Harward & Associates Dissolve and Drop SSH Matter

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

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

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?

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

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

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

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

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

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

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

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

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

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

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

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

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

Continuing Education

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

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

Instructor Gail Higgins

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

Disputing Your AES Accounts Part 2

Several of our SSH clients asked for a further explanation as to how one of our SSH clients got Transunion to remove AES from his credit report. Here is the explanation, direct from our client: "It was actually really simple. I went to 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

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

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?