any class member, and any person acting on behalf of a class member are
ENJOINED from prosecuting, pending this court’s review of the proposed class action
settlement, any claim resolved by or subject to the proposed settlement. The court shall
retain jurisdiction over this matter for all purposes. Furthermore, (1) notice to each class
member shall be mailed no later than December 30, 2009; (2) each class member shall
object to the proposed settlement, object to the class member’s number of FAA
certifications, file a claim, or request exclusion from the settlement no later than
February 13, 2010; (3) any party that wishes to support the settlement or respond to
any objection to the settlement shall file any supporting or responding paper by
March 15, 2010, (4) a final fairness hearing on the proposed settlement is set for
March 22, 2010, at 8:30 a.m..
ORDERED in Tampa, Florida, on November 19, 2009.
Case 8:08-cv-00305-SDM-MAP Document 87 Filed 11/19/2009 Page 13 of 13

All States Covered By Proposed Class Action Settlement With Student Loan Xpress

2009-11-19T08:42:00.001-08:00

The proposed class action settlement applies to eligible class member students in all 50 states, regardless of whether or not their State Attorney General is a party to the Assurance of Voluntary Compliance Agreement entered into by Student Loan Xpress and the Attorney Generals for 12 states.

In re ArmorLite Roofing Technology, LLC Notice of Sale of Estate Property

2009-11-18T15:12:00.000-08:00

NOTICE OF SALE OF ESTATE PROPERTY
In re: ArmorLite Roofing Technology, LLC
United States Bankruptcy Court for the Central District of California
Case No. 2:09-bk-22974-SB
Sale Date: December 16, 2009
Sale Time: 11:00 a.m.
Sale Location: 255 E. Temple Street, Courtroom 1575, Los Angeles, California 90012
DESCRIPTION OF PROPERTY TO BE SOLD
ArmorLite Roofing Technology, LLC (the “Debtor”), proposes to sell to Wilton Acquisitions, Corp., a Delaware corporation, and its assignees (“Buyer”), all business fixtures, all leasehold improvements, all inventories, all goodwill and intellectual property, all existing contracts for the sale/delivery of roofing materials, all business records, all cash and marketable securities, and all accounts receivable (collectively, the “Purchased Assets”).
PROPOSED PURCHASE PRICE
$75,000.00
TERMS AND CONDITIONS OF SALE
Pursuant to the Purchase and Sale Agreement, dated October 2, 2009 (the “Purchase Agreement”), the Buyer does not assume the obligations and liabilities of Debtor, except for all sales contracts made in the ordinary course and any applicable property lease for the premises located at 11643 E. Telegraph Road, Suite 100, Santa Fe Springs, California 90670 (the “Premises”). The closing is the second Monday following Court approval of the sale. Debtor proposes to sell the Purchased Assets free and clear of all liens and encumbrances, except to the extent the liabilities and obligations of the Debtor are specifically assumed under the Purchase Agreement.

CONTACT PERSON FOR POTENTIAL BIDDERS
Michael E. Mahurin, Esq.
LAW OFFICES OF MICHAEL JAY BERGER
9454 Wilshire Blvd., 6th Floor
Beverly Hills, California 90212
Telephone: (310) 271-6223
Facsimile: (310) 271-9805

PROPOSED OVERBID PROCEDURES
1. On or before five (5) business days prior to the sale hearing, all potential overbidders (other than Buyer) must demonstrate to the reasonable satisfaction of Debtor that they are financially qualified so as to be able to perform all of the obligations arising under the Purchase Agreement. Such demonstration must include evidence of adequate cash or liquid assets on hand to close on the date required by the Purchase Agreement, executed by Buyer.
2. All potential overbidders shall be required to provide Debtor’s counsel with a non-refundable deposit of not less than $25,000.00 in cash or certified funds made payable to “Law Offices of Michael Jay Berger Client Trust Account” (the “Trust Account”) no later than 4:00 p.m., Pacific Time, of that day which is five (5) business days before the date set for the sale.
3. Any potential overbidder, at any time prior to the date set forth in (b), above, may obtain access to Debtor’s due diligence material by providing to Debtor’s counsel a refundable deposit of $10,000.00 in cash or certified funds made payable to the Trust Account. Any such potential overbidder must also sign a confidentiality agreement which provides that any non-public information they may receive in conducting due diligence shall remain confidential, shall not be copied and shall be returned to Debtor in its original format in the event the potential overbidder is not the successful overbidder. Upon determination by any such potential overbidder that said party chooses not participate as a qualified overbidder, that party shall notify Debtor’s counsel in writing of such intention and shall return all due diligence materials to Debtor prior to the date set forth in (b), above. Within three (3) business days of the receipt of such notification, and return of all due diligence materials, Debtor’s counsel shall return the deposit to the potential overbidder.
4. On or before two (2) business days prior to the date set for the sale hearing, all potential overbidders shall be required to execute a purchase and sale agreement on exactly the same terms and conditions as set forth in the Purchase Agreement.
5. In the event that there is at least one qualified overbid, the following terms shall apply to the non-refundable deposit submitted by all potential overbidders:
a. As to all parties, the entire $25,000.00 deposit shall be considered liquidated damages and shall be non-refundable, except as set forth in (5)(b) through (d) below;
b. If the Buyer is not the successful bidder, the Debtor shall reimburse Buyer any deposit paid;
c. In the event that Buyer is the successful bidder, the entire $25,000.00 deposit shall be refunded to all potential overbidders within five (5) business days of the date of the sale hearing; and
d. In the event that there is more than one qualified overbidder, and one of the overbidders is successful, any deposit paid by the Buyer and the unsuccessful overbidders’ deposits shall be refunded within five (5) business days of the sale hearing.
6. The minimum initial overbid shall be $5,000.00 for a total of $80,000.00. All subsequent overbids shall be in a minimum increment of $5,000.00. The actual minimum bid is subject to change as may be ordered by the Honorable Samuel L. Bufford, United States Bankruptcy Judge for the Central District of California (the “Bankruptcy Court”)
7. In the event of at least one qualifying overbid, the overbidding shall take place at the time of hearing for approval of the sale to Buyer, currently set for December 16, 2009, at 11:00 a.m., in Courtroom 1575, 255 E. Temple St., Los Angeles, California 90012. All potential overbidders must appear personally at the hearing, unless otherwise authorized by the Bankruptcy Court.
8. The successful overbidder must pay the balance of the purchase price with cash or certified funds made payable to Sell

Student Loan Xpress' Parent Corporation CIT Group Files Chapter 11 Bankruptcy

2009-11-02T07:06:00.000-08:00

CIT Group, the owner of Student Loan Xpress, filed a Chapter 11 bankruptcy Sunday night, November 1, 2009. CIT's bankruptcy filing will be the fifth largest in U.S. history. The 101 year old lender received a $2.33 billion taxpayer-financed bailout in December 2008. This taxpayer money will most likely be lost. The effect of CIT Group's bankruptcy filing on the pending class action settlement in the Student Loan Xpress matter and on all former Silver State Helicopters students who obtained loans from SLX is not yet known. Student Loan Xpress' website states that "Student Loan Xpress is a member company of CIT Group Inc." Because Student Loan Xpress itself did not file bankruptcy, there is no automatic stay preventing litigation against Student Loan Xpress from going forward.

Today

2009-10-27T13:45:00.000-07:00

2 BIG Developments today in the Silver State Helicopters matter. First, papers were filed in Federal Court in Tampa, Florida confirming that class counsel reached a proposed settlement with SLX whereby the loans of students enrolled at SSH when it ceased operations will be significantly reduced depending on the number of Federal Aviation certifications or ratings that student achieved at SSH before its bankruptcy and closure. The settlement benefits include debt forgiveness, lower interest rates, notification to credit reporting bureaus, and a refund for early repayment. Second, the attorney general task force that has been working on the SSH matter entered into a consent decree with Student Loan Xpress that will provide 112.7 million in debt relief to former students of SSH.

Here is the press release issued by the California State Attorney General:

Brown and 11 States Force Loan Provider to Forgive $112.7 million in Debts of Helicopter Flight School Students

"El Cajon-Attorney General Edmund G. Brown Jr. and 11 other state Attorneys General today forced Student Loan Xpress, Inc. to provide $112.7 million in debt relief to students facing a "mountain of debt" for helicopter flight instruction they never received.

Of the $112.7 million, approximately $25.5 million in debt relief will go to California residents who did not receive the training they paid for.

"These students did not obtain the helicopter instruction they were promised, yet Student Loan Xpress insisted that they pay off the full cost of their tuition," Brown said. "Without this agreement, Silver State flight school students would face a mountain of debt for training they never received."

Silver State Helicopters was founded near Las Vegas in 2002, and the company quickly grew. At its height, the school comprised 34 campuses in 17 states, and included 2,700 students who paid approximately $69,900 each. In California, Silver State Helicopters operated flight schools in Sacramento, Chino and El Cajon.

In August 2005, Student Loan Xpress became the preferred student loan provider for Silver State Helicopters, lending or servicing some $180 million in student loans.

Yet, even before it made its first loan, Student Loan Xpress had reason to believe that the school was in serious financial difficulty. Students complained of a shortage of instructors, flight simulators and helicopters. Only 10 percent of Silver State students graduated. Ultimately, the school filed for bankruptcy in February 2008.

Many students paid thousands of dollars of tuition, but did not receive the flight training they were promised in return. Regardless of the bankruptcy, Student Loan Express demanded that borrowers repay the full cost of the loans.

Consequently, several state Attorneys General launched an investigation, which determined that the two companies had a close business relationship, and that that Student Loan Xpress had failed to comply with the duty to provide required notices to borrowers. Under the settlement, Student Loan Xpress denied any wrongdoing.

After several months of negotiations, the attorneys general and Student Loan Xpress reached a settlement agreement. The settlement, in tandem with the resolution of a private class action, calls for Student Loan Xpress to restructure approximately $174 million of student debt, based on the number of Federal Aviation Administration (FAA) certifications each student obtained. The fewer certificates obtained, the larger the amount forgiven. The average debt relief for students under this settlement is $46,016.

The company also agreed to:
- Forgive an additional 2.5 percent of the student loan if the adjusted loan is repaid within five years;
- Refrain from providing negative information to credit reporting agencies with respect to any loan restructured; and
- Forgive interest between the dates Silver State Helicopters filed for bankruptcy and approximately the end of 2009.

Student Loan Xpress will also pay $125,000 in legal expenses to the states. The states joining California in today's settlement are: Florida, Georgia, Idaho, Illinois, Missouri, Montana, Nevada, Oklahoma, Oregon, Utah, and Washington.

The $112.7 in debt forgiveness included in this settlement includes the total relief provided in both the states' settlement with Student Loan Xpress, and the proposed settlement in a private, nationwide class-action called Holman et al v. Student Loan Xpress, Inc. That class action was filed in federal court in Florida.

Student Loan Xpress borrowers with questions about the settlement are asked to contact the settlement administrator in this matter by e-mail, at settlementquestions@gmail.com." (Andrew August reports that the reference to the Gmail email address in the Attorney General's press release and in other media accounts is is wrong: "It is not an email address for the settlement administrator. Rather it is our private, secure email account through which we will be able to answer questions. Of course it will not be operational until the court grants preliminary approval of the settlement.")

To read the Assurance of Voluntary Compliance Agreement entered into by Student Loan Xpress and the Attorney Generals for 12 states, click on this link:

http://ag.ca.gov/cms_attachments/press/pdfs/n1827_studentloanxpress.pdf

Here is more information from the press release issued by Andrew August aaugust@pinnaclelawgroup.com and Chris Casper ccasper@jameshoyer.com , two of the leading class counsel lawyers that will directly respond to questions from class members once the proposed settlement has received preliminary approval from the court:

"The parties have requested that the federal court overseeing the action preliminarily approve the settlement and authorize notice of the terms of the proposed settlement to be disseminated to class members. The notice will contain detailed information about the terms of the settlement, class members' options, and ways to obtain additional information about the settlement. The court will then hold a hearing to decide whether to grant final approval of the settlement.

In additon to Class Counsel, numerous other attorneys who individually represented Silver State Students, including Daniel Reed from Utah (representing more than 300 students nationwide) and Michael Berger from California (representing more than one thousand students nationwide) have closely reviewed the settlement and uniformly and unconditionally support it. Moreover, Attorneys General from more than 10 states reviewed and enhanced the terms of the proposed settlement, while also reaching a separate agreement with SLX."

I will post additional information about the proposed class action settlement agreement in the days to come. Clients of mine who want individual, personal advice about the pros and cons of this proposed settlement agreement for them are urged to wait until the court gives its preliminary approval to the proposed class action settlement, approves a manner and form of notice, and establishes a proposed schedule for final approval of class action settlement. All class members will receive a notice in the mail and will have at least 45 days to consider the proposed settlement agreement. I will then happily answer any and all questions from my clients by e-mail and by telephone. Clients of mine who choose to opt out of the proposed class action settlement agreement or who are not covered by the proposed class action settlement agreement will still be represented by me and I will continue to use my best efforts on their behalf.

The proposed class action settlement only covers former students of Silver State Helicopters who obtained loans from Student Loan Xpress to attend SSH and who were still enrolled at SSH at the time that it filed its bankruptcy petition. If you got your loan from KeyBank or paid cash and/or if you were not enrolled at SSH at the time that it filed bankruptcy, you are not covered by the pending proposed class action settlement.

Tomorrow

2009-10-21T09:30:00.000-07:00

The proposed class action settlement agreement with Student Loan Xpress will be submitted to the Court tomorrow or Friday for preliminary approval. I will post detailed information about the proposed settlement as soon as it is filed with the Court. If and when the proposed settlement agreement is approved by the Court, as I expect it will be, written notice will be sent out to all class members. This Notice will give you detailed information about the settlement agreement, and will provide ample time for you to evaluate the merits of the settlement for you.

For my clients with KeyBank loans and my clients who paid cash to attend SSH, I am continuing to work for you and will post further updates as soon as there are important developments that affect you.

SSH In The News (Las Vegas Sun, October 8, 2009)

2009-10-09T09:30:00.000-07:00

Ex-sheriff candidate accused of fraud tied to bankruptcy
Trustee: Silver State Helicopters sought cash, students as finances worsened

Steve Marcus

Jerry Airola, president of Silver State Helicopters, poses on a MD500 jet helicopter in early 2008 piloted by Topper Nelson at the North Las Vegas Airport.

By Steve Green (contact)

Thursday, Oct. 8, 2009 | 5:32 p.m.

Jerry Airola
Related Document (.pdf)
See the complaint against Jerry Airola
Sun Coverage
Students rage about flighty helicopter school (2-15-08)
Airola powers down helicopter company (2-4-08)
Airola unable to capitalize on scandal (11-2-06)
Former Clark County sheriff's candidate Jerry Airola is under fire in his helicopter company's bankruptcy case, with a trustee suing Airola and others to recover millions of dollars the trustee says were fraudulently transferred prior to the bankruptcy.

Silver State Helicopters LLC shut down and filed for bankruptcy protection in February 2008, with Airola saying at the time the company was hurt by a lack of funding for student loans that the company needed to run its flight schools.

Reports at the time said the shutdown involved 30 locations around the country, put 750 employees out of work and left some 2,700 students stuck with student loan payments for instruction they would no longer receive.

A report in Inc. Magazine said that three years before the bankruptcy, Silver State had posted $40 million in revenue. An industry observer said the problem with Silver State was that it promoted training for helicopter pilots at a time when there wasn't a big demand for such pilots.

With operations in Southern Nevada including the Boulder City and North Las Vegas airports, Silver State filed for Chapter 7 liquidation in U.S. Bankruptcy Court for Nevada and attorney James Lisowski Sr. was appointed trustee in the case.

Lisowski, who has been working to sell assets to recover funds for creditors, last month filed an adversary lawsuit alleging the fraudulent transfers.

The suit was filed against Airola, former Silver State Chief Financial Officer Steve Pickett, First American Equity LLC (allegedly controlled by Airola and Pickett) and Stars & Stripes Heliplex LLC (allegedly controlled by Pickett and businessman Steve Trenk).

Pickett could not be located for comment on the accusations. But attorney Nile Leatham, who represents Airola, said Thursday that he was preparing to file a response disputing the allegations.

