Silver State Update

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

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

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

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

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

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

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

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

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

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

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

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!

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?