Silver State Helicopters
Encyclopedia
Silver State Helicopters was a helicopter flight training, sight seeing tours and charter air operator. The company was founded in 1999 by Jerry Airola, flying Robinson R22
Robinson R22
The Robinson R22 is a two-bladed, single-engine light utility helicopter manufactured by Robinson Helicopter. The two-seat R22 was designed in 1973 by Frank Robinson and has been in production since 1979.-Development:...

 helicopters. Silver State Helicopters expanded rapidly and reported revenues of US$40.7 million dollars in 2005 and US$78.1 million dollars in 2006. Silver State Helicopters ceased operations and entered bankruptcy on February 3, 2008.

History

The company was founded in 1999 at Henderson Executive Airport
Henderson Executive Airport
Henderson Executive Airport is a public airport located south of the central business district of Las Vegas, in Clark County, Nevada, United States. The airport is owned by Clark County and operated by the Clark County Department of Aviation. According to the FAA's National Plan of Integrated...

 with one Robinson R22
Robinson R22
The Robinson R22 is a two-bladed, single-engine light utility helicopter manufactured by Robinson Helicopter. The two-seat R22 was designed in 1973 by Frank Robinson and has been in production since 1979.-Development:...

 helicopter
Helicopter
A helicopter is a type of rotorcraft in which lift and thrust are supplied by one or more engine-driven rotors. This allows the helicopter to take off and land vertically, to hover, and to fly forwards, backwards, and laterally...

. In 2007, Silver State Helicopters expanded into the agriculture field with the purchase of Central Washington Helicopter. Silver State's intent was to give their students a chance to gain experience while allowing current pilots opportunities to advance their careers.

The company expanded into flight training in 2003, with a model based on the United States Army
United States Army
The United States Army is the main branch of the United States Armed Forces responsible for land-based military operations. It is the largest and oldest established branch of the U.S. military, and is one of seven U.S. uniformed services...

’s Fort Rucker
Fort Rucker
Fort Rucker is a U.S. Army post located mostly in Dale County, Alabama, United States. It was named for a Civil War officer, Confederate General Edmund Rucker. The post is the primary flight training base for Army Aviation and is home to the United States Army Aviation Center of Excellence and...

 based helicopter training program and an aim of establishing a helicopter school in every US state. Silver State Helicopters expanded at an unprecedented rate for a helicopter company, especially one that specialized in flight training. Its corporate headquarters was 500 East Cheyenne Avenue in North Las Vegas, Nevada
Nevada
Nevada is a state in the western, mountain west, and southwestern regions of the United States. With an area of and a population of about 2.7 million, it is the 7th-largest and 35th-most populous state. Over two-thirds of Nevada's people live in the Las Vegas metropolitan area, which contains its...

 and had flight academies located in 34 cities around the United States. By 2006, the company was 12th on Inc. magazine's
Inc. (magazine)
Inc. magazine, founded in 1979 and based in New York City, is a monthly publication focused on growing companies. The magazine publishes an annual list of the 500 fastest-growing private companies in the U.S., the "Inc...

 list of the top 500 privately held companies in the United States. Airola sold the company to New York investment house EOS Partners in 2007, creating Silver State Services Corp. He moved from being President and CEO and became the General Manager instead. The plan was to give Silver State the opportunity to grow at an accelerated pace