"I don't believe the complaint is meritorious," Leatham said.

The trustee's lawsuit, seeking to recover funds from the defendants for creditors, alleges that in 2007 Airola and Pickett made a deal to recapitalize the company that resulted in Airola being paid more than $10 million.

By entering into a $40 million revolving credit line with Orix Commercial Finance LLC in 2007, of which $31 million was due in February 2008, and continuing to seek helicopter students in 2007, Airola and Pickett left Silver State vulnerable to bankruptcy, the trustee charged.

In 2007 "Airola and Pickett caused (Silver State) to continue its course of offering training to student pilots; courses that (Silver State) did not have the resources to service and complete," the lawsuit charges.

The suit detailed these deals:

--The spring 2007 transfer of assets of an Airola company, Air Excel Inc., which had a lease with the Boulder City Airport, to Stars and Stripes Air Tours LLC for $2.4 million. The deal included Stars and Stripes paying off a mortgage at the Boulder City Airport, $1.2 million in cash and a $700,000 promissory note, the suit said.

--The August 2007 transfer by Silver State to First American of a heliport at the North Las Vegas Airport, $1.2 million in cash, the $700,000 Stars and Stripes note and all the issued and outstanding shares of Air Excel. First American paid nothing for these assets, the lawsuit charges.

--The June 2008 transfer of the heliport from First American to Stars & Stripes Heliplex.

"During the period from April 2007 through August 2007, Airola and Pickett caused (Silver State) to divest substantial assets," the lawsuit charges. "By this series of transactions, Airola, Pickett and First American stripped (Silver State) of assets, for their personal benefit, worth at least $7 million, in the 10 months immediately preceding the filing of the bankruptcy."

The trustee claims Silver State was insolvent when some of these deals were made, meaning Airola and Pickett allegedly received some assets that rightfully should go to creditors.

Silver State "made the transfer with the actual intent to hinder, delay or defraud" creditors, the lawsuit said of the deals in which the heliport, Air Excel shares, Stars and Stripes note and $1.2 million in cash were allegedly transferred by Silver State to Airola, Pickett and First American.

Silver State also "received less than a reasonably equivalent value" in the deal, the suit charges.

The suit also asserts claims of breach of fiduciary duty, unjust enrichment and conversion against Airola and Pickett.

The trustee seeks damages of $8.2 million against Airola, Pickett and First American, plus interest from August 2007.

His suit also seeks a judgment against the defendants for the fair market value of the heliport, the Stars and Stripes note and the Air Excel shares at the time they were transferred.

"This action by the trustee is a good thing for all legitimate creditors of SSH (Silver State Helicopters). It may help to bring money back into the SSH bankruptcy estate. Meanwhile, we are all still waiting to see if any governmental agency will bring criminal charges against Airola and Pickett," said California attorney Michael Jay Berger, who represents student creditors in the case.

In June 2008, In Business TV, a sister production of the Las Vegas Sun, reported FBI agents had interviewed Silver State students as potential crime victims.

Berger, too, said Thursday that he has thousands of student loan clients who have received questionnaires from the FBI. He said some 15 state attorneys general from around the country have been looking into the issue.

Students typically borrowed $70,000 at interest rates of as high as 15 percent, he said. Citibank has forgiven the loans of 68 of his clients, he's working with Key Bank in behalf of another 179 clients and is close to a settlement for 1,090 clients with the major lender Student Loan Xpress, Berger said.

But for students who paid cash, recovering their losses may be challenging because of a lack of assets in the case and the first-lien claim of Orix.

"The bad news is we're pretty far in the hole in this case," Berger said.

Leatham, in disputing the allegations in the trustee lawsuit, said he believes the key issue is whether the company was solvent when the transactions were made.

"It was a strong going-concern company at that time," Leatham said, arguing its demise was caused by the economic downturn and the drying up of student loan funding.

Not Yet

2009-10-08T12:02:00.000-07:00

Predicting exactly when a proposed class action settlement agreement will be submitted to the Court has proven to be difficult. This proposed agreement will cover most former SSH students who obtained loans from Student Loan Xpress to attend Silver State Helicopters and were still enrolled at SSH at the time that it filed bankruptcy. It now looks like the settlement papers will be filed with the Court somewhere between next Tuesday, October 13 and next Friday, October 16. All class members will have a chance to accept the settlement or "opt out" and reject the proposed settlement. Many of my clients have pressed me for the details of this proposed agreement, but until it is submitted to court, these details are still covered by a written confidentiality agreement.

Silver State Helicopters Trustee Sues Jerry Airola and Steve Pickett

2009-09-29T13:07:00.000-07:00

On September 15, 2009, James F. Lisowski, Sr. Chapter 7 Trustee for Silver State Helicopters, LLC ("SSH") and Silver State Services Corporation, filed an Adversary Proceeding Complaint ("The Complaint) against Jerry Airola ("Airola"), Steve Pickett ("Pickett"), First American Equity, LLC ("First American") and Stars & Stripes Heliplex, LLC. The Complaint seeks the avoidance of preferential and fraudulent transfers of assets and the recovery of more than $8,200,000.00 in damages from the defendants based on Claims for Relief for Recovery of Preference, Avoidance of Fraudulent Tranfer, Breach of Fiduciary Duty, Unjustment Enrichment and Conversion.

Airola was the President and Founder of SSH. Pickett was the Chief Financial Officer of SSH. Airola and Pickett are the members of Defendant First American and Defendant Stars & Stripes Heliplex, LLC.

The Complaint alleges the fraudulent and preferential transfer of assets from SSH to First American, including the transfer of 1.2 million dollars in cash, a $700,000.00 promissory note, all issued and outstanding shares of Air Excel, a company owned by SSH, and real property located at 500 E. Cheyenne Avenue, North Las Vegas, Nevada, all for no consideration. The Cheyenne Avenue property is alleged to include a private airport, one of the few facilities approved as such in the greater Las Vegas area.

The Complaint further alleges that between April 2007 and August 2007, Airola was paid in excess of ten million dollars pursuant to a "Recapitalization Agreement." During the same period of time, Airola and Pickett caused SSH to enter into a revolving $40,000,000.00 credit line with Orix Commercial Finance LLC. Less than 6 months later, Silver State Helicopters, LLC filed its Chapter 7 bankruptcy.

This action by the Trustee is a good thing for all legitimate creditors of SSH. It may help to bring money back into the SSH bankruptcy estate. Meanwhile, we are all still waiting to see if any governmental agency will bring criminal charges against Airola and Pickett.

One More Week

2009-09-29T12:59:00.000-07:00

Final documents are being prepared now regarding the proposed class action settlement between Student Loan Xpress and many of the former Silver State Helicopters students who received loans from Student Loan Xpress to attend Silver State Helicopters schools throughout the country. My best estimate is that these documents will be submitted to the Court on or before October 5, 2009. I will post an update to my blog regarding the terms of the proposed settlement as soon as these documents are filed with the Court.

SLX Settlement Delayed Until September 28, 2009

2009-08-31T18:57:00.000-07:00

A proposed Settlement Agreement covering the vast majority of my clients with loans from Student Loan Xpress, as well as most other former SSH students with loans from SLX, has been delayed until September 28, 2009. This delay was caused by the ongoing negotiations between SLX and the AG Task Force.

Silver State Helicopters Students Near Settlement With Student Loan Xpress

2009-08-06T20:37:00.000-07:00

A proposed Settlement Agreement covering the vast majority of my clients with loans from Student Loan Xpress, as well as most other former SSH students with loans from SLX, is scheduled to be filed in United States District Court on August 31, 2009. This proposed nationwide class action settlement is to be filed in United States District Court Middle District of Florida Tampa Division Case No. 8:080cv-00305-SDM-MAP. All leading counsel representing former students of SSH have joined together to negotiate and approve the best possible settlement for our former SSH student clients. These attorneys include myself, Andrew August and Kevin Rooney of the Pinnacle Law Group in San Francisco, and Chris Casper of Tampa, Florida. Certain state Attorney Generals, including the Florida Attorney General, who have undertaken a cooperative investigation of the business practices of SSH and the events leading to its closure in February of 2008 (The AG Task Force), are reviewing the proposed settlement and using their influence to get the best possible settlement terms for former SSH students. These settlement negotiations have been ongoing for more than one year, and include three mediation sessions before retired Judge William Cahill in August, September and December of 2008 in San Francisco, California. The parties have engaged in confirmatory discovery and exchanged multiple drafts of a more than sixty page settlement agreement. Plaintiff's counsel have conducted extensive independent investigation and analysis, including obtaining a copy of SSH's computer and hard copy records. 3 separate putative class actions are pending against SLX on behalf of Student borrowers of SSH, and all of these actions may be said to have helped facilitate the proposed settlement. Most of this formerly confidential information has been set forth in pleadings filed in the above referenced District Court Case and can now be shared with you. The terms of the proposed settlement must remain confidential until the proposed agreement is filed with the Court. I will post full details regarding the proposed settlement agreement on this blog at the earliest possible time. Each client of mine with loans from Student Loan Xpress will be contacted individually regarding this settlement proposal.

Silver State Update

2009-04-23T09:00:00.000-07:00

Patience is a virtue. Have you heard that one before? The Silver State Helicopters case is definitely one that has required both action and patience on my behalf and on behalf of all of my clients. For my Citibank clients, I have already achieved 100% success. For all others, the work continues.

Right on Citibank

When Citibank first offered to forgive 100% of my Citibank clients’ SSH student loan debt in all states except California in exchange for an assignment of the clients’ proofs of claim in the SSH bankruptcy, there were a few skeptics. Some suggested that there must be a catch. They said that perhaps Citibank would sell the loans to a third party that would then try to collect. They asked if the students would be sent a 1099 and incur debt settlement income. They wondered aloud if the client’s credit would be trashed. Here is the reality of what has happened:

1. The Citibank offer was expanded and extended to all former SSH students with took out student loans from Citibank to attend SSH, including all of my California clients with Citibank loans.

2. All of my clients with Citibank loans took my advice and accepted Citibank’s offer of 100% loan forgiveness.

3. Citibank did not resell the loans to any third party.

4. Citibank did not send 1099s to any of my clients.

5. Citibank kept its promise to completely remove all reference to the Citibank loans from its credit reporting to all credit reporting agencies.

6. Now, in an unprecedented development, Citibank has agreed to refund all of the money that one of my Citibank clients paid on his Citibank loan prior to receiving Citbank's 100% debt forgiveness offer.

I think it is fair to say that I was right on Citibank. In saying this, I acknowledge the role of Andrew August and Kevin Rooney of the Pinnacle Law Group in helping to achieve this result.

Still Waiting on SLX

On February 18, 2009 I wrote a post on this blog entitled "SLX is Next" in which I stated my belief that SLX would be the next lender to settle with my SSH clients and told my clients with SLX loans to "look for an announcement in the next 30 days." 64 days later, we are all still waiting for this settlement offer that I can recommend to my clients. As I have stated before on this blog, settlement negotiations with SLX are covered by a written confidentiality agreement. This prevents me from discussing the settlement negotiations and the proposed terms of the settlement offer. I will use my best efforts to resolve any remaining differences and to get each and every one of my SSH clients with SLX loans the best possible settlement offer. All Plaintiffs' counsel are cooperating on this matter. Counsel for SLX is the Los Angeles office of Sidley & Austin, with attorney Jennifer Landau acting as lead counsel for SLX. I will e-mail all of my SLX clients with the details of this settlement offer as soon as the offer is made public.

Come On, KeyBank

KeyBank is firmly in last place when it comes to settling with its clients that obtained student loans to attend SSH. Nixon Peabody LLP is counsel for KeyBank on the SSH matter, with Scott O'Connel of the Manchester, New Hampshire branch of the firm serving as lead counsel. Although there have been general discussions and an unsuccessful mediation, there has not been any reasonable settlement offer from KeyBank and its counsel. KeyBank seems to want to wait and see what happens with Citibank and SLX first. With Citibank resolved and SLX well on its way, I am hopeful that real progress will be made soon with KeyBank. On a more positive note, KeyBank continues to honor its no payment while this matter is in dispute offer and has not sued any of my clients. For that matter, I have not received any reports of any lawsuit by SLX against any of my clients either.

Still Out of the Money in the SSH Bankruptcy Case

On November 4, 2008, I wrote that "For now, it appears that the SSH bankruptcy estate is administratively insolvent. This means that there is no money to pay to unsecured creditors and that administrative creditors may receive less than full payment on their claims." 1,620 separate pleading have been filed in the SSH bankruptcy since it was filed on February 5, 2008, but my analysis remains the same: There is no money to pay to unsecured creditors. There has been no indication of when, if ever, a distribution will be made to the unsecured creditors. This is true even for my clients who have made part of their claims priority claims that get paid ahead of general unsecured creditor claims. So far, the best thing that I have been able to do with my clients' proofs of claim against SSH is to trade them to the lenders in exchange for loan forgiveness, as we did with Citibank. Efforts continue on a daily basis to bring additional assets into the bankruptcy estate. If and when I believe that there will be a distribution to my clients from the bankruptcy estate, I will post further information on this subject.

Is Delay Good For You?

It's better than losing. It's better than being sued. It gives the FBI and the State Attorney Generals more time to investigate and develop a case. Public opinon and government pressure can help us. Banks that take government money may be held accountable to the government. In my opinion, delay is better than accepting anything less than the best offer that I can get for you.

Continuing Bankruptcy Legal Education

2009-04-23T08:28:00.000-07:00

Every month of the year, I take classes, seminars and programs in bankruptcy law. Every week, I read bankruptcy journals and newsletters. I go far beyond the minimum requirements for continuing my status as a Specialist in Bankruptcy Law, Certified by the California Board of Legal Specialization of the State Bar of California. On March 13,2009 I participated in an all day program put on by the American Bankruptcy Institute in Beverly Hills, California entitled, “Bankruptcy Battleground West.” Subjects covered included emerging real estate issues in bankruptcy, selling assets in bankruptcy proceedings, and the economic forecast for 2009. Many prominent bankruptcy attorneys from across the Country attended, as did the United States Trustee for Region 16 and 5 of the bankruptcy judges from the Central District of California.

On Saturday, April 11, 2009 I attended the Central District Consumer Bankruptcy Attorney Association program on Tax Issues in Bankruptcy at Southwestern Law School.

On May 15-17, I will be attending the California Bankruptcy Forum Conference at the Loews Coronado Bay Resort in San Diego, California. Every bankruptcy judge in California is invited to attend this program free of charge for both the judge and a guest, including the cost of resort lodging, food and all programs. In return, the judges help to teach the attending bankruptcy attorneys about recent developments in bankruptcy law. Most of the Judges in the Central District of California where I practice accept this offer every year. Past year’s events that I attended in Napa and in Palm Desert allowed me not only to further my bankruptcy education, but also to get to know more of the judges on a personal level. This event is always both educational and fun.

We Do Loan Modifications Too

2009-04-23T08:25:00.000-07:00

Loan Modification is a hot topic now. Many firms throughout the country are offering loan modification services. Often, the attorney who solicits the business is a front for others or there is no attorney involved whatsoever. They take on any client who can pay their fee, with little or no regard for the likelihood of success. Many of the firms collect illegal up front fees, do little or no work, and leave a trail of consumer complaints in their wake.

At my law office, all loan modification work is done by me and by the Senior Associate Attorneys that work for me. We do not take cases that we think are unlikely to succeed. As with our bankruptcy work, we offer a free consultation to anyone and everyone who is interested in receiving our help.

Our fee structure is simple: $2,500.00 for the first loan on any property and $1,250.00 for any second or third loan on the same property. Unlike other loan modification firms, we offer a full range of bankruptcy services when needed. Sometimes the elimination of debts in a bankruptcy proceeding can increase the likelihood of a successful loan modification after the bankruptcy case is concluded. Other times, a successful loan modification can avoid the need for a bankruptcy altogether.

Boston Marathon 2009

2009-04-23T07:54:00.000-07:00

My running friends know that I am a regular participant in the Boston Marathon. On Monday, April 20, 2009, I completed my 6th Boston Marathon, finishing in a time of 3:39:36. In addition to competing as an individual, I was part of a Men’s Masters Team for Track Club Los Angeles (“TCLA”).

