BANKRUPTCY PROTECTION: Company files for Chapter 7 - News

PRINT THIS Popular

Feb. 05, 2008
Copyright © Las Vegas Review-Journal

BANKRUPTCY PROTECTION: Company files for Chapter 7

Source: Lender won't give loans to students of Silver State Helicopters

By BRIAN HAYNES and FRANCIS McCABE
REVIEW-JOURNAL

Jerry Airola, shown in this 2003 photo, built Silver State Helicopters into a nationwide business. The North Las Vegas-based company filed for bankruptcy Monday.
Review-Journal file photo.

When he was running for Clark County sheriff, Jerry Airola said he would run the Metropolitan Police Department like his fast-growing helicopter company.

A year and a half later, Silver State Helicopters, the company he built, filed for Chapter 7 bankruptcy Monday, about 24 hours after suddenly closing its doors at more than 30 locations nationwide. The move left about 750 employees out of work and roughly 2,700 flight students on the hook for thousands of dollars in student loans.

Most Popular Stories

NORM: When live news shots turn bad

NORM: Terry Fator, wife ending marriage

NORM: Blaze breaks out during magic act

NORM: Jackson worked on album at Palms

Ex-Ensign aide details wife's affair

NORM: Jacksons set up LV memorial area

Ensign wrote lover a letter, saying their affair was a 'sin'

Coroner says sexual assault suspect killed by police was shot in back

LV area residential real estate sales reach record in June

Official: Fatal gunshot in back

In a statement released Monday, the North Las Vegas-based company blamed the closure on troubles in the U.S. credit markets that cut the availability of student loans and led to a "sharp and sudden downturn in new student enrollment."

According to a former employee who requested anonymity, the shutdown was triggered after student loan lender Citibank told the company on Thursday that it would no longer make loans to its students.

That news followed dismal recruiting numbers at four Florida seminars two weeks ago in which the company enlisted only 30 new students per seminar instead of the usual 100, the former employee said.

The bankruptcy filing calls for liquidation of the company's assets, listed as less than $50,000, and ends the rapid growth of Silver State Helicopters. The filing estimates there are at least 5,000 creditors and that liabilities range between $10 million and $50 million.

Airola helped found the company in 1999 with one helicopter in Henderson and oversaw its expansion to 33 flight schools in 17 states from coast to coast.

In August, Airola sold a 60 percent stake in his company to Eos Partners, a New York-based private equity firm. He gave up day-to-day control of the company but remained on the board of directors, and he was the lone vote against bankruptcy on the four-person board, said Elizabeth Trosper, a spokeswoman with public relations firm Mass Media.

Airola could not be reached for comment Monday.

Eos expects to lose the $30 million it invested in the company, spokesman Michael Frietag said.

In 2006, Airola tried to parlay his business experience into becoming the county's top cop, using slogans such as, "We need a sheriff who can run that department like a business."

He spent more than $3.5 million of his own money trying to win the race for Clark County sheriff, and thanks to a blitz of television ads he finished second in the primary and faced then-Undersheriff Doug Gillespie in the general election.

But he couldn't overcome media coverage exposing his lack of law enforcement credentials and a history of lawsuits claiming he lied to flight school students and didn't provide the helicopter time they needed to complete their training. Airola lost the sheriff's race by nearly a 2-to-1 margin.

Kent Oram, who managed Gillespie's campaign, called news of Silver State Helicopter's bankruptcy "poetic justice."

"We talked about this all the way through the campaign. We believed the guy was bankrupt," he said.

Despite losing the sheriff's race, Airola remained active in state political circles. He served on Gov. Jim Gibbons' public safety transition team a year ago, and last week he hosted a political fundraiser for Gibbons' legal defense fund and co-hosted a Nevada GOP fundraiser, featuring President Bush, with casino executive Sheldon Adelson and other top state Republicans.

Pete Lown, a Georgia lawyer representing 40 former Silver State Helicopter students from Arizona who sued the company, said it was just a matter of time until it collapsed. He called the business a Ponzi scheme that relied on an influx of new students to support the existing students.

