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Closure of flight school ‘nightmare’ for students

The abrupt closure and bankruptcy filing of a national flight-instruction school for helicopter pilots has left hundreds of Arizona students, and thousands across the nation, grounded without the pilot certification and jobs they were promised.

The shutdown of Las Vegas-based Silver State Helicopters last week puts 750 employees out of work and affects an estimated 2,700 students at 33 flight academies from New York to California. In Arizona, about 200 pilot trainees were enrolled at Silver State schools at airports in Mesa, Glendale and Tucson.

Silver State’s Tucson office was located at 7001 South Park Avenue.

“It’s a financial nightmare for me,” said Shane Hale of Gilbert, a 26-year-old aspiring pilot. “I took out a huge loan and gave up an incredible job to pursue this as a dream.”

Hale said he expects never to see the $46,000 tuition.

The Chapter 7 bankruptcy filing comes more than a year after 39 other Arizona students lodged a federal lawsuit against the company, claiming that they were fraudulently induced to borrow funds for tuition costs ranging from $47,000 to $69,000. Pete Lown, an attorney for the students, estimates that Silver State has received $125 million nationwide in tuition from trainees who are still enrolled. He said most of that money was borrowed under a program coordinated by the company.

Jerry Airola, the Silver State founder and president who touted his business acumen while running for sheriff in Nevada, did not respond to interview requests.

Rachel Truman, a public-relations representative for the company, said all operations have ceased. A creditors meeting is scheduled March 14.

In a letter to employees, Airola blamed mounting financial losses and “crippled” lending institutions that stopped issuing loans for students. He said the company did “everything possible to weather the storm, and will continue to work on a solution.”

Silver State was created in 1999 and expanded dramatically. A company statement lists its rate of growth from 2002 to 2005 at 2,786 percent. Two years ago, Inc. magazine ranked Silver State as the nation’s 12th-fastest-growing private company.

Along with insolvency, the business faces claims by Arizona students that Airola misrepresented tuition costs, failed to provide enough aircraft for flight instruction, made false promises about employment and otherwise misled those who signed up.

Lown said the lawsuit in U.S. District Court here was withdrawn to pursue arbitration, but he anticipates a new complaint will be submitted now due to the bankruptcy.

According to the arbitration complaint, Airola conducted recruiting seminars nationwide, including a 2004 meeting that lured 1,300 prospective students to Phoenix-Mesa Gateway Airport in Mesa. It says Silver State promised certification papers for commercial pilots and flight instructors within 12 to 18 months, and guaranteed jobs with earnings upward of $50,000.

The complaint says those claims, also made on radio and the company’s Web site, could not possibly have been met for a number of reasons, including the fact that Airola did not have nearly enough helicopters. The papers say 119 students were enrolled in Mesa during 2004, each needing 175 flight hours, yet Silver State had only one helicopter for training.

Paul Mischel, a 39-year-old Tucson firefighter, said he paid $59,950 to Silver State and was enrolled for 30 months, but never received the certificates or jobs promised: “They just essentially ruined people’s lives.”

Mischel said only six students from his class of 80 became certified flight instructors. Yet, when students complained, he said, Silver State administrators told them they would not get jobs after graduation if they caused problems. He finally quit the course, but continues paying $600 per month on his student loan.

The complaint claims that Silver State stalled by telling students they could not fly until they received at least a 90 percent score on ground-school tests, even though the Federal Aviation Administration’s minimum passing score is 70 percent. Arizona trainees also complained of other practices, including:

• Silver State received full tuition through lenders just five months after students enrolled.

• Obese students claimed they were told after signing up that they had to lose weight or pay extra to train in more powerful helicopters.

• Some students purportedly were promised interest rates as low as 4 percent on tuition loans, only to discover they were paying up to 9 percent, plus additional fees.

• The company promised to hire “almost every graduate” of the program.

Airola gained notoriety in Las Vegas two years ago, when he ran for Clark County sheriff, claiming to be a law officer in Merced County, Calif. Nevada newspapers subsequently reported that he had served only as a reserve deputy and was dismissed from that position. He lost the election.

Last month, Airola was appointed to the Nevada Economic Development Advisory Board, which promotes business growth in the state.

Silver State also faces a federal lawsuit in Florida filed by the family of a company pilot who was killed last year in a helicopter crash. The civil complaint accuses the company of willful negligence in maintaining the aircraft.

This week, the Statesman Journal in Salem reported that the Oregon Attorney General’s Office has launched an investigation of Silver State after a number of students filed fraud complaints.

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