The race was exciting as always and the crowd support was fantastic. The woman’s race was decided by one second. I had the pleasure of meeting many of the top finishers in the race, including the female winner of this year’s Boston Marathon Salina Kosgei, and the 2 top finishing Americans, Kara Goucher and Ryan Hall (both finished third). Shown above are some photos of me and my new friends.

A "Key" Victory for Flight School Students

2009-03-10T16:31:00.000-07:00

This article should be of interest to all of my SSH clients with loans from KeyBank. It is reprinted from the Higher Ed Watch Blog where it was posted earlier today:

"It appears that KeyBank's predatory private student loan practices are finally catching up with the company.

Late last month, the bank settled a lawsuit filed by 51 former students from TAB Express International, a defunct flight school in northern Florida, who had accused the lender of colluding with the school to defraud them. The settlement puts an end to the case, which was scheduled to go to trial before a jury this week in a state circuit court in Florida.

Meanwhile, according to a U.S Senator in Florida, the FBI and a group of state attorneys general are investigating the exclusive lending arrangements that KeyBank had with TAB Express and Silver State Helicopters, a Nevada-based chain that shut down suddenly on Super Bowl Sunday last year.

As we have reported previously, 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 "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 providers, securitized the loans, shifting these high-risk loans onto unsuspecting investors.

One of the most aggressive players in this arena has been KeyBank, which has formed exclusive arrangements with dozens of unlicensed trade schools -- particularly ones that focus on computer training and flight training. These schools have required their students to pay for the full cost of their programs up front, with tens of thousands of dollars of private loans from KeyBank. Unfortunately, many of these schools have shut down without warning, leaving their students in the lurch -- heavily indebted with expensive private loans and little to no practical training.

In case after case, KeyBank has fought vigorously (and often successfully) to force students to pay back these loans. In doing so, the lender has denied borrowers basic protections that are in federal law to protect borrowers from being scammed. For example, the bank has routinely omitted from the promissory notes for its private loans a required notice that asserts the borrowers' right to have their loans canceled if a school with which it has "a referring relationship" closes down, is not licensed, or engages in fraud. In addition, the bank has tried to prevent students whose schools have shut down from challenging their loan agreements in court.

A Big Victory for Students

In June 2005, TAB Express International shut its doors without notice after KeyBank ended its three-year relationship with the school. Prior to that, KeyBank and TAB had an exclusive arrangement in which the school required students to pay the full cost of attendance -- which was around $100,000 -- with private loans from the lender before classes even started. The bank sent the money directly to the school. According to the former students' lawsuit, the students were told that their loans would be forgiven after they completed the training and worked for TAB's airline for a period of time.

But after enrolling, students became suspicious. "The students became aware of a lack of available instructors, simulators, and aircraft at the flight school as the school continued to increase the number of enrollees," the lawsuit stated. Eventually, they realized that "TAB had no airline." The lawsuit said that the students repeatedly brought their concerns to KeyBank officials but were rebuffed, and the lender continued to help market the school to prospective students.

When the deal finally collapsed, the lawsuit said, KeyBank officials tried to convince the students to take advantage of a "train out option" that would have required them to take on additional private loan debt and to waive their right to pursue legal action. Most of the students were not persuaded.

Instead, they decided to pursue a lawsuit against KeyBank. They won a major victory last year when the Florida State Appeals Court rejected an effort by the lender to enforce a "venue restriction clause" included in the students' private student loan promissory notes. That clause would have required them to re-file their case in KeyBank's home state of Ohio, which has much weaker consumer protection laws than Florida.

With only weeks before the jury trial was to start, KeyBank decided to come to terms with the former students. Under the settlement, the bank agreed to discharge the borrowers' private loans, which were worth about $5 million, and to pay a portion of their legal fees. The company, however, did not admit to any wrongdoing.

Under Scrutiny

Whether or not KeyBank wittingly helped schools like TAB Express and Silver State Helicopters exploit students is sure to be the focus of an investigation that the FBI is conducting of the lender's activities. Sen. Bill Nelson (D-FL) revealed the existence of the FBI probe in a letter he sent to one of the former TAB Express students last fall that was obtained by Higher Ed Watch. The letter also noted that "the Florida Attorney General's Office is also conducting a formal investigation into the matter as part of a larger multistate group of Attorneys General."

At Higher Ed Watch, we are pleased that federal and state investigators are taking these cases seriously. While justice has been served for former students of TAB Express, there are many others who are being forced to repay tens of thousands of dollars in expensive private loan debt for training they never received. Hopefully, they won't have to wait for their day in court before their debt is forgiven."

Bogus Offer from KeyBank

2009-02-18T05:48:00.000-08:00

Citibank was the first major lender to settle with the SSH students. Student Loan Xpress is likely to be next. That makes KeyBank most likely to be the last major lender to settle with the SSH students. KeyBank has not made any offer to Plaintiffs' counsel, though it has participated in discussions and agreed to participate in a mediation. Meanwhile, in January of 2009, KeyBank made individual offers to certain California SSH borrowers. In one such offer made to a Los Angeles, California client of mine, KeyBank offered to reduce my client's SSH KeyBank student loan balance by $8,763.36 from $66,763.16 to $58,000.00. This amounts to a 13% reduction for a client that received only his private pilot's license from SSH.

KeyBank wants an assignment of the student's proof of claim against SSH, a covenant not to sue, a confidentiality agreement, and a complete release. All it offers in return is a 13% discount. In my opinion, KeyBank's offer is not good enough. It is a bogus offer.

KeyBank mailed its offer directly to my client, with no copy to me. KeyBank did this despite the fact that I have previously advised KeyBank and its counsel of my representation of this client and of all the KeyBank clients that I represent. I urge all clients of mine who receive such a letter to forward said letter to me and to authorize me to reject KeyBank's offer. Together, we can do better.

No Action Needed on SLX "Personal Information" Letter

2009-02-18T05:41:00.000-08:00

Many of my SLX clients have contacted me about a letter that they received from SLX in late January or early February regarding the inadvertant disclosure of certain personal information and the subsequent destruction of said information. My opinion is that no action is needed on said letter. I have not had any reports of any identity theft or attempted identity theft as a result of SLX's actions. Here is what the letter says:

We recently became aware of an incident involving certain personal information related to some Student Loan Xpress, Inc. student loan data. The service provider for your loan(s), American Education Services (“AES”), inadvertently transmitted a report which contained your personal information to another student loan lender with which AES contracts. That lender has indicated that it destroyed all of the information it mistakenly received. We have no evidence that any of the information has been used in an unauthorized manner as a result of this incident. The information that AES inadvertently sent to the unauthorized recipient may have included names, addresses, Social Security numbers, dates of birth, and information specific to you student loan account. We are working with AES to take steps to help ensure that this type of incident does not happen in the future.

We regret that this incident may affect you. We take our obligation to safeguard personal information very seriously and, therefore, we are alerting you so you can take steps to protect yourself from possible identity theft. We encourage you to remain vigilant and regularly review and monitor your account statements and credit reports. The attached Reference Guide provides details on these and other steps you may wish to consider.

You are entitled under U.S. law to one free credit report annually from each of the three national credit bureaus. To order your free credit report, visit www.annualcreditreport.com or call toll free
(877) 322-8228.

To further assist you, we recommend that you register for credit monitoring, which we have arranged to provide at no charge to you. The attached Reference Guide provides information on how you can register for the credit monitoring and recommendations by the U.S. Federal Trade Commission on how to further protect yourself against identity fraud. You may also want to place a fraud alert or security freeze on your credit file.

We hope this information is useful to you. If you have questions regarding this incident, please call AES’s dedicated Customer Service staff at 1-800-2149320 between the hours of 8:00 am and 5:00 pm EST.

Again, we regret any inconvenience this may cause you.

David Harmon
Executive Vice President
Student Loan Xpress, Inc.

SLX is Next

2009-02-18T05:27:00.000-08:00

Student Loan Xpress is the lender that wrote the most student loans for Silver State Helicopters. It is also the lender that I believe is going to be next to make an offer that I can enthusiastically recommend to all of my SLX clients. Settlement negotiations with SLX are covered by a written confidentiality agreement. These negotiations are, in my opinion, about to bear fruit. SLX has already quietly settled several SSH student loan claims with former SSH students in Georgia. Look for an announcement in the next 30 days. I will e-mail all of my SLX clients with the details of this settlement offer as soon as the offer is made public.

Citibank Settlements Are Complete

2009-02-18T04:40:00.000-08:00

On November 10, 2008, I announced and highly recommended Citibank's 100% debt forgiveness offer to my former SSH students in every state except for California. Through my efforts and the efforts of others, this offer was subsequently extended to include my California SSH clients with Citibank loans and all former SSH students throughout the country with Citibank student loans. This offer by Citibank was met with skepticism by some who figured that there must be a catch. In December of 2008, A second settlement letter was issued clarifying the fact that in exchange for an assignment of the client's proof of claim, Citibank will cancel the debt and not assign its claims to any other company. In addition, Citibank agreed in writing to request that any reference to the Citibank SSH loans be deleted by all credit bureaus to whom the SSH Student Loans were reported. Since then, I have heard back from many of my Citibank clients confirming that the Citibank Student loan has been deleted from their credit reports. Earlier this month, I learned that Citibank has decided not to issue any 1099-C debt settlement income forms as a result of its cancellation of these disputed debts. This is a complete victory for all of my Citibank clients.

A copy of the revised Citibank Settlement letter is set forth herein:

Date

Student Borrower Name
Student Borrower Address

Re: Master Student Loan Promissory Note between you and Citibank, N.A.;
Account Number __________

Dear ________________:

Our records reflect that Citibank, N.A. and The Student Loan Corporation (collectively, “Citibank”) made the above-referenced loan to you for flight training and education at Silver State Helicopter School (the “Student Loan”). As you may know, Silver State filed bankruptcy in Bankruptcy Court in Nevada and ceased operations earlier this year.

Citibank sent funds to Silver State for your flight training tuition. It is our position that you remain obligated to repay those amounts to Citibank under the promissory note you signed. In recognition of the disputed nature of your obligation, Citibank will agree to release you of such obligation and to cancel the debt if you comply with the conditions and terms set forth below.

Specifically, if you assign to Citibank any and all claims you may have with respect to your Silver State loan, whether against Silver State, Citibank, or their present and former officers, directors and employees, Citibank will release you of the debt under the Student Loan. If such release occurs, then Citibank will not seek to transfer or assign the collection rights with respect to the debt of the Student Loan to any third party. The assignment by you of your claims with respect to the Silver State loan will enable Citibank to pursue a claim in the bankruptcy court for return of the money it advanced on your behalf.

If you do not sign and return this letter to us, we will assume that you have not agreed to assign your claims to Citibank, and you may keep and pursue any claims against Silver State in the bankruptcy court and make arrangements with Citibank for a repayment plan, as you will remain obligated for repayment of the Student Loan.

If you agree to assign your claims to Citibank in exchange for the cancellation of your Student Loan, you and any cosigner should review carefully, sign below and return this letter to Citibank at the following address by December 31, 2008:

Citibank South Dakota
Attention Executive Communications
701 E. 60th Street N.
Sioux Falls, SD 57104

If you assign your claims to Citibank, then Citibank will also request that the credit bureaus to whom your Student Loan was reported, if any, delete any reference to the transaction from your credit reporting, although Citibank cannot warrant or guarantee the timing with which such credit bureaus will comply with such request.

Please be advised that the statements herein apply only to the Student Loan and do not in any way modify, amend or otherwise relate to any other accounts you may have with Citibank or its affiliates. If you and any cosigner do not timely sign and return the enclosed assignment, then Citibank reserves all rights and remedies against you under the Student Loan.

If you have any questions or need additional information, please call Mary Bakker at 605-331-7219.

Sincerely yours,

Citibank, N.A. and The Student Loan Corporation

By signing below, the undersigned borrowers agree to assign to Citibank any and all claims we may have with respect to our Student Loan for flight training and education at Silver State Helicopter School, whether against Silver State, Citibank, or their present and former officers, directors and employees. In exchange for this assignment, Citibank (including its predecessors and successors in interest, employees, agents, affiliates and assigns, agrees to release the undersigned borrowers from the Student Loan.

___________________________ ________________________________
Borrower Signature Date

___________________________ _________________________________
Cosigner Signature Date

In February of 2008, Citibank Filed Notices of Assignment of Claim and Pending Order Thereon in the Silver State Helicopters, LLC Bankruptcy Case for the claims that were assigned to it by way of settlement. These Notices read as follows, "YOU ARE HEREBY NOTIFIED an Assignment of Claim has been filed in this case by the Assignor named above. Pursuant to Federal Rule of Bankruptcy Procedure 3001(e), you are hereby notified that unless you file your objection within 20 days following the date of this notice, the following Order will become effective without further action by the Court. Any objection filed must be set for hearing and notice sent to the U.S. Trustee, Trustee, creditors and all parties in Interest.

IT IS ORDERED that Citibank South Dakota, N.A. The Student Loan, Assignee, is hereby substituted for ____________, Assignor, as a claimant against the estate herein, effective on the 21st day hereafter, absent the filing of a timely objection."

More Firepower

2009-01-07T15:20:00.000-08:00

I am very happy to announce that we have added 2 new attorneys to our firm.

Attorney Mike Mahurin started with us today. Mike is a graduate of Pepperdine University School of Law and has 12 years of legal experience handling real estate, employment, estate planning and bankruptcy matters. Mike was previously an associate in the real estate department of Stroock & Stroock & Lavan and worked in the chambers of the Honorable Robert W. Alberts as a law student. Mike is a member of the board of directors of the Southern California Association of USA Track & Field in addition to being an accomplished runner and triathlete, having won the 2008 Tucson Marathon and competed in the 2003 Hawaii Ironman.

Attorney Donna Dishbak will be starting with us on Monday. Donna was admitted to the State Bar of California on December 4, 2008. Donna graduated from U.C. Berkeley with a major in Rhetoric and a minor in Business Administration. She then returned to her hometown of Los Angeles to attend Loyola Law School where she dedicated many hours to being trained in mediation and working at the on campus mediation clinic. Donna spends her free time painting, playing tennis, and volunteering for a local non-profit job resource center for the homeless.

Going After Airola, Pickett and Trenk

2008-12-11T18:49:00.000-08:00

James Lisowski, the Chapter 7 Trustee in the Silver State Helicopters bankruptcy case, has filed an Application for an Order Approving Employment of Fennemore Craig, PC as Special Litigation Counsel to the Trustee. The Trustee's Application states that he "requires representation for the following services: Special Litigation Counsel to assist the Trustee in investigating and analyzing objections to claims, potential claims, and causes of action by Debtors against Jerry M. Airola ("Airola"), Steven Pickett ("Pickett"), Steven L. Trenk ("Trenk"), their family members and any companies in which Airola, Picket or Trenk are officers, directors, members, partners, or shareholders, and to prosecute those objections to claims, potential claims and causes of action, including the initiation and conduct of discovery and the filing of claims objections, adversary proceedings and other litigation as appropriate." I support this action by the Trustee. The hearing on the Trustee's Application to Employ Special Litigation Counsel is set for December 17, 2008 at 2:30 pm.

Notice of Filing Official Transcript

2008-11-12T21:12:00.000-08:00

Many of my clients have contacted me regarding a notice that they received from the Bankruptcy Court in the SSH case. This notice is entitled "Notice of Filing Official Transcript" and is dated November 4, 2008. No action is required by any of my clients with regards to this notice. I used my CM/ECF and PACER logins to read the entire 61 page transcript to see if it contains any personal information for any of my clients that should be redacted. The transcript does not contain any such personal information. The transcript is entitled "TRANSCRIPT OF PROCEEDINGS OF STATUS HEARING RE: TRUSTEE'S MOTION TO SELL REAL PROPERTY IN PROVO, UTAH, NO. 1135 AND ORDER SHORTENING TIME RE: TRUSTEE'S MOTION FOR PROTECTIVE ORDER REGARDING SUBPOENA AND MOTION TO QUASH SUBPOENA ON ORDER SHORTENING TIME, NO. 1142 VOLUME 1 16 BEFORE THE HONORABLE MIKE K. NAKAGAWA UNITED STATES BANKRUPTCY JUDGE." The transcript is for a Court hearing that took place on October 22, 2008. The Trustee in the SSH bankruptcy case James Lisowski appeared, as did his counsel, counsel for the Student Loan Corporation ("SLC"), Counsel for Orix Finance Corporation, and counsel for Jerry Airola. At the hearing, the parties and the Court discussed the Trustee's request for a protective order and The Student Loan Corporation's objection to a Proof of Claim filed by Jerry Airola. Counsel for the Trustee spoke of the time, difficulty and expense in locating specific documents requested by SLC. He spoke about how the documents sought by SLC were consolidated from 35 different locations and now housed in 5 different storage facilities, intermixed with confidential student records. SLC's counsel spoke of SLC's interest not only in objecting to Airola's Proof of Claim, but possibly also in filing an Adversary Proceeding against Airola and other individuals. She referred to allegations that SSH never had the ability to provide the services that it was advertising and stated that SLC may have Nevada Deceptive Trade Practices Act claims and racketeering claims. Judge Nakagawa granted a protective order for 90 days, and set a continued status conference on the matter for January 21, 2009.