"It just finally caught up with him," he said. "It was just a slip-shod, fly-by-night operation."

The plaintiffs in Lown's lawsuit and several others filed across the country claim Airola promised to teach them to fly in 18 months or less. In reality, they said, a lack of helicopters and flight instructors dragged out the training for several years or more. Many students dropped out in frustration even though they still owed $50,000 to $70,000 in loans they took out for the helicopter school.

"The sad thing, for the most part, these are everyday people who were put in severe financial disrepair because of Jerry Airola," Lown said.

Ben Schenk, Silver State Helicopters' chief ground instructor from 2002 to 2005, said he quit because he couldn't work for Airola in good conscience.

The main goal of the company, he said, was to expand its schools without the "dedication to the education" Airola promised. Toward the end of his time with Silver State Helicopters, students were taking out $70,000 in loans at 15 percent interest and not getting the services they paid for, he said.

Airola neglected the schools he was building throughout the country, Schenk said. For example, the company opened its Mesa, Ariz., school with one helicopter and 119 students.

"There was no way we could provide the services he was selling," Schenk said of Airola.

Despite that, Silver State Helicopter flight schools continued to open across the nation. Now the company's 200 helicopter pilots are flooding a job market that doesn't have enough spots for them, he said.

Former student Joe Hinton, one of Lown's clients, said he dropped out of the school after 33 months and no end in sight to his training. He still owes about $58,000 and had to refinance his house to make student loan payments, he said.

But he saw a silver lining in Silver State Helicopters' collapse.

Airola "won't have an opportunity to ruin people's lives like he ruined mine," he said.

Review-Journal staff writers Molly Ball and John Edwards contributed to this report. Contact reporter Brian Haynes at bhaynes@reviewjournal.com or (702) 383-0281. Contact reporter Francis McCabe at fmccabe@reviewjournal.com or (702) 381-2904.

