CIT Group: Two New Class Action Suits

As originally reported in Leasing News' April 9^th, 2008 story on CIT (NYSE:CIT), there were problems expressed in their financial statement regarding student loans delinquencies in general, as well as a major problem with student loans concerning a flight school in Nevada:

As noted by Leasing News in the over 60 day column, CIT has delinquencies in its $11.6 billion in student loans (as do most of the other student loan lenders.) Leasing News observed in their SEC filing before they made the announcement why they should exit the government student loans program.

While these loans are guaranteed by the federal government, there are cash flow difficulties connected that are costly, as well as problems, such as the $196 million CIT most likely will write off in student loans to a Las Vegas based operator of flight training schools. The school has declared bankruptcy and a good number of the student body never finished training and others never received a certificate of completing training. The New York Attorney General also believes there was fraud involved by the operators of the flight school. It is reported only $17 million of the loans are being serviced.

The Brualdi Law Firm, P.C. has announced that a lawsuit has been commenced in the United States District Court for the Southern District of New York on behalf of purchasers of CIT Group, Inc.

The complaint alleges that during the Class Period, defendants made false and misleading statements about the Company's financial condition. Specifically, CIT's public financial statements failed to account for tens of millions of dollars in loans to Silver State Helicopter (``Silver State''), which were highly unlikely to be repaid and should have been written off. On March 6, 2008, Keefe, Bruyette & Woods issued an analyst report on CIT lowering its first quarter 2008 earnings per share estimate by $.08 based on concerns that CIT would have to write down a significant portion of its private student loan portfolio, including the risk that the Company would have to charge off $179 million of private student loans made to students of Silver State, which recently filed for bankruptcy.”

Coughlin Stoia Geller Rudman & Robbins LLP ("Coughlin Stoia") on Friday, March 25 announced that a class action has been commenced in the United States District Court for the Southern District of New York on behalf of purchasers of CIT Group Inc. ("CIT") for a similar cause.

The information for the class action suit was in the SEC filed statements, but it seems both firms believe the delinquencies "should have been given more attention."

Disclosure: Author has no position in the stocks mentioned. 

Comments

[Scammed By ...:]

RIGHT ON!! I am so glad to see that action is being taken against the fraudulent lending practices. AES, SLX and key Bank all did the same thing as CIT did. They never checked the records or demanded that SSH report on % of graduates, % of graduates completed, where the money was going, etc... Had they been doing this, me and thousands of other hopeful pilots wouldn't be stuck with $70,000 in UNSECURED (not federally backed) student loans.

2008 Jul 28 11:39 AM

[Scammed By ...:]

We are 375 Students in Florida and we are organized to fight the same fight against AES, SLX and Key bank. The FBI is investigating Jerry Airola (CEO of SSH) and the lenders. The new investment group, EOS, that took over SSH needs to be investigated too!

2008 Jul 28 11:41 AM

[Paul Boudreaux:]

when we sat in class the first day, they asked us this: Why do you want to be a pilot?. we all stated pretty much the same thing: we wanted to fly, it was our dream. For my part, I was holding down a full time job, studying during lunch breaks, late nights, and still made my flight blocks even though A LOT were cancelled on me (aprox. 65%). All this while sill being daddy to my kids and husband to my wife. I made a tremendous amount of sacrifices as well as the sacrifices of my family. What did I get for my trouble..... NOTHING!!!.... How many sacrifices did you the stockholders make? It seams we ALL were suckered into selling off our dreams...shame!!!

2008 Jul 28 01:24 PM

[Aaron Hutch:]

This sucks for everyone. It has affected alot of families by crushing loved ones dreams and putting most of them into a financial pinch when they were already living tight. There is no way that we can live comfortably knowing that we have to pay for these loans (that paid for hummers and houses) without receiving our proper and full training. It is stealing.

2008 Jul 28 01:42 PM

[JAX EX SSH ...:]

I hope that the attorney general and FBI and any other officials that have been approached by ex SSH students or employees will look more seriously at our situation now. Knowing that we are not just a bunch of students trying to get out of loan responsibilities, but have a justified legal issue about the way we have been dealt with by Student loan Xpress, Silverstate helecopters, EOS and any other companies involved in our recruitment, training and management of our student loans. It's good to know we aren't the only one's who have a problem with these companies.

2008 Jul 28 08:45 PM

[AZ-Wong:]

I'm mother of one of Glendale students. Like many of others my son dream to became a helicopter pilot has been taken from him. All theses students never complained that they were paying too much to achive their dreams. They are definally making theirs voice heard because this dream has been taken from them leaving them only with a debt to pay and nothing worthy to show for.

The SSH scandal involved more than we can see on the surperfice. It has been clear to anyone that the school was using the students tuition as base to open another school in differents states. The method is know as Ponzi scam. The banks was providing the loan without even invistigating the school in how they are proceding with the training and just release the payment with few days that the students were enroll.

Why EOS bought a flight training school ? It was not the type os company they invest in. The follow words was in a business blog posted on 2/21" probally bought out only the assets to create Silver State Services Corp with $75 million in capital leaving Silver State Helicopters with only debt. This will probally be bundled into a hedgfund and dumped onto unsuspecting inverstors" .

There is so much on this....

I don't want to sound silly but I still believe in justice. I stand up strong knowing that all those that has step in to assist on this matter such as the Florida and the NY Attorney generals, lawyers that are representing SSH students or the ones that filled a class suit agaist the banks , XS loan , AES...please don't give up the fight.