Citibank Surrenders!

2008-11-10T07:00:00.000-08:00

On November 5, 2008, Citibank began offering 100% loan forgiveness of Citibank SSH student loans in exchange for an assignment of the student's claims against SSH and against Citibank. We highly recommend that all of our clients with Citibank loans accept this offer. 100% Loan forgiveness has always been our highest goal for each and every one of our SSH clients. It is a complete victory for each and every one of our Citibank clients. It sets the bar high for KeyBank and Student Loan Xpress, the 2 other banks that wrote the majority of the SSH student loans.

The Citbank offer is being extended to all former SSH students with Citibank loans in every state except for California. I am working with counsel for Citibank to have this offer also extended to all my California Citibank clients who specifically request it. The Citibank offer is not yet generally available to California Citibank clients, apparently due to the pendency of a class action lawsuit.

Here is a complete copy of the November 5, 2008 Citibank letter that has already been received by several of our Citibank clients:

"Re: Master Student Loan Promissory Note between you and Citibank, N.A.

Our records reflect that Citibank, N.A. and the Student Loan Corporation (collectively "Citibank") made the above-referenced loan to you for flight training and education at Silver State Helicopter School ("the Student Loan"). As you may know, Silver State filed bankruptcy in Bankruptcy Court in Nevada and ceased operations earelier this year.

Cibank sent funds to Silver State for your flight training tuition. While you remain obligated to repay these amounts to Citibank under the promissory note you signed, Citibank will agree not to seek collection of those amounts from you on the terms set forth below.

Specifically, if you assign to Citibank any and all claims you may have with respect to your Silver State loan, whether against Silver State, Citibank, or there present and former officers, directors, and employees, Citibank will not seek to collect these amounts from you. This assignment will enable Citibank to pursue a claim in the bankruptcy court for return of the money it advanced on your behalf.

If you do not sign and return the letter to us, we will assume that you have not agreed to assign your claims to Citibank, and you may keep and pursue any claims against Silver State in the bankruptcy court and make arrangements with Citibank for a repayment plan.

If you agree to assign your claims to Citibank in exchange for Citibank's agreement not to pursue any amounts from you related to your Silver State loan, you and any cosigner should review carefully, sign below and return this letter to Citibank at the following address by November 21, 2008:

Citibank South Dakota
Attention Executive Communications
701 E. 60th Street N.
Sioux Falls, SD 57104

Please be advised that the statements herein apply only to the Student Loan and do not in any way modify, amend or otherwise relate to any other accounts you may have with Citibank or its affiliates. If you and any cosigner do not timely sign and return the enclosed assignment, then Citibank reserves all rights and remedies against you under the Student Loan.

If you have any questions or need additional information, please call Mary Bakker at 605-331-7219

Sincerely yours,

Citibank, N. A. and The Student Loan Corporation

By signing below, the undersigned borrowers agree to assign to Citibank any and all claims we may have with respect to our Silver State loan, whether against Silver State, Citibank, or other present or former officers, directors, and employees. In exchange for this assignment, Citibank agrees not to pursue collection of the Student Loan from the undersigned borrowers.

________________________ ______________
Borrower Signature Date

________________________ _______________
Cosigner Signature Date

What This Offer Means

This offer means that former SSH students with student loans from Citibank can now walk away from 100% of their loans. They are being made whole. Students who owed $23,300.00, $46,600.00 and $69,900.00 + interest can now pay nothing to Citibank and move on with their lives. No principal, no interest, no attorneys' fees, no costs, nothing of any value whatsoever with the exception of the assignment of their claims against SSH and Citibank and its present and former officers, dirctors and employees. The most famous of these ex officers and directors is, of course, Jerry Airola. The assignment of these claims in exchange for 100% debt forgiveness seems 100% fair to me. Former SSH students are not entitled to a double recovery, and were never going to get one anyway. As discussed in my last post to this blog on November 4, 2008, unsecured creditors in the SSH bankruptcy are likely to recover much less than the full value of their claims. Trading these claims to Citibank for 100% debt forgiveness is a deal that I highly recommend -- it cannot be beat.

Why Is Citibank Doing This?

Why is Citibank making such a good offer? That is an interesting question on which there can be many different opinions. Is it a response to the pending lawsuits against Citibank and the additional threatened lawsuits? Is it due to political and public pressure? Is it the result of a cost benefit analysis in which giving in to the demands of its borrowers and their attorneys is seen as less costly than litigating and possibly losing and setting a precedent that would be bad for Citbank? Is it simply Citibank deciding to do the right thing?

What Is Happening In The SSH Bankruptcy

2008-11-04T02:09:00.000-08:00

It has now been 9 months since Silver State Helicopters, LLC ("SSH") filed bankruptcy in United States Bankruptcy Court, District of Nevada, Case No. 08-10936-mkn. This case is being jointly administered with the related case Silver State Services Corporation, 08-10935-mkn. To date, 1078 different documents have been recorded on the docket in the SSH case. Documents filed include, but are not limited to, Debtor’s original bankruptcy petition and schedules and amended schedules, Motions for Approval of Procedures, a Motion to Limit Notice, Verified Petitions Designating Local Counsel, Notices of Appearance and Requests for Special Notice filed by Creditors, Applications to Employ Counsel, Accountants, Real Estate Brokers and Auctioneers, Applications for Administrative Claims/Expenses, Motions for Order Shortening Time, a Motion to Use Cash Collateral, Motions to Assume or Reject Leases and Executory Contracts, Motions for Examination, Motions for Relief From Stay, Motions to Compel, Motions to Quash, Motions for a Protective Order, and Motions for Sale/Use/Lease of Property. SSH assets sold to date include helicopters, airplanes, cars, real estate, office furniture and office equipment.

United States Bankruptcy Court Judge Mike Nakagawa has conducted dozens of hearings in this case and has generally given the Trustee James Lisowski and his counsel Anthony Zmaila ("Tony Z") and Victoria Nelson what they want. The big winner to date has been secured creditor Orix Finance Corp which has been getting paid regularly out of the ongoing asset sales while the former students of SSH and all of its other unsecured and priority creditors wait and receive nothing.

The Proofs of Claim

3,417 Proofs of claim have been filed in the SSH case. The total amount claimed is $515,697,336. This is far more than is likely to be recovered in this case. Here is the breakdown for the proofs of claim: $463,723,615.62 unsecured, $41,759,763.95 Secured and $4,885,143.87 Priority. The largest secured proof of claim is from Orix Finance Corp for $33,117,417.20. The most interesting secured proof of claim is from Jerry Airola for $1,502,388.18 based on an Assignment of a Deed of Trust for a property in Provo, Utah which was owned by the debtor and has now been sold in the SSH bankruptcy proceeding.

The Trustee has not objected to any proof of claim yet, and appears to be waiting to see if there are any funds to distribute to creditors before deciding to review all of the proofs of claim filed and determine which claims if any should be objected to.
For now, it appears that the SSH bankruptcy estate is administratively insolvent. This means that there is no money to pay to unsecured creditors and that administrative creditors may receive less than full payment on their claims.

One thing that could put substantial additional cash into the SSH bankruptcy is the institution and successful prosecution of Adversary Proceedings against third parties that received preferential payments from the Debtor or for other reasons are liable to the debtor. Only one Adversary Proceeding has been filed so far -- an Adversary Proceeding filed against the Trustee and against Orix Finance Corp by AICCO, Inc. for Declaratory Relief and Turnover of Property. A Summary Judgment hearing is set in that case for December 11, 2008.

My Conversations With Tony Z

I spoke at length with The Trustee's lead counsel Tony Z last month in an effort to increase the level of our mutual cooperation to benefit all former students of SSH. Tony Z informed me that he has sent out "hundreds of letters" threatening to sue individuals and companies that received preferential payments from SSH prior to the filing of the SSH bankruptcy, but has not filed any Adversary Proceedings to date. He also shared with me his opinion that the ongoing governmental investigations of SSH and its former principals are likely to result in governmental prosecution.
I spoke to him about my ongoing efforts to help my clients reduce or eliminate their outstanding loan balances to KeyBank, Student Loan Xpress, and Citibank, and discussed with him certain strategies. Tony Z encouraged my efforts and promised to cooperate with me.

I have been working closely with Andrew August and Kevin Rooney, 2 attorneys who have filed actions in California on behalf of California residents who obtained loans from KeyBank, Student Loan Xpress, or Citibank to attend SSH and were still enrolled at SSH at the time that it filed bankruptcy. While the proposed class outlined in their actions is narrower than my nationwide group of former SSH student clients, we share the same objectives -- to eliminate or reduce as much as possible the loan balances for our clients. I am attempting to facilitate cooperation between these 2 attorneys and the trustee and the trustee's counsel -- something that appears to be on the verge of breaking down now. After several weeks of trying to get access to the relevant documents from the Trustee on a voluntary basis, Andrew and Kevin were forced to get a Court Order for a Rule 2004 Examination of the Trustee with document production. Now the Trustee and his counsel have filed a Motion for a Protective Order and asked the Court to quash the examination. A hearing on the Trustee's Motion is set for November 19, 2008.

Confidential Settlement Negotiations

Settlement negotiations with the lenders are subject to a written confidentiality agreement, but are still going forward. I hope to have something positive to report about this before the end of the year.

The SSH bankruptcy case itself appears likely to continue all through 2009 and well into the future.

Harward & Associates Dissolve and Drop SSH Matter

2008-09-20T16:26:00.000-07:00

Rumors began circulating last week that James Harward and Spencer Robinson of Harward & Associates were no longer doing any work on behalf SSH students. I spoke to Andrew August of Pinnacle Law Group and Dan Reed formerly of Harward and Associates and confirmed the truth of these rumors.

Dan Reed told me that Harward & Associates has dissolved, that Mr. Harward and Mr. Robinson will not be doing any more work on behalf of SSH students, and that he is attempting to take over representation of the approximately 300 former SSH students that paid Harward and Associates to represent them. Dan Reed's new engagement letter requires that his clients pay him a contingent fee that ranges between 30% and 50%.

Dan Reed posted this information on his website: "The relationship between Dan Reed Law and Harward & Associates has been discontinued effective September 2008. Mr. Dan Reed has been designated the primary point of contact with former Silver State Helicopter students. Mr. Reed has been an attorney since the fall of 2007."

In February, March and April of 2008, I competed with Dan Reed and James Harward for clients, and suggested that I was better qualified to help former SSH students. Now James Harward is gone, and I have reached out to Dan Reed to try to help him and his clients. Dan told me that this SSH matter was his first case right out of law school, and that he joined with Harward & Associates in an effort to help his clients. Unfortunately, Mr. Harward did not deliver what Dan and his clients expected from him. I will be meeting in person with Dan Reed in Utah after the St. George Marathon to discuss how we can cooperate with each other to help our SSH clients.

SSH Confidential Settlement Discussions

2008-09-20T15:31:00.000-07:00

Settlement discussions with the lenders have not resulted in any offer that I can recommend to my clients. Still, all parties are talking and all parties say that they are interested in a fair settlement. Settlement discussions will soon be entering a critical phase during which I will not post further information about these discussions unless and until they are resolved one way or the other.

It is interesting to note that not one of my SSH clients has been sued by KeyBank, Student Loan Xpress or Citibank for his or her unpaid loan balance. To me, this indicates that these lenders are not eager to file thousands of individual collection lawsuits and that they may in fact be interested in trying to resolve these claims in a more economical manner.

Pending Motions to Dismiss against the pending class actions have also been postponed to give more time for settlement discussions.

Many of you know that my Senior Associate Georgeann Nicol and I enjoy running Marathons. My next Marathon will be on October 4, 2008 in St. George, Utah. Keep in mind that this SSH matter is much more like a Marathon than a sprint. We will continue to work on all aspects of this matter and to do everything that we can to help each and every one of our SSH clients. This matter is sure to go on to 2009 and may continue for years after that. As in a marathon, and as in life, the important thing is not how you start, it's how you finish.

Multi-State Group of Attorney Generals Investigating SSH And Its Lenders

2008-08-22T12:13:00.000-07:00

I have been carefully following the ongoing separate and joint efforts of 16 different states to investigate SSH, its owners, and its lenders KeyBank, Student Loan Xpress, and Citibank. The Attorney General's Offices for 15 different states have joined together to form a multi-state group to investigate SSH and its lenders. The 14 states that have agreed to be part of this joint effort are Arizona, California, Florida, Georgia, Idaho, Illinois, Nevada, New York, Missouri, Montana, Oklahoma, Oregon, Texas, Utah and Washington. 2 additional states, North Carolina and Colorado, were asked to participate in this group, but have so far declined to do so. All parties to the multi-state investigation have signed on to a Common Interest Agreement agreeing to share documents and strategies. I am attempting to get permission to publish a copy of this Common Interest Agreement on my blog. I believe that as a part of this multi-state effort, one or more lawsuits will be filed by the different State Attorney Generals' Offices against KeyBank, Student Loan Xpress, and Citibank. Details of the ongoing investigations are confidential. All of this is good news for all former students of SSH. I will continue to cooperate in every way possible with all government agencies investigating SSH, its owners and its lenders, and I urge my clients to do so as well. In that regard, I wrote to Associate Attorney General Andrew Shull of the Oregon Department of Justice earlier today and gave him and his investigators permission to speak directly to my Oregon clients who attended SSH. I spoke earlier today with an Associate Attorney General in a different state who is considering writing a letter to Citibank urging it to forgive the student loans that Citibank made to students that attended SSH in that state. This is based in part on the fact that the SSH school established in that state was never licensed to operate, and is also based on the fact that Citibank failed to adequately investigate the operations of SSH.

Sue The Lenders Now Or Try To Settle First?

2008-08-07T16:00:00.000-07:00

Sue the Lenders now or try to settle first? This is the choice that I have to make on behalf of our SSH clients. Three separate class action lawsuits have been filed against one or more of the lenders that SSH referred its students to. Pinnacle Law Group, LLP of San Francisco, California filed class actions in California and Nevada against Student Loan Express and KeyBank on behalf of students from those two states who were enrolled at SSH at the time of the SSH bankruptcy. James Harward of Salt Lake City, Utah is co-counsel on the Nevada action. Chris Casper of James, Hoyer, et al. of Tampa, Florida filed a national class action in Florida against Student Loan Express only. I am carefully monitoring all of these actions, and am in regular contact with Andrew August and Kevin Rooney of Pinnacle Law Group. These class action lawsuits face serious obstacles, including, but not limited to, pending Motions to Dismiss and a certain fight over class certification. Many of my clients are not covered by any of these class actions, which do not include in their class definitions students who obtained loans from Citibank, students who obtained loans from Student Loan Express but do not reside in Nevada or California, and all students who were not enrolled at SSH at the time of its bankruptcy filing.

In addition to monitoring the existing actions against KeyBank and Student Loan Xpress, I have been carefully researching prior actions against the lenders by or on behalf of students who attended schools that closed before they could graduate. I want to learn everything that I can about what has worked for Plaintiffs and what has not worked.

While all of this has been going on, I have initiated contact with counsel for Student Loan Xpress and KeyBank and begun my exploration of all settlement possibilities. I want to see if fair settlement agreements can be reached for my clients. These agreements would take into account the amount of education received by my clients and the amount of education that they were promised and paid for, but never received. They might also take into account the current financial condition of the student and any cosigner. Class counsel has been involved in similar discussions. I want to see what results I can achieve for my clients by way of settlement. All of us are working both separately and together in an effort to determine whether or not we can get these lenders to agree to enter into fair settlement agreements that we could all recommend to our clients. Counsel for the lenders and class counsel have asked that the specifics of these discussions remain confidential until there is something more concrete to report.