Share & Save

Leave Your Comment	49 Reader Comments
Terms & Conditions The following comments are provided by readers and are the sole responsiblity of the authors. The reviewjournal.com does not review comments before publication nor guarantee their accuracy. By publishing a comment here you agree to abide by the comment policy. If you see a comment that violates the policy, please notify the web editor. Some comments may not display immediately due to an automatic filter. These comments will be reviewed within 48 hours. Please do not submit a comment more than once.
Please enter your name Name: Please enter your email Email: Please enter a comment COMMENTS : (word count limit is 300) You have reached the maximum number of words allowed Current Word Count: Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background. Terry Whiteside wrote on January 09, 2009 12:04 PM: My email address for the below comment is terry_whiteside2005@yahoo.com Terry Whiteside wrote on January 09, 2009 11:41 AM: My brother was one of the appaarently many students who were lied to and defrauded by Airola and Silvar State Helicopters. However, he was introduced to flying helicopters and would love to pursue a career in the air. If anyone has any leads or comments as to who he should contact for a career stemming from his learning, please email me and I will gladly pass on the information. Thank you in advance. Sincerely, Terry Whiteside Free Nevada wrote on October 14, 2008 03:57 PM: Now that the credit crunch is FRONT PAGE NEWS, it sort of makes the Review Journal look kind of crappy for tearing into them like this. The point of the article is that the owner was claiming he ran a good business and so that he should be sheriff but here he is a year later going out of business, so he must have been a liar during the campaign. This implies he should have had a backup plan for the largest bank in the country turning off loans to his customers when that was so clearly central to his business model. Review Journal owes this man a formal front-page apology in my book. Ricardo Figueroa wrote on July 12, 2008 11:12 AM: I'm so glad I procrastinated in starting Training on Silver state Flight school Leslie wrote on July 11, 2008 04:25 AM: Bonnie, Sorry to hear about your situation. My boyfriend was a student of Silver State in Long Beach, CA. I found this, and it may be helpful: Not to worry. Creditors may be flocking like vultures over the remains of your company's assets, but the vested portion of your account (i.e., the amount that you would be able to walk away with if you quit your job under normal circumstances) should be safe and sound. After all, that money belongs to you -; even if it's partially made up of funds contributed by your employer. And creditors can't get their sticky hands on those savings since all 401(k) monies are held in a trust at a designated financial institution (that is, a company other than your employer). There are a couple of exceptions. First and foremost, if you're holding company stock within your 401(k) you could face trouble. When a company goes bankrupt, its stock generally gets crushed. And unfortunately, if your company match comes in this form, there may be little you can do to prevent this type of disaster. (This is part of the reason why we rarely recommend holding more than a small amount of company stock in your 401(k), if you have the choice.) Secondly, many company managers have been known to illegally dip into a 401(k) or pension fund in times of trouble, says Ted Benna, president of 401(k) Assocation. If that were to happen in your case, it would be a matter for the courts. But rest assured that it's rare. If you have any questions, contact me. I work at Edward Jones Investments for a Financial Advisor. Or, contact a financial advisor in your area. Leslie (407) 658-3067 Bonnie Shanks wrote on July 03, 2008 01:13 PM: Good afternoon, I was one of the employees for Silver State Helicopter in Tucson and Glendale Arizona and I am still trying to collect my 401K money from them. I tried to get it from the company that holds it and they said that my monies have been frozen due to the bankruptcy. So not only are the students taking a beating, I assume I am not the only employee who can not get, move or transfer their monies. If anyone has any information that might help me get my 401K please help me out. I also want to express my sincere regrets to all those students who were affected by this. I was very close to a lot of them and my heart goes out to each and every one of them. I know that is a lot of money to have to pay back for services you did not receive, keeping in mind the loan was $69,999.00 not including the interest. I was part of the clean up that was being done by one of their General Managers who had a true heart for these students who were still in school after 2 or 3 years that just had been swept under the carpets. We stepped in and really put the focus on getting them through and what needed to happen to do that. Then from that point on we watched every students progress and made sure they were on and stayed on track. They needed staff in there that cared about the outcome and not just the income and they found that in Eric Kroll and myself who really did an awesome job with getting these students where they needed to be. I feel bad for those who were so close and did not get the chance to complete their training. If you would like any further information, please feel free to contact me. Bonnie Shanks 623-225-2317 Heli Vincent Helicopters wrote on February 19, 2008 05:03 AM: Heli Vincent Helicopters inc. Please call me i am very interested to make a Bid of the machine of the compagnie... we very actif on Robinson Helicopters.. Let me Know.... Denis Vinent 819.536.8888 airpyt@hotmail.com DENIS VINCENT wrote on February 19, 2008 04:59 AM: I would like to buy a lot of machine... to who i have to make my demand.. denis Vincent 8195368888 cell quebec canada Heli Vincent Helicopter P.s come back to me soon.. cas127 wrote on February 09, 2008 12:42 PM: RJ, Do some legwork and you will find many "educational institutions" (including plain old traditional colleges) that are massively ripping their students off by explicitly or implicitly promising much much more than they can deliver career-wise. Most schools (public and private sector) are really about defrauding students into the indentured servitude of student loans. Duke B. wrote on February 09, 2008 12:04 PM: Helicopters are very costly to operate and, as has been seen clearly, demand for pilots is limited. I sold a helicopter to a radio station when I was in grad school and they paid for my flight training. It's the only way to safely get involved in an industry with the obvious imbalances that exist, regardless of the claims of this guy Airola. There are many, many hurdles which must be cleared when first entering this business as a pilot or candidate; those without the wherewithal to secure advanced ratings and time in "heavy iron" should really take a hard look at their career choice. While few activites are more fun than flying helicopters (N.B.: I said 'few,' not 'none.'), the fact is that it is not the best financial decision unless you can get someone else, such as Uncle Sam, to pay for your training. Add in the inherent physical risk involved, and it becomes clear that one should investigate every aspect of this career, and the schools that promise gateways into it, before borrowing dime number one and giving it to a guy like this. Read All Comments