2008 Jul 28 11:32 PM

[SteveDotson:]

I am a former student of the SSH/JAX flight school, I live in GA, which was 150 mile round trip for every class, meeting, flight block etc...I did this on average about 2 or 3 times a week from 11/06 thru 2/08. Dispite all the time spent in school and training I still fell short of aquiring ANY of my certificates that were promosed if I applied myself (which I did). I recall many times hearing the words "You just do YOUR part and we will do ours" or "you'll get out of it what you put into it". I guess that could have been interpreted as "we aren't going to do anything" and that would have been more accurate.The reasons that almost everyone in the JAX location was unable to get the training promised to them was due to the fact that Silverstate did not supply the means to do so. Those of us in the first class didn't see a helicopter for the first 4 months and then it was only 1 of which 50 people were supposed to fly 3 times a week each. with only 3 instuctors allowed to fly 4 times a day 6 days a week. You do the math. Needless to say the numbers don't add up. It was impossible for them to provide the services they promised with the resources they provided, and we were told "IT will all work out, just concentrate on your studies and your training and Silverstate will do its part". Now I'm $80,000 in debt(thats the $69,900 plus acrued interest) not to mention the fuel costs to attend the school,I like Paul,have NOTHING to show for it, I have a business to run and a family with 7 kids ages ranging from 18 to 9 mo. so tring to finish my training with no money or place etc... is impossible at the moment. I'm not here to "cry" about my situation, I was more than willing to make what ever sacrifices I needed to. But I expected the same from Silverstate.

2008 Jul 29 12:26 PM

[optimistprime:]

First of all the only people that make money in "Class Action" law suits are the ambulance chasing trial lawyers who will reap millions while the average schlup stockholder will get a check for 68 cents. Notice how several "firms" are suing. CIT will lump all of these together and you'll now get that big check for 34 cents. Why would CIT "write off" loans that are still active on their books? Did they not purchase the financing company that "owned" the loans? Lots of questions her. I tend to trust CIT's decision not to write off loans which have not been defaulted on. Sounds like the mortgage "crisis." 3 people out of 100 cannot repay their mortgages and the world falls apart? Sounds like scare tactics to me especially since the homes can be sold, albeit at some loss, but not TOTAL loss.

2008 Aug 27 08:57 PM

[User 381768:]

EMAIL [e-mail] PASS IT ON TO ANY AND ALL PILOTS WHO HAVE BEEN EFFECTED. sHE HAS ALOT OF SIGNATURES AND POLITITCANS HELPING TO GET A BILL/LAW PASSED TO HELP ANY ANY ALL PILOTS/STUDENTS EFFECT BY KEY BANK GREAT LAKES AND ANY SCHOOLS THAT WERE FRAUDULENT


On Jul 28 11:39 AM Scammed By SSH & AES wrote:

> RIGHT ON!! I am so glad to see that action is being taken against
> the fraudulent lending practices. AES, SLX and key Bank all did the
> same thing as CIT did. They never checked the records or demanded
> that SSH report on % of graduates, % of graduates completed, where
> the money was going, etc... Had they been doing this, me and thousands
> of other hopeful pilots wouldn't be stuck with $70,000 in UNSECURED
> (not federally backed) student loans.

Mar 24 02:30 AM

[User 381768:]

please email me I have been meeting with Congressman, Attorney General and Senators after staying persistent for many years in writing asking for some much wanted help. I am asking fro everyones signature so we can go to washington and anyone both past and present who have been screwed over by a flight school/key bank/great lakes or any other lender. We have alot of signatures this is going to change and all of us can make the difference. Please email me send to anyone to sign not just pilots,freinds, students aviation students etc...tskypilot150@yah...


On Mar 24 02:30 AM User 381768 wrote:

> EMAIL [e-mail] PASS IT ON TO ANY AND ALL PILOTS WHO
> HAVE BEEN EFFECTED. sHE HAS ALOT OF SIGNATURES AND POLITITCANS HELPING
> TO GET A BILL/LAW PASSED TO HELP ANY ANY ALL PILOTS/STUDENTS EFFECT
> BY KEY BANK GREAT LAKES AND ANY SCHOOLS THAT WERE FRAUDULENT

Mar 24 02:34 AM

[User 381768:]

email [e-mail] she has got alot of signatures and we can all make a difference!


On Jul 28 01:42 PM Aaron Hutch wrote:

> This sucks for everyone. It has affected alot of families by crushing
> loved ones dreams and putting most of them into a financial pinch
> when they were already living tight. There is no way that we can
> live comfortably knowing that we have to pay for these loans (that
> paid for hummers and houses) without receiving our proper and full
> training. It is stealing.

Mar 24 02:35 AM

[pcup78:]

so whats going to happen with the loans that we have out? email me @ [e-mail]

Jun 20 08:45 PM

[Will Schramer:]

With news of 75% reduction for those who didn't receive a cert and limbo for those who did obtain a cert, how can anybody call this fair? $17K for a couple of study aids and some air time? Get real! And for those obtained a cert - the question needs to be asked: Who would have started the program to end with anything less than an instructor's rating; hence any cert is near worthless.

Furthermore, I knew two good people chasing a fruitless dream die on a Florida beach. Silver State Helicopters was in a commission of a crime during this and many other fatal accidents. Jerry and his cronies along with all that distributed student loans against legitimate lending guidelines need to be held accountable.

Oct 18 11:46 AM