Settlement negotiations are expected to continue over the next two to three months, at which time I will be in a position to convey detailed information regarding the best specific settlement proposals that I can obtain for my clients and either recommend the acceptance or rejection of these settlement proposals. I hope to get Citibank actively involved in these settlement negotiations. If a good settlement appears to be unlikely, I will have plenty of time to institute my own litigation against the lenders. Meanwhile, I believe that my clients will benefit by my monitoring how the other litigation against the lenders proceed, and by giving more time to the various ongoing civil and criminal investigations of SSH.

Student Loan Xpress, the lender that made the most loans to SSH students, stopped writing new student loans in April and went out of business in May, 2008. My typical SSH client borrowed $69,900.00 from Student Loan Xpress to attend SSH, and incurred origination fees and high interest rates that push the total repayment amount over $200,000.00. The lenders and their counsel are well aware of the risks that their clients face, and I am well aware of the risks that each and every one of my clients faces. I ask that you all be patient during this settlement negotiation period. Please understand that not everything that I do on behalf of our SSH clients can be put on the blog. I want to help all former SSH students, but my first allegiance is always to my clients.

Good New for Our Clients Who Borrowed Money From KeyBank

2008-07-16T12:09:00.000-07:00

Many of our KeyBank clients have written to us or called us to complain about collection efforts by KeyBank, including telephone calls, letters, and demands for immediate repayment. I am very pleased to report that I have found a way to stop all of this for our KeyBank clients. I have provided KeyBank's counsel with a list of all of my KeyBank clients and gotten KeyBank to agree to place all of my clients' accounts into administrative forbearance (which suspends their payment obligations, but interest continues to accrue). The debt will be reported as disputed, KeyBank will request that all collection calls cease, and all written communications (including billing statements and delinquency letters) will also cease. KeyBank will begin doing all of this immediately, and will provide me with written notice when all of this is done. Because KeyBank works with outside vendors to perform some of the functions outlined above, it is possible that something may fall through the cracks. Thus, I ask that my KeyBank clients please bring any failure by KeyBank to do this on or before August 1, 2008 to my attention, and I will in turn bring it to the attention of KeyBank's counsel. This action by KeyBank is a good thing for all of our KeyBank clients.

Our SSH Clients By Lender

2008-07-14T18:49:00.000-07:00

3 major lenders made "student loans" to the students that attended SSH: KeyBank, Student Loan Xpress, and Citbank. Most of our 1372 paid SSH clients obtained their loan from Student Loan Express. Here is the breakdown of where our SSH students obtained their loans from: Student Loan Xpress 1,113. KeyBank 150. Citibank 72. The remaining students paid cash, or obtained loans from other sources.

Tucscon Weekly Story About Silver State Helicopters Bankruptcy

2008-07-03T07:47:00.000-07:00

PUBLISHED ON JULY 3, 2008:
Permanently Grounded
A helicopter school took student money and suddenly went bankrupt
By AUBIN TYLER

Silver State Helicopters school filed for bankruptcy, leaving students in shock and on the hook for tens of thousands of dollars in student loans.

At least a year before the Silver State Helicopters school filed for bankruptcy in February, 18 of its Arizona students sued the company and its owner for fraud.
But that didn't prevent the school from continuing to recruit new students--and many of them are now on the hook for up to $70,000 each in student loans, for flight training they never received.
One of those suing is firefighter Paul Mischel, 39, a 19-year veteran with Northwest Fire District.
"I'd heard the ads on the radio: 'You can be flying in 18 months.' It sounded too good to be true," Mischel said. "But everything promised was attainable. It's not like they were offering to make elephants fly."
The first sign of a problem: Even though flight training requires hundreds of hours in the air, there were no helicopters available for the first three months when Mischel started in the summer of 2004, he said. After that, the school provided one helicopter and two flight instructors for 80 students.
Part of the school's attraction was its lure of full-time employment for top students after training. "People who grumbled were warned that they were on a perpetual job interview if they wanted to work for Silver State," he said.
Mischel, who owes more than $50,000 on his school loan and has spent $5,000 to $6,000 in legal fees to sue the company, said he spent 28 months in the program, but completed only half of it by November 2006, when he dropped out in disgust.
"In my class of 80 students, only eight or 10 got a private license"--the first of five required licenses and ratings--"and only seven had become Silver State employees" by the time of the lawsuit.
Silver State's former president and CEO, Jerry Airola, started the company in Henderson, Nev., with one helicopter in 1999, and eventually enrolled some 2,500 students in more than 30 schools in 15 states, three of them in Arizona (Mesa, Glendale and Tucson).
In a release sent to students from Silver State's public-relations firm, MassMedia, the company cited the "unprecedented downturn in the U.S. credit markets, which severely curtailed the availability of student loans for the company's flight academy students and resulted in a sharp and sudden downturn in new student enrollment."
On Feb. 4, 2008, the company filed for Chapter 7 bankruptcy. In its filing, the company estimated that it had 5,000 to 10,000 creditors and $10-$15 million in liabilities, but only $50,000 in assets. Because of the bankruptcy, the fraud lawsuit, filed by Mesa attorney C. Randall Stone and Georgia attorney Peter C. Lown in U.S. District Court in Phoenix on behalf of the 18 Arizona students, is on hold.
The whereabouts of Airola, a high-powered Republican fundraiser and failed candidate for Nevada's Clark County sheriff in 2006, are unknown. His Las Vegas bankruptcy attorney, Jeanette E. McPherson, of the Schwartzer and McPherson Law Firm, referred calls to MassMedia, where a representative had "no idea" where he was. Silver State's Las Vegas headquarters no longer has phone service, and its Web site has been shuttered.
Michael Berger, the attorney representing more than half of Silver State's former students as creditors in the company's bankruptcy, said he believes Airola is AWOL. "Let me put it this way: I don't know anyone who's talked to him."
Lon Enos, 39, an ex-forklift driver who had worked for 16 years for Costco before he quit to attend Silver State, did get work with the company as a certified flight instructor, but was fired after six months when a student of his rolled the helicopter's throttle, which can damage the rotor system.
He now commutes between Tucson and a flight school in Virginia, where he's still an instructor, which is considered an entry-level position for a pilot.
"My biggest problem now is that I can't get a job anywhere else because of having Silver State on my résumé," Enos said, explaining that other employers who hire pilots shy away from the school's name.
Like most students, Enos enrolled at Silver State after attending a glitzy sales seminar during which Airola pitched the dream of earning more than $100,000 a year after 18 months of training.
Enos' retirement account, with about $90,000, paid the bills while he attended flight school full-time. "We were told that if we had good availability, we'd get more flying time. So I quit my job and spent my 401(k) plan over two years, and didn't get done any sooner."
Berger represents 1,330 former Silver State students--including 28 from Arizona--as creditors in the company's bankruptcy proceedings.
"A lot of people seem to be investigating Silver State. The biggest problem is that students are stuck with these large loans. Co-signers are on the hook as well," he said.
In Florida, where Silver State had 200 students (including one who was killed along with an instructor in a March 2007 crash), U.S. Sen. Bill Nelson has described the school's practice of arranging large, unsecured student loans and then delivering little as a pyramid scheme. He has called for the Federal Trade Commission to investigate.
"With the crunch in the consumer credit market, (Silver State) ran out of banks to get loans," Berger explained. "It depended on a stream of new investors to keep everything going. Without that, everything fell apart."
Berger said he's suspicious about a pattern of early loan disbursements to Silver State--sometimes, the entire amount of the loan was paid to the school after only three months--and that his firm is looking into any unusual relationships between Silver State and its lenders.
"I haven't seen student loans like this before," he said. One of school's private lenders, Student Loan Xpress, is no longer in the business.
"With a federally guaranteed loan, if the school closes, you can discharge the loan, but there's no equivalent for these private loans," he added. Silver State was a "part 61" flight school; only flight schools certified by the Federal Aviation Administration, or "part 141," are eligible for federal financial aid.
Last fall, the private-equity firm Eos invested $30 million to purchase a 60 percent ownership share in Silver State. The firm typically invests in companies that have an annual revenue base between $30 and $500 million, according to its Web site.
"Some of the folks at Eos walked away with millions" according to testimony recorded by the trustee in the company's Nevada bankruptcy case, Berger said. "Airola walked away with $13 million. Then in February, the company's in bankruptcy." (For more on the first meeting of Silver State's bankruptcy creditors, see Berger's Web site.)
One of Berger's Tucson clients, Britta Penca, 42, was about a third of the way through her training, with 90 of 200 promised flight hours, when the school abruptly shut down. The paperwork for her $69,900 loan through Student Loan Xpress and American Education Services shows three disbursements to Silver State in February, April and July 2007--comprising the entire amount of the loan, disbursed in the first five months of what should have been 18 months of training.
"It was a disaster--shock, loss, my own personal tsunami," Penca said about the school's closing. "I'd given up everything--and suddenly, (the school) didn't exist." She paid another $4,000-$5,000 to finish her private pilot's license through another school.
Penca is considering leaving the Tucson area to finish at a part 141 school, where her loan will be federally backed. "It's a little scary. We don't know what's going to happen with the current litigation. It seems risky to take out another loan--and pay for (the training) twice, with interest."

The original of this story is available online @ http://www.tucsonweekly.com/gbase/Currents/Content?oid=112543

Proof of Claim Bar Date in the SSH Bankruptcy Case is July 21, 2008

2008-07-02T21:00:00.000-07:00

The Bar Date in the Silver State Helicopters Bankruptcy Case, also known as the last day to file a proof of claim, is July 21, 2008. This Bar Date has been extended twice by the Bankruptcy Court. The original bar date was in June, and the first extended bar date was July 7, 2008. No further extension of time to file a proof of claim in this case is likely. As set forth in the document entitled "Trustee's Notice of Finding Assets, Notice to File Proof of Claim and Notice of Time Limitation" e-filed on April 16, 2008, "Claims not filed by the Bar Date are generally not allowed . . . The Bar Date, or last date to file a Proof of Claim in this case is July 21, 2008."

We have completed our filing of Proofs of Claim for each and every one of the 1,367 former SSH Students that we represent. We have sent individual confirmations to many of these clients at their request. On July 7, 2008 I will send out an e-mail to each and every one of our SSH clients confirming that we have in fact filed his or her proof of claim in this case.

We have double checked each and every proof of claim that we filed to be sure that it shows up in the Claims Register for the Silver State Helicopters, LLC Bankruptcy Case No. 08-10936 MKN on PACER (Public Access to Court Electronic Records). Individual Clients who want to use PACER to check to be sure that his or her proof of claim has been filed or to monitor all documents filed in the Silver State Helicopters, LLC Bankruptcy case (or for any purpose) may register by going to http://pacer.psc.uscourts.gov/ and then clicking on the "Register for Pacer" link on the left hand side of the page. There is a charge of $.08/page to use Pacer.

We filed a proof of claim for each individual student client that attended SSH, not for his or her cosigner. Filing 2 separate claims, one for the individual and one for the cosigner, would be asking for a double recovery.

We believe that part of each student's claim qualifies as a priority claim under 11 U.S.C. Section 507(a) (7). This code section allows a priority claim of up to $2,425.00 for, amongst other things, deposits toward "the purchase of services, for the personal, family or household use of such individuals, that were not delivered or provided." We believe that the the helicopter training services that our clients purchased from SSH but did not receive fit this definition. By making part of our clients' claims priority claims, we increase the likelihood that they will receive a recovery from the SSH bankruptcy estate and increase the likelihood that they will receive a greater recovery than creditors with lower priorities or no priority. Priority claims get paid before general unsecured claims.

When available, we have attached the SSH Training Services Agreement and the Student Loan Agreement to each individual Proof of Claim.

If you are our client in the SSH case, the preparation and filing of your Proof of Claim is just one of the services that we provide for you. If you are a former SSH student and you are not our client, we urge you to file your Proof of Claim before the July 21 Bar Date.

Citibank Deferment Request Letter

2008-06-27T11:09:00.001-07:00

Many of our SSH clients with loans from Citibank have received a letter regarding a deferment request. The first paragraph of the letter states, "At this time we are in the process of updating our records to ensure that we have current enrollment information for our customers. We would appreciate it if you would assist us with this process. Please read this information in Section 1 and have your school's Registrar complete Section 2. Be sure to sign, date and return this request in the envelope provided. Failure to complete and return this form may result in your CitiAssist Loan being placed in immediate repayment." The letter only allows for a deferment if the borrower is currently enrolled in school. Any deferment request made pursuant to this letter requires a certification from an authorized schoold official. If you are not in school, you do not qualify for a deferment under the terms of this letter. Here is how I suggest that our Citibank clients respond to this letter. Write the following on the letter: " I was a student at Silver State Helicpoters. The school closed and filed bankruptcy on February February 4, 2008. I request that this loan be placed on a no interest, no payment status while the facts regarding this bankruptcy are reviewed. I am represented by attorney Michael Jay Berger with regards to both the Silver State Helicopters bankruptcy and my loan from Citibank. Please have your legal counsel call Mr. Berger at his office, 310-271-6223 to discuss my loan and the loans of Mr. Berger's other clients who borrowed money from Citibank to receive training from Silver State Helicopters."

AES/Student Loan Xpress Suspends Interest Accrual and Payments on SSH Student Loans

2008-06-19T15:23:00.000-07:00

Many of our SSH clients with loans from Student Loan Xpress that are serviced by AES have received letters from AES regarding the suspension of interest accrual and payments on their SSH Student Loans. The letters are dated or or about May 27, 2008 and state in pertinent part, "Dear Customer: As you may know, Silver State Helicopters filed for bankruptcy and ceased operations on February 4, 2008. We continue to assess the situation created by the closure of the school. Although you may have received a prior letter from us regarding your account, this is to advise that, as a courtesy to you, we have elected to treat your account as being "in grace" status and to suspend interest accrual, from the date the school filed for bankruptcy. Accordingly, until you receive further written notice from us, your loan will remain in grace status, interest will not accrue, and you will not be required to make any payments. We are not waiving any of our rights under the terms of your loan, including our rights to restart accrual of interest or to begin the repayment period, however, we will provide you with written notice of any decision to restart the accrual of interest or to being the repayment period. No action on your part is required at this time and we will update your loan status with the loan servicer, Amercian Education Services. " This letter is a good thing for all of our AES/Student Loan Xpress clients, and a good example for KeyBank and Citibank to follow. It may ultimately prove to be the first step towards a mutually agreeable settlement with the lenders.

More Publicity For Our Cause

2008-06-15T15:40:00.000-07:00

The following is a transcript of a story that aired on the local ABC television station on Friday, June 13, 2008 on the 5:00 pm news. It appears on the abc7.com website under the Title "Consumer NewsSchools close, but students still pay."
By Ric Romero
LOS ANGELES (KABC) -- Trade schools and vocational schools provide a wonderful service for students who find traditional colleges are not for them. But what happens when the school you attend goes bankrupt and has to close? You may be left with a huge bill that still has to be paid off.
Many of these schools require you to pay up front, and often the money comes from a loan from a private finance company who expects you to pay them back no matter what happens to the school.
When they're in the air, professional helicopter pilots can feel like they're on top of the world. It's a rewarding job that requires months of training to master. Christian Shaffer of Oro Grande thought he had the right stuff. Shaffer signed up for instruction with Silver State Helicopters Flight Academy and thought he was on his way to becoming a chopper pilot.
"They promised me a long-term career with Silver State themselves, promised me good pay, and a lot of credentials that would help me to further my career," said Shaffer.

A North Las Vegas company, Silver State thought there were no limits and had operations in 28 locations across the country, including Long Beach and Chino. In handout video, Silver State makes the 18-month-long training program look very exciting.
But as with all students, it was going to cost Shaffer plenty. Silver State got the aspiring pilot a loan through an outside private lender to pay the tuition.
"The first $24,000 was taken out before I even started class," said Shaffer.
Six months later, Christian was even deeper in debt and far from living his dream.
"I was already $48,000 in debt, owed $48,000, with only four hours of flight time logged," said Shaffer.
Helistream in Orange County is a helicopter school that's been around for over 20 years. According to Helistream's Director of Operations, Rod Anderson, Silver State's requirement of students to pay so much up front was unusual for the industry.
At Anderson's chopper school there is a three-to-one teacher/student ratio, with plenty of hands-on training. Silver State emphasized more classroom instruction and a large student class-to-teacher ratio. But remember, Shaffer was told he would have a job once he graduated from Silver State.
The only thing is, Silver State declared bankruptcy well before Shaffer finished his training, and after he had paid nearly $70,000 to attend the school.
"It was pretty devastating to the family -- very. I can't explain it enough, how it really put a damper to our life and our future," said Shaffer.
With the school closed and Silver State with his money, Christian's only choice now is to hire an attorney and attempt to get Silver State's president and CEO, Jerry Airola, to give him his money back.
"We're certainly going to investigate all the avenues of recourse against the lenders. If there's been fraud or collusion by the lenders, we hope to use this to wipe out these student loans," said attorney Michael Berger.
"They will have lost time, they will have lost their hopes, but at least maybe they won't have a huge burden on them," said attorney Gail Higgins.
At this point, Christian's only hope is with a lawsuit. But before you enter into a contract with a trade school or vocational school, make sure you know your rights and know how to protect yourself

Proofs of Claim

2008-06-14T15:34:00.000-07:00

The deadline to file a proof of claim in the Silver State Helicopters Bankruptcy Case is July 7, 2008. If you are one of our SSH clients, we handle this for you. We have already filed hundreds of proofs of claim for our clients, and we anticipate having all remaining proofs of claim for our clients filed by July 1, 2008. I have 2 employees working full time on this 5 days a week, with an additional 2 employees helping out. We already have all of the information that we need to file these claims for most of our SSH clients. If we need further information from any individual client, we will contact him or her by telephone and by e-mail. The most important piece of information that we need for each SSH client is the amount that he or she paid to attend SSH. This can be paid paid in cash, or by obtaining a loan, or in some combination. The typical SSH student years borrowed $69,900.00 to attend SSH, and obtained his loan from Key Bank (earlier students), Student Loan Xpress (most of the students), or Citibank (later students). Liberty Bank acted as an originator for some loans, and then sold the loans to Student Loan Xpress. AES is the loan servicing agent for Student Loan Xpress. It is helpful for us to know the name of the bank in preparing the proof of claim and to have a copy of the loan agreement and a recent statement from the lender. When the documents are available, we attach a copy of the loan agreement and the SSH Training Services Agreement to the Proof of Claim.

Helping the FBI With Its Criminal Investigation of SSH

2008-05-29T17:24:00.000-07:00

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.

Notice of Appearance Filed Today

2008-05-13T17:12:00.000-07:00

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.

Running, Racing, Riding, and Raising Funds for Charity

2008-05-11T16:56:00.000-07:00

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

2008-05-11T16:43:00.000-07:00

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

2008-05-11T16:35:00.000-07:00

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.

Disputing Your AES Accounts Part 2

2008-05-09T09:23:00.001-07:00

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 www.freecreditreport.com 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,
Jason"

ABC 7 News San Francisco Tonight

2008-05-07T13:09:00.000-07:00

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.

From The Higher Ed Watch Blog

2008-05-03T16:00:00.000-07:00

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?

Working on the Proofs of Claim and the Adversary Proceeding Complaint

2008-05-02T10:45:00.000-07:00

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.

Disputing Your AES Accounts

2008-05-01T14:02:00.000-07:00

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.

Brown Dean Out

2008-04-16T23:23:00.000-07:00

Texas based law firm Brown Dean has decided to drop all 35 of its former SSH student clients and urge them to immediately seek legal counsel elsewhere. The majority of these former Brown Dean clients have already committed to joining our SSH client group. We welcome them, and wish a full and speedy recovery to Charles Mitchell, the attorney who formerly was handling this matter for the Brown Dean firm. Mr. Mitchell is the father of two former SSH students. He is recovering from a heart attack that he suffered in March and quadruple bypass surgery.

AES Changes Course

2008-04-16T22:41:00.000-07:00

This week, many our our clients received letters from AES stating that they do not have to begin making any payments to AES. This is a 100% reversal of the position taken by AES in late March when it issued payments demands to most of its SSH student borrowers. Here is an exact quote of one of these new letters from AES:

"On March 25, 2008, we sent you a letter regarding your outstanding loan and your repayment schedule. Please disregard that letter. It was sent to you in error.

We are in the process of reviewing the current situation and options, and, until you receive further information from us, your outstanding loan will be treated as it it is still in the grace period. During that time, interest on your outstanding loand will accrue, but you will not be required to make any payments.

If you have any other concerns please contact at the address or telephone number shown above. Our office hours are Monday though Friday 7:30 A.M. to 9:00 P.M., Eastern Time

American Education Services"

Who or what is responsible for this 100% change in AES' position? When AES says that it is "reviewing the current situation and options," does that include the fact that we now represent 999 former SSH students and have unequivocally proclaimed our intent to sue AES to void these bad loans? Gail and Georgeann believe that we are what caused AES' change of position. I can only say that we welcome AES's change of position. Our advice not to make payments on these loans while they are in dispute is now easier for everyone to take.

Final Deadline: April 18, 2008

2008-04-10T01:23:00.001-07:00

The final deadline for all SSH students to hire me and my law firm to represent them in the SSH case is April 18, 2008. Any retainer fees and contracts must be postmarked and in the mail on or before April 18, 2008. There will be no further extensions of time. There will be no exceptions. We will be filing our Request for Special Notice listing all of our SSH clients later this month. Our lawsuit against the lenders will be filed in late April or early May and you will either be with us or be left out. This is NOT a class action lawsuit. We are seeking relief only for our clients. If you are still unrepresented in this case, I urge you to consider hiring the attorneys that you feel are most qualified to represent you. As of today, we represent 901 former SSH students -- more than twice the number of former SSH students represented by all of the other attorneys in the country put together. While I am proud that so many SSH students have chosen us, I am concerned about the many SSH students that are not represented by any legal counsel. It is my belief that most of these students will end up being sued by the lenders and found liable for the entire balance of their student loans plus interest and attorneys fees. So please, if you know any of these unrepresented students, tell them about us.

New Deadline For Filing Proofs of Claim in the SSH Case

2008-04-10T01:10:00.000-07:00

Trustee James F. Lisowski filed and served a Trustee's Notice of Finding Assets, Notice to File Proof of Claim and Notice of Time Limitation on March 31, 2008. Many of our clients have asked us about this Notice. Here is what you need to know: (1) The trustee has found assets in the estate from which a payment of dividends to creditors appears possible; (2) The deadline for creditors to file a proof of claim has been extended from the former date of June 9 to July 7, 2008; and (3) If you are our client, we will file the Proof of Claim for you. We will be filing the proofs of claim for you in April and May, long before the July 7 deadline. We will contact our clients one by one if and when we need additional information from you to prepare the proof of claim. We will notify each and every one of our clients by e-mail when his or her proof of claim has been filed.

There is a typo in the Notice sent out by the Trustee. The Case Number refers to the Silver State Helicopters, LLC bankruptcy, but the caption says "Silver Helicopters." This is not a third Silver State case, it is simply the Silver State Helicopters, LLC bankruptcy case.

As Seen On TV

2008-04-10T01:01:00.000-07:00

The local ABC affiliate Channel 7 will air a story about the SSH bankruptcy on Thursday, April 10 @ 5:00 pm. on its ABC7 Eyewitness News program. This story features former SSH student Christian Shaffer and attorneys Michael Berger and Gail Higgins. Rick Romero is the on air reporter and Elaine Hogue is the reporter who interviewed all of us for the story.

Road Show

2008-04-05T11:05:00.000-07:00

Geo and Gail hit the road this weekend to spread the word about what we are doing for SSH students. Georgeann is in St. Louis, Missouri where she will meet with SSH students today, April 5, at 3:00 pm at Culpeppers Restaurant in O'Fallon, Missouri 4401 Hwy K. To relax on Sunday, Geo will run the St. Louis Marathon.

Gail is in Melbourne Florida where she will meet with SSH students today, April 5 at 1:00 pm at the Atlantic Jet Center, 1401 General Aviation Drive in Melbourne, Florida 32935. Gail will lead an additional meeting with Florida SSH students at Bennigan's Grill & Tavern on Monday, April 7 at 6pm. Bennigan's is located at 900 S Apollo Blvd., Melbourne, FL 32901

Why You Should Hire Me And My Law Firm To Represent You

2008-04-01T20:41:00.000-07:00

Here are the highlights of why you should hire me and my law firm to represent you in the SSH matter:

1. We are Certified Specialists in Bankruptcy Law and this is a bankruptcy matter. I am Certified as a Specialist in Bankruptcy Law by the California Board of Legal Specialization of the State Bar of California. My Senior Associate Attorney Gail Higgins is Certified as a Specialist in Bankruptcy Law by the American Board of Certification. To see my resume, follow this link: http://www.bankruptcypower.com/resume.html.

2. We have substantial experience in bankruptcy law (26 years of experience for me). This includes handling major fraud cases and suing lenders to discharge student loans.

3. We are top rated attorneys. Martindale-Hubbell publishes peer review ratings regarding an attorney’s legal ability and ethics. I have been awarded their highest rating, "AV," A for excellent legal ability and V for very high ethics. My firm and I have had this rating for more than 15 years. This can be independently verified by you by going to Martindale.com or go directly to the webpage with my profile http://www.martindale.com/Michael-J-Berger/77858-lawyer.htm or the web page with my law firm's profile

Here is more information about the Martindale-Hubbell pier review process as posted on the Martindale.com website:
"For over a century, lawyers have relied on the Martindale-Hubbell® Law Directory for authoritative information on the worldwide legal profession. The Martindale-Hubbell® Peer Review Ratings™ play an integral role in this service to the legal community.
Buyers of legal services, as well as those making referrals, consider Martindale-Hubbell Peer Review Ratings invaluable when evaluating a lawyer. Whether choosing between two equally qualified candidates or looking for counsel in another jurisdiction, lawyers and consumers need to have confidence in the individual under consideration. Using ratings, they can select counsel with superior ethics, as well as the desired level of professional experience.
Martindale-Hubbell Peer Review Ratings attest to a lawyer's legal ability and professional ethics, and reflect the confidential opinions of members of the Bar and Judiciary. They appear in all formats of the Martindale-Hubbell Law Directory, in the online listings on martindale.com, on the LexisNexis® services, on CD-ROM, and in print.
An objective way to assess a lawyerA Martindale-Hubbell rating guides buyers of legal services and those referring business in making faster, smarter decisions. A rating's third party validation of ethics and legal ability provides that extra level of confidence that the right lawyer or firm has been selected. By combining a rating with a review of other data in a lawyer's Professional Biography - such as practice areas, bar memberships, professional affiliations, education and clients - a person can be certain he or she has made the right choice for that particular legal matter.
A cooperative effort with the legal professionMartindale-Hubbell Peer Review Ratings are established by lawyers. The legal community respects the accuracy of ratings because it knows that its own members — the people best suited to assess their peers — are directly involved in the process"

4. Our clients consistently give us 5 star ratings and tell the world about how we have helped them. To verify this, go to the City Search Los Angeles website and look up Michael Berger in Los Angeles, or go directly to this link:
http://losangeles.citysearch.com/review/41833096?rpp=20&providerSource=cs
These reviews are independent reviews and are posted on an independent website.

5. We are geniuses. Both Gail Higgins and I are members of Mensa, the International High IQ Society.

6. We are compassionate. We enjoy helping people. This is why I chose to be a bankruptcy lawyer. This is why my Senior Associate Attorney Georgeann Nicol does the AIDS ride every year, riding her bicycle from San Francisco to Los Angeles and raising tens of thousands of dollars to fight AIDS in the process.

7. We are high energy people, and we put that energy into helping our clients. I am a 17 time Marathon finisher with a Boston qualifying personal best time of 3:24:18 set at the St. George Marathon on October 7, 2006. I will be going back to Boston this April 21 for my 5th Boston Marathon. Senior Associate Georgeann Nicol paces others in Marathons, teaches spin, and is an Ironman Triathlete.

8. We are the overwhelming choice of the Silver State Helicopter Students. As of today, more than 700 SSH students have hired us to represent them in the SSH case. This is far more than every other law firm combined. The combination of our experience, intelligence, compassion, hard work and reasonable fee has made us the choice of SSH students from every location across the Country. Again and again, students who have done their research and consulted their attorney friends have chosen us.

9. Attorney Peter Lown of Jonesboro, Georgia has given us his unqualified endorsement and referred his SSH clients to us. Mr Lown represented approximately 40 SSH clients, making him the attorney with the third largest group of SSH clients, behind the Law Offices of Michael Berger and the Dan Reed/Harward & Associates firm. On Tuesday, March 18, Mr. Lown sent the following e-mail to all of his SSH clients:"Folks:I have been continuing my investigation and research on the evolving situation with Silver State post bankruptcy. In this vein, I have reviewed and spoken to two other law firms stepping up to represent former Silver State students, the Brown, Dean law firm in Texas and the Berger law firm in California. At this point I feel you will be better represented by one of the other firms and it is my recommendation that you all sign-up with the Berger Law firm without delay. I have reviewed Mr. Berger’s qualifications and discussed his litigation plan with him. I believe Mr. Berger is eminently qualified to handle this litigation and he has now signed up over 400 other students. There is considerable strength in numbers, and Mr. Berger has already made a considerable investment in the case. I also met two of his attorneys at the bankruptcy 341 hearing and they were very aggressive and on target in their questioning. I will be refunding any remaining trust funds and I plan to have the meeting with you scheduled for April 6th at the usual location in Casa Grande.Pete Peter Charles LownHARRINGTON & LOWN9425 South Main StreetJonesboro, GA 30236-6023Tel.: 404-520-0171Fax: 404-506-9149"Earlier that same day, Mr. Lown sent me the following e-mail:"Michael:Thank you for taking the time to speak with me today. With the information you have provided regarding your plan for litigation against the various parties involved the Silver State operation and your substantial client base, I am convinced that you are best positioned to represent former Silver State students in attempting to make them whole. I will be recommending that the 40 clients Randall Stone and I represent in Arizona retain your firm to continue their litigation with Silver State. I am very pleased that someone of your ability and determination has come forward to help these people.I am looking forward to working with you.PetePeter Charles LownHARRINGTON & LOWN”

Attorney Steven Sayler of San Diego, with approximately 20 SSH students, has followed suit and has referred all of his SSH clients to us.

10. Our flat fee of $800/SSH client is the only flat fee being offered by any law firm, and is by far the most reasonable fee. There is no hourly fee, no contingent fee, and no chance of us asking you for any more money on this matter, ever.

11. We have already been highly active on this case. For example, when other attorneys stayed home, we sent our 2 Senior Associates to the First Meeting of Creditors in this case, and took a leading role in the questioning of the debtor. For more information about this and our other work on this case, check out my blog http://www.bankruptcypower.blogspot.com/

12. Our 4 part plan of attack makes sense:

A. Assisting with filing a proof of claims and assisting the Trustee and Office of the United States Trustee in actions to recover fraudulent and preferential transfers so that assets can be brought into the SSH bankruptcy estate for the benefit of creditors.

B. Negotiating with AES, Student Loan Xpress, KeyBank and Citibank re discharge/voiding of loans made to our SSH student clients and the filing of one or more Adversary Proceedings in the SSH bankruptcy to accomplish this.

C. Cooperate with all governmental authorities interested in criminally prosecuting and fining all individuals and entities criminally responsible for the disappearance of tens of millions of dollars in student loan funds.

D. Investigating every government program, state and federal, that may provide relief to our clients.

13. We take the time to answer every phone call and every e-mail.

There is much, much more to say, but I think that is enough for now. We are the law firm that is best qualified to represent SSH students.

Silver State Update

2008-04-01T13:50:00.000-07:00

To our Silver State clients:

AES

Yesterday, March 31, 2008 we received almost 150 calls about a billing memo from AES. Each student wanted reassurance and an explanation. It took up most of the day for 3 of our 4 lawyers. It also taught me a valuable lesson. When we are besieged by dozens of SSH clients all asking the same question, we will immediately post an answer to the question on our bankruptcy blog, www.bankruptcypower.blogspot.com. We are putting our explanation of the AES letter on our blog, http://www.bankruptcypower.blogspot.com/. We will follow the same procedure for common questions in the future. We want students with questions to look to our blog first, then email their questions to us. When the same question comes in many times, we will compose an answer and cover that question quickly and then concentrate on the unique problems.

Most of the happenings are things we have previously explained or warned about but this is a good time to go over the issues.

AES is the present servicing company for several of the banks that made loans for Silver State Students. Many of you signed original documents with US Bank, KeyBank, or Student Loan Express and now are getting letters from AES. AES now owns the notes; AES is the company expecting payment.

Many of the Students have paperwork stating that their repayments were not to start until June or ‘09 or later. Unfortunately, the small print says – ‘or when you are no longer a student’. Well, Silver State closed; you are no longer a student (and yes, I know it was through no fault of your own) – so AES accelerated all the loans and wants payment in June 08.

Most of the loans are scheduled out in 3 groups – from when they supposedly paid the money to Silver State – so the letter says $200 something on loan disbursement #1 and $200 something on loan disbursement #2 and so on… - for a total of over $600 per month - starting June 2008.

This loan is what we are trying to get eradicated in the bankruptcy court. (I chose that word carefully – there are tax ramifications of getting a loan forgiven; we want it nullified as to you and your cosigner.

To Pay Or Not To Pay?

The students are asking: should we pay it? We think that the loans are fraudulent and that we will prove it up in Court. We don’t want you to pay anything. However, if you don’t pay, AES may place negative entries on your credit reports. We are contacting the 3 major credit bureaus to give them a heads up and maybe forestall some of that problem, but we anticipate that your lender will place negative entries on your credit reports if you do not pay your lenders what they want when they want it. You could get sued. You could get a nasty phone call. (Oh, please let that happen, because you will all tell them to contact your lawyers: us).

So, what do you do? Wait a bit. Give us time to do the ’lawyer stuff’. We are working on our Adversary Proceeding Complaint and will be filing it in May, 2008.

The Proofs of Claim must be in by July 7, 2008. We will do them for you and will be contacting you all through May to see that they are done.

One piece of good news: those students who were ‘inadvertently’ filed in the wrong case when they sent in their Proofs to the Debtor’s attorney, are in the right case now. The Trustee listened to us when we complained about her and merged the cases.

AES / Xpress Loans Request for Hardship Forbearance

Don’t sign the Xpress Loans Request for Hardship Forbearance form being sent by AES to SSH students. This form contains language such as “I intend to repay my loan(s)” that is not true and that can be used against you later in Court. The AES form is not appropriate for SSH students who are planning on suing AES and their lender.

Time Extension

To accommodate clients referred to us by attorney Peter Lown of Jonesboro, Georgia and attorney Steve Sayler of San Diego, to accommodate clients who had difficulty raising our $800.00 fee, and to further increase the size and strength of our group, we are today announcing a final extension of time for SSH students to hire us to represent their interests in the SSH matter to postmarked by April 18, 2008. Due to the need to commence legal action against the SSH lenders, there will be no further extensions of this deadline.

The Winner Is

I am proud to announce that as of today, we have signed up more than 700 SSH students. This is far more than every other law firm combined. The combination of our experience, intelligence, compassion, hard work and reasonable fee has made us the choice of SSH students from every location across the Country. Again and again, students who have done their research and consulted their attorney friends have chosen us. We thank you for your trust. We will continue to use our best efforts on your behalf. We are passionate about helping you.

Road Show

Georgeann and Gail, my two Senior Associates, are hitting the road again to meet with SSH students, to tell them about our work on their behalf, and to answer all of their questions in person.

Georgeann will be in St. Louis, Missouri on Saturday, April 5 @ 3 pm. For more information about this meeting, send an e-mail directly to Georgeann.Nicol@bankruptcypower.com.

Gail will be in Melbourne Florida on Sunday, April 6. For more information about this meeting, send an e-mail directly to Gail.Higgins@bankruptcypower.com.

Attorney Peter Lown Endorses Michael Berger

2008-03-20T15:32:00.000-07:00

Attorney Peter Charles Lown of the Georgia Law Firm of Harrington & Lown has decided to stop working on the SSH matter and refer all of his SSH clients to the Law Offices of Michael Berger. Mr Lown represented approximately 40 SSH clients, making him the attorney with the third largest group of SSH clients, behind the Law Offices of Michael Berger and the Dan Reed/Harward & Associates firm. On Tuesday, March 18, Mr. Lown sent the following e-mail to all of his SSH clients:

"Folks:

I have been continuing my investigation and research on the evolving situation with Silver State post bankruptcy. In this vein, I have reviewed and spoken to two other law firms stepping up to represent former Silver State students, the Brown, Dean law firm in Texas and the Berger law firm in California. At this point I feel you will be better represented by one of the other firms and it is my recommendation that you all sign-up with the Berger Law firm without delay. I have reviewed Mr. Berger’s qualifications and discussed his litigation plan with him. I believe Mr. Berger is eminently qualified to handle this litigation and he has now signed up over 400 other students. There is considerable strength in numbers, and Mr. Berger has already made a considerable investment in the case. I also met two of his attorneys at the bankruptcy 341 hearing and they were very aggressive and on target in their questioning. I will be refunding any remaining trust funds and I plan to have the meeting with you scheduled for April 6th at the usual location in Casa Grande.

Pete

Peter Charles Lown
HARRINGTON & LOWN
9425 South Main Street
Jonesboro, GA 30236-6023
Tel.: 404-520-0171
Fax: 404-506-9149"

Earlier that same day, Mr. Lown sent me the following e-mail:

"Michael:

Thank you for taking the time to speak with me today. With the information you have provided regarding your plan for litigation against the various parties involved the Silver State operation and your substantial client base, I am convinced that you are best positioned to represent former Silver State students in attempting to make them whole. I will be recommending that the 40 clients Randall Stone and I represent in Arizona retain your firm to continue their litigation with Silver State. I am very pleased that someone of your ability and determination has come forward to help these people.

I am looking forward to working with you.

Pete

Peter Charles Lown
HARRINGTON & LOWN
9425 South Main Street
Jonesboro, GA 30236-6023
Tel.: 404-520-0171
Fax: 404-506-9149"

Geo’s and Gail’s report on the Silver State Helicopters, LLC 341(a) hearing on 3/10/08 at 3pm

2008-03-14T08:53:00.000-07:00

Georgeann Nicol and Gail Higgins of the Law Offices of Michael Jay Berger represented all of our SSH clients at the 341a hearing of Sliver State Helicopters, LLC in Las Vegas, NV at 3pm on 3/10/08. Here is Geo and Gail’s report:

The hearing started out in the Bankruptcy court at 300 S. Las Vegas Blvd. but because over 300 people (mostly former SSH students) were in attendance, the meeting was moved across the street to a hearing room in the District Court building, (which was still filled to capacity).

Silver States was represented by its Attorney Jeanette McPherson, its Chief Accountant James Little, Stenning Schupert, a representative of EOS, and EOS’s attorney Mark First. Stenning Schueppert is the Corporate Secretary of both Silver State Services (hereinafter SSS) and Silver State Helicopters (hereinafter SSH). He is the person that signed the bankruptcy petition for SSS and the bankruptcy petition for SSH. We were there on behalf of approximately 300 students who attended the hearing and all our other clients who could not make the hearing. Local media was also in attendance.

Prior to the hearing, the atmosphere was one of excitement and hopefulness that some answers might be forth coming today. Side note: there were several clever t-shirts worn by the former SSH students reflecting their feelings about this situation.

The Trustee began the hearing by advising everyone of the rules of the hearing, i.e. no cell phones, no talking … unless asking questions, and about the time limit for questions of the Debtor’s representatives.

The Trustee announced one very important piece of information. In the future, there will be a web link to the Silver State information that will be accessible to everybody. (We noted that he recently filed a request with the Court to be allowed to Limit Notice - his mailings were costing $3,000 a pop, and would quickly eat up available funds.) The direct link is: www.silverstatehelicoptersbankruptcy.com. This will save individuals from having to pay for PACER access to the Bankruptcy Court’s website.

The Trustee noted that there were actually two bankruptcy cases, SSH , the case that we are all familiar with, and SSS, the holding company for SSH. (Note: In a short discussion after the Hearing, the Trustee informed us that he is “Consolidating” these two cases. That means that all the Proofs of Claim that the Debtor’s attorney “mistakenly” filed in the wrong case will be automatically applied to the proper case. This is a good thing.)

The Trustee had a few simple questions for the representative of SSS and the Trustee’s counsel had a couple of follow up questions and then the Trustee concluded that hearing.

The Trustee then began the 341(a) hearing for the case we are all interested in, SSH. He asked the usual questions, who are you , how are you the person most knowledgeable for SSH, and so on. It should be noted that Mr. Schueppert explained essentially that the EOS contingent decided to file the Bankruptcy and that Jerry Airola refused to sign the paperwork, so Schueppert signed the paperwork on orders from the Board of Directors of SSS. Consequently, most of Schueppert’s answers to questions were “To the Best of My knowledge.”

This Q&A period went on for approximately 10 minutes. We learned that the person ‘most knowledgeable’ for SSH was: new to the entire operations because he: “had no knowledge of any real substantive SSH information prior to August of 2007.” He testified that EOS purchased 60% of SSH for $30,000,000.00 in November of 2007. When asked by the Trustee what precipitated this chapter 7 filing, he said the following three things:
1 - No more school loans were going to be funded by Citibank and Citibank was the only remaining bank writing student loans for SSH;
2. Enrollment was down, hence the income would be limited; and
3. The 01/31 sale of the Commercial side of SSH had not gone through as planned - hence no commercial contracts.

He testified that the decision to file Bankruptcy was made on Feb 4, the day of filing.

He testified that prior to EOS purchasing the 60% of SSH, excuse me: “investing in SSH,” EOS looked into the following issues: the lawsuits, the commercial activities, and the student enrollment/ the cash flow of SSH. They made a plan with Airola for the Recapitalization of SSH .

Schueppert testified that EOS had never been involved in any type of aviation company and had never been involved with any school. Based on an outside audit which Shueppert claimed was done by an independent company, EOS concluded that this would be a good investment for EOS clients and they consummated the deal in November of 2007. Of the $30,000,000.00, EOS gave Jerry Airola and Steve Pickett $13,000,000.00 cash, $13,000,000.00 supposedly went into SSH operating funds and the balance of $4,000,000.00 was for fees for the transaction itself. (Comment: EOS probably took its profit right there). (It should be remembered that this was a transaction for Jerry’s stock and ownership of SSH - it supposedly did not affect SSH directly.)

Jerry Airola and Steve Pickett failed to attend the 341(a) hearing. ORIX, the secured lender on the birds, had previously scheduled a 2004 examination of Airola, which he also did not attend, despite a Court Order that he appear. A new 2004 exam for Airola has been ordered by the Court, - set for a date to be determined. Airola must attend this examination or be subject to a Bench Warrant for his arrest.

The Trustee’s counsel broke in from time to time and asked his own questions.

After the Trustee and Trustee’s counsel asked questions for about 15 minutes, the floor was thrown open to questions from various creditors and creditors’ reps. For the next 2.5 hours, SSH’s representative had to respond to questions pertaining to the following subjects: The relationship between AES, EOS and SSH. Why did EOS file bankruptcy so quickly after buying 60% of SSH? Did EOS know about helicopters that were still flying out of the Cheyenne airport in Vegas? What was the explanation for the $180,000.00 paid to various law firms and PR firms on the exact day of the filing? It was noted by the Trustee’s attorney that these funds were probably not all earned and some of these fees should likely come back into the estate. We agree.

There were also several student and their parents who expressed their general outrage at the representatives of EOS.

The Trustee allowed the expression of their feelings and did not ask them to tone it down, nor did he ask marshals to escort them from the room. (To our knowledge the only one excluded was a cell phone violator).

Conspicuously absent at the 341(a) meeting was James Harward and Dan Reed of Harward and Associates. Also absent was any representative from the law firm of Brown & Dean.

During his testimony, the representative for EOS revealed that the reason SSH was longer using AES was because AES was caught receiving kickbacks from student loan funding in another school and thus could no longer write this type of loan. This confirmed our research and we will be posting more on this later.

Mr. Schueppert testified that EOS did not attempt to push through more students and more student loans prior to filing the bankruptcy. This is in direct contradiction to information that we have from several sources.

Gail believes that EOS’s plan was to carve out the commercial aspects of SSH and sell them off, and then close down the school. EOS advertises that it handles companies in “ownership transition” and does “recapitalizations.” We will post information on EOS separately.

Our plan right now to: 1) try to get the loans declared null and void and to 2) try to get monies returned to those who have already paid in, is underway.

San Diego Union Tribune Writes About The Plight of the SSH Students

2008-03-10T15:26:00.000-07:00

JACIE LANDEROS / Union-Tribune

Left in the lurch
Lenders expect students to repay private loans even if school goes bankrupt
By Bruce V. Bigelow
UNION-TRIBUNE STAFF WRITER
March 9, 2008
Hector Leon was a freshly divorced father with two small children when he
decided in 2006 to enroll in a helicopter flight school offered at El Cajon's
Gillespie Field by Nevada-based Silver State Helicopters.
The flight school required all students to pay the full amount of their
$69,900 tuition up front. Leon said Silver State made it easier by arranging
a private student loan for the full amount, with payments deferred until six
months after graduation.
“When I heard their ads, which said you could make upwards of $150,000 to
$180,000 a year, I thought it was the way to get a better income and provide
a better life for my two kids,” the San Diego resident said.
But Leon's helicopter dreams began to spin out of control when he learned
on Super Bowl Sunday that Silver State had ceased operations and was filing
for bankruptcy liquidation in Las Vegas.
The privately held company has refused to comment since itsFeb. 4 Chapter
7 filing, when it issued a brief statement that blamed its abrupt liquidation
on “a rapid, unprecedented downturn in the U.S. credit markets.”
The credit squeeze “severely curtailed the availability of student loans” Silver
State said, “and resulted in a sharp and sudden downturn in new student
enrollment.”
By some accounts, Silver State's bankruptcy was triggered after a major lender informed the company it would no
longer make loans to its students.
Now Leon and some 2,500 other Silver State students nationwide
are facing a double bind not of their making: fighting for scraps of
their paid tuition in Silver State's bankruptcy while battling
lenders who insist the students are still on the hook for repaying
the loans. “My first reaction was a sick feeling,” said Leon, 36.
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CHARLIE NEUMAN / Union-Tribune
A bankruptcy notice was taped to the door at Silver
State Helicopters, which required students to pay
tuition upfront.
CHARLIE NEUMAN / Union-Tribune
Local Silver State students are among
those battling lenders who insist that the
students are on the hook for repaying
their loans.
To consumer rights advocates, the situation is reminiscent of a
wave in trade school scams and student loan abuses in the 1980s
and early 1990s. They suggest Silver State may be an early
casualty as credit woes squeeze lenders and pose problems that
may be especially painful for students at postsecondary vocational
schools and private, for-profit educational institutes.
“The new twist this time around is that most of them have these
private student loans,” said Deanne Loonin, a staff attorney at the
National Consumer Law Center in Boston. Students today “don't
have the same protections and remedies” available 20 years ago, when most education loans were federally
backed, Loonin said.
For one thing, the federal Bankruptcy Act of 2005 made it far more difficult for individuals to discharge a student
loan in personal bankruptcy.
A California law established to protect students at private postsecondary and vocational schools expired June 30,
2007. Gov. Arnold Schwarzenegger vetoed legislation to renew the program, calling the existing statutes
“fundamentally flawed.”
At the time the law expired, California had about 2,400 postsecondary
schools, including technical-training institutes, cosmetology, culinary and
truck-driving schools, as well as educational chains operated by Corinthian
Colleges, Career Education Corp. and others.
Since then, there has been little if any state oversight.
The company at the center of the latest controversy was founded in 1999 in
Henderson, Nev., by Jerry Airola, who rapidly expanded Silver State's
business to at least 33 flight schools nationwide. In addition to its school in
El Cajon, the company operated in six other California cities: Long Beach,
Camarillo, Chino, Los Banos, Oakland and Sacramento.
Many, if not most, of Silver State's students received private student loans to
cover all or part of their $70,000 enrollment. But because Silver State did
not participate in federal education aid programs, its students were
ineligible for federally guaranteed student loans.
After Silver State's bankruptcy, many students learned that private student
loans usually cannot be discharged if their school goes out of business –
unlike federally guaranteed education loans.
Shortly after the bankruptcy, San Diego-based Student Loan Xpress, which
worked closely with Silver State's California flight schools, indicated it had
no plans to write off its loans to Silver State borrowers.
In a statement, Student Loan Xpress urged students to contact Silver State's bankruptcy attorney to file individual
claims for a refund on the “unearned” portion of their paid tuition.
“We also encourage those students whose tuition was financed by SLX to contact us to implement mutually
satisfactory repayment plans,” the lender said.
Students may have little recourse, but Elena Ackel of the Legal Aid Foundation of Los Angeles offered one sliver
of hope, known as “the FTC rule.”
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The rule, based on a Federal Trade Commission regulation, gives consumers the right to legally raise a financial
claim against a lender in cases where a seller and lender have a business arrangement, Ackel said. It applies to
private, for-profit schools and educational lenders.
To Loonin, Silver State exemplifies the sort of hidden risks the credit crunch has forced into the open as the cost
of education has skyrocketed in the United States.
She views private student loans as one of the biggest hazards because they aren't subject to the rate caps that fix
the interest rates on most federally backed loans at 6.8 percent.
In a recent study of 28 representative loans, Loonin found the average initial rate was 11.5 percent, and the
highest was nearly 19 percent. Most had origination charges that added, on average, 4.5 percent to the loan
amount.
Private loans, which were once used chiefly by graduate students, have grown dramatically, from about 5 percent
of all student loans a decade to nearly 25 percent today, Loonin said.
In 2005-06, students took out $17.3 billion in private loans, compared with $1.3 billion a decade earlier,
according to the College Board.
The dramatic growth in private student loans is due chiefly to the enormous profitability of the lightly regulated
industry, Loonin said.
As in the subprime mortgage market, one of the biggest factors driving profitability has involved packaging
student loans and selling them to hedge funds, mutual funds and other investors as “asset-based securities.”
Selling “securitized” student loans has been a key source of revenue for many lending companies, especially those
not affiliated with banks.
In a recent report issued by the National Consumer Law Center, Loonin and co-author Julia Devanthery found
the market for such securitized student loans jumped from $9.4 billion in 2005 to $16.6 billion in 2006 – a 76
percent increase.
But Wall Street lost its appetite for such deals as investors' bets on securitized subprime mortgages began turning
into disastrous losses last year. The resulting credit squeeze has prompted many lenders to make drastic cutbacks
and sever their ties with financially troubled schools, which apparently is what happened at Silver State.
Some lenders also have raised their loan requirements, left less-profitable loan programs and, of course,
increased their interest rates and fees.
“It all helps unmask the larger problem, which is that students are having trouble affording the cost of education,”
Loonin said. “We've masked that problem by throwing all these predatory loans at them.”
She contends that many postsecondary schools mislead students through aggressive marketing that makes
exaggerated promises about high-paying careers without disclosing the exorbitant costs of their classes or the
burdensome nature of private student loans.
Like a receding tide, the industry's cutbacks have exposed some hazards that students face. But nowhere has this
reef been exposed more clearly than in Silver State's bankruptcy.
In the hierarchy of bankruptcy law, students rank as unsecured creditors who stand near the end of the line of
people who hope to get their money back. Silver State has said in its filings that it does not expect any proceeds
will be left over from its liquidation to reimburse such creditors.
Still, Michael Berger, a Beverly Hills bankruptcy lawyer who is intervening on behalf of hundreds of students in
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California and elsewhere, said there are fraudulent aspects of the case he intends to challenge.
“We have students who got their loans funded the day before the bankruptcy, the day of the bankruptcy and the
day after the bankruptcy,” Berger said.
He also asserted that federal investigators and attorneys general in several states, including California, have
launched inquiries into Silver State's operations.
Meanwhile, Leon and other students say they are learning details about their loans – such as higher interest rates
– that they knew nothing about before now.
Leon said the interest rate on the $69,900 loan he signed in 2006 was supposed to be 10 percent. But after
looking over his paperwork, Leon discovered that his rate had jumped to 14 percent and that another lender,
American Education Services, was servicing his loan.
Another Silver State student, Tony Vaca of Long Beach, said as many as 70 Silver State students in California also
have discovered to their surprise that someone had co-signed their student loans, presumably to help them
qualify. But the co-signer's name was not familiar to any of them – and they all had the same co-signer.
Vaca and Leon said they plan to attend a key creditors meeting in Silver State's bankruptcy case that is set for
tomorrow afternoon in Las Vegas, and they plan to fight however they can.
“A lot of students are just sort of throwing up their hands ... not knowing that those $70,000 student loans are
going to be following them around for the rest of their lives,” Vaca said.
Bruce Bigelow: (619) 293-1314; bruce.bigelow@uniontrib.com
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Silver State Helicopters, LLC

2008-02-18T22:56:00.000-08:00

Gail, Georgeann and I have taken on a new big case: representation of many of the 2,700 former students of Silver State Helicopters who are now creditors of Silver State Helicopters. These students never received the helicopter training and certifications that they were promised. Most were left with huge student loan debts. Tens of Millions of dollars are unaccounted for as Silver State Helicopters, LLC abruptly closed its doors and filed for bankruptcy protection in the United States Bankruptcy Court, District of Nevada in Las Vegas. Anyone seeking representation in this bankruptcy case or more information about this case is invited to call me, Gail or Georgeann at the office 310 271-6223.

Silver State Student Christian Shaffer, Gail and I were all interviewed at our law offices on February 14, 2008 by local ABC news reporter Elaine Gouda. Our interview is part of a story on the Silver State Helicopters bankruptcy that will air on ABC local news later this week.

The Network Is Up!

2008-02-08T00:00:00.000-08:00

As my bankruptcy practice has grown, I have continued to update our computers and computer software. This week, the IT crew from Dell Computers and All Covered installed a new Heavy Duty Dell Power Edge Server and linked all of our Dell desktop computers and HP 4250 Laser Jet printers in a high speed network. We are now running Best Case Bankruptcy Software, Act! 2008, Legal Solutions, and Microsoft Office on our network. This lets each one of our 4 attorneys, 2 paralegals and 2 law clerks access the same database and make changes on the same files. All of our contact and calendar information and our e-mail is synced to our Palm Treo 755 phones. With this technology, all of our attorneys and staff have instant access to all of the information about our clients' bankruptcy cases.

Boston Marathon, Monday, April 16, 2007

2007-04-26T15:00:00.000-07:00

What's so great about Boston? It's not the weather. This year, on race day, it was cold and rainy, with constant headwinds of 15-30 mph and gusts to 46 mph. The running expo is great, with the best selection of running gear and inspirational speakers anywhere. The course is great, rolling, beautiful and historic. The runners are great, with many of the best amateur and professional runners from around the world gathering here again this year for the 111th Boston Marathon. But what is so great about the Boston Marathon? What is so great that I urge each and every TCLA member to run the Boston Marathon? It's the people of Boston. It's the Boston Athletic Association and the local town officials and local police and the thousands of volunteers who are there to assist the runners at every turn. The organization is great, every step of the way. Most of all, what makes the Boston Marathon so great is the incredible Boston Marathon fans who come out to support 20,000 strangers.
In Boston, the entire course is lined with fans that cheer for you. These fans care deeply about running and care deeply about each individual runner. They line the course from start to finish and scream their support for you as if you were a rock star. At the start, they say, "You are already a hero, you came out to run today." They reach out to you, young and old, to give you five. At Wellesley, the college girls shout "You are my hero," "Kiss Me," "I love you," and "Marry me!" Mostly they just scream so loud and so long that you can hear them half a mile away. This is why they call Wellesley "The Scream Tunnel." At each and every town that you run into, you are greeted like a conquering hero. Fans scream your name, over and over. "Go, Mike!" As you enter the City of Boston, the crowds of fans get deeper, and the encouragement given to every runner is amazing. "You are doing great!" "Your legs look great!" "You're almost there!" Groups of 10 or 15 start to chant your name: "Mike, Mike, Mike, Mike, Mike, Mike!" This year, they did all of this in the pouring rain, in the freezing cold, and in the gusting, howling winds.
This year TCLA sent 10 runners, including its first ever Boston Marathon teams. First for the TCLA Men's Masters Marathon team, and first for TCLA overall by almost 12 minutes was 52 year old Boston Marathon veteran Frank Tai. Frank had an excellent starting position, with his toes directly in front of the timing mat when the gun went off. Frank is a consistent sub 2:50 marathoner, but leg cramping caused by the weather and the course conditions slowed him to a 3:12:43. Shortly behind Frank, Bill Korthof enjoyed his Boston experience, albeit a bit slower one than he wanted. Third for TCLA was Bruce Reisenfeld. Bruce improved on his Boston Marathon time from last year by five minutes. Peter Glassman was next for TCLA. Peter is a regular with the Coffee Bean Crew, and he expressed his appreciation to all of them "who have made going to Boston possible" for him.
Sitting in his car in Hopkinton at 7:00 a.m. with his wife Ruth and watching "sheets of rain dancing across the parking lot," Dean Goodman heard "the newscasters describing the storm as a Category 2 hurricane." His wife literally begged him not to run. More than 2000 registered entrants for the Boston Marathon this year decided not to run. But not Dean, and not any member of TCLA. Dean ran strong for 20 miles and then suffered in the final 10K, but still managed to run a Boston Qualifying time on a tough day in the middle of the biggest "Noreaster" storm in New England in 15 years. 25 seconds behind Dean was your author Michael Berger. 6 weeks earlier at the Los Angeles Marathon, I made a strong effort and had a good finish. I knew that at Boston I might have to pay for this strong effort at LA, and I did.
First woman for TCLA by 21 minutes was Jennifer Liu. Jennifer led the TCLA Woman's Open Marathon Team and improved on her Boston Marathon time from last year by four minutes. Jennifer did not go out too fast, and actually negative split the course by two minutes. The next woman for TCLA was Gina Jamero. Gina "ran for fun" and said that she thoroughly enjoyed everything about the Boston Marathon long weekend, from her shopping spree at the expo and the great company at our TCLA/LA Leggers/LA-Tri Club Dinner on Saturday night at Legal Seafood, to the race and the "incredible fans" all along the course.
Wayne Joness ran the Boston Marathon in memory of his recently deceased sister, Jan. He carried her name and the date of her death on his running outfit, and the crowd support was "overwhelming." Wayne struggled with leg and hip injuries in the second half of the race, but never thought of quitting. Like your author, Julie Gutman ran the LA Marathon 6 weeks before Boston, and like your author, Julie had to pay. Julie decided that a little Advil might help her effort, so she took 2 Advil just before the start of the Boston Marathon. Then, as she felt pain, she took 2 more and another 2 more and another 2 more. This eased the pain enough for her to turn in a good finish for her first Boston Marathon. Don't try this yourself.
Special thanks to former single TCLA member and now married Boston resident Julie Kriger Ledwig. Every year, Julie stands at the foot of Heartbreak Hill and Cheers for TCLA and LA Legger runners, while holding a big sign just for us. This year, Julie gave me five, took my picture, and ran with me for about 100 yards. Julie, you rock! Special recognition to Bruce Reisenfeld's family, who once again came out in force to support him. Bruce's mom and his 2 twin brothers traveled back to Boston with Bruce and supported him and all of his TCLA teammates.
To those of you who have qualified for Boston and never run it, I urge you to try it. You will not be disappointed. To those of you who have yet to qualify for Boston, I hope that Boston dreams will motivate you all year long. The Boston Marathon is everything that you have heard and more. Next year in Boston!
Half Finish
Frank Tai 1:30:22 3:12:37
Bill Korthof 1:32:43 3:15:53
Bruce Reisenfeld 1:30:49 3:24:24
Peter Glassman 1:42:13 3:37:57
Dean Goodman 1:44:44 3:42:52
Michael Berger 1:45:43 3:43:17
Jennifer Liu 1:58:03 3:54:26
Gina Jamero 2:03:26 4:15:23
Wayne Jones 1:54:00 4:20:05
Julie Gutman 2:01:26 4:23:05

This article was written by Michael Berger and was originally published on the Track Club Los Angeles website @ http://www.trackclubla.org/results/07/boston07.shtml

Finishing Strong at the LA Marathon, 2007

2007-04-08T18:15:00.000-07:00

This is me on the way to a 3:26:55 finish at the LA Marathon on March 4, 2007. I placed 388/24,715. Now it is on to Boston where I hope to set a new marathon PR.

Recent Educational Programs

2007-03-21T18:57:00.000-07:00

Even though I am already certified by the Board of Legal Specialization of the State Bar of California as a Certified Legal Specialist in Bankruptcy Law, I am always learing more about bankruptcy law. Recent educational programs that I have take include the following:

March 2, 2007 American Bankruptcy Institute's Day Long "Battleground West" program at the Regent Beverly Wilshire Hotel in Beverly Hills, California.

February 7, 2007 Beverly Hills Bar Association Bankruptcy Section Dinner Program on Chapter 11s for individuals.

Upcoming bankruptcy educational programs that I am registered for include the following:

March 26, 2007 Los Angeles Bankruptcy Forum Dinner Program "How to Not Get Sued and How to Protect Your Fees."

March 27, 2007 Beverly Hills Bar Association Bankruptcy Section Program "Lunch with the U.S. Trustee Peter Anderson."

May 18-20 California Bankrupcy Forum's Annual Conference in Yountville, Napa Valley, California.

These programs give me a chance to continue to learn more about bankruptcy law so that I can give the best advice to my clients. In addition, these programs allow me to constantly network with Bankruptcy Judges, Trustees, and other bankruptcy counsel.

L.A. Leggers 2007 L.A. Marathon Runner 2nd Place Male Award

2007-03-14T09:56:00.000-07:00

On March 11, 2007, I received an award from the L.A. Leggers for having the the second fastest Legger finishing time at the 2007 LA Marathon. The L.A. Leggers is a marathon training club with over 1800 members. It has been rated as the top running club in Los Angeles by both LA Sports and Fitness Magazine and Competitor Magazine. This trophy is now sitting on my desk, and serves as an inspiration to me to keep getting faster and stronger. The first place male Legger at the 2007 LA Marathon was my friend Bruce Reisenfeld. The first place female Legger at the 2007 LA Marathon was my friend Katie Sobczak.

2006-07-23T13:52:00.000-07:00

Here I am at Yosemite in June. This picture was taken in the middle of a 9 mile hike.

2006-07-21T18:28:00.000-07:00

Here is a picture of my daughter Lauren and my dog Petey on the beach at Carmel, California Beautiful! This photo was taken June 17, 2006.

Debt Settlement

2006-02-24T12:16:00.000-08:00

In addition to our bankruptcy practice, we negotiate settlements of debts on behalf of our clients that can not or should not file bankruptcy. All of our negotiators are experienced bankruptcy attorneys, not clerks or paralegals. Our typical fee to negotiate a settlement for a client is $475.00/debt. We do not take any percentage of the money that we save the client. Typically, we save our clients 50-70% of the total debt amount. Our fees for this debt settlement work are much more reasonable than so called "debt consolidation" businesses. Unlike "debt consolidators," we work only for our clients and take no percentage of the money paid to the creditors. If you are interested in our debt settlement services, or any of our other services, please call Michael Berger or Georgean Nicol at 310 271-6223.

Night and Weekend Hours

2006-02-20T18:02:00.000-08:00

It's 6:00 p.m. on Presidents Day, Monday February 20th and I am hard at work at my office. At the Law Offices of Michael Jay Berger, we are available by appointment to meet with you early in the morning before work, in the evening after work, on the weekends and even on holidays like President's Day. We go out of our way to accomodate you.

Bankruptcy Today

2006-02-16T15:56:00.000-08:00

Bankruptcy Today

2006-02-16T15:48:00.000-08:00

Attorney Georgeann Nicol has worked with me since October, 2001. Here she is finishing the Vineman Ironman Triathlon.

2006-02-16T15:08:00.000-08:00

Michael Berger Finishing Strong at the Tucson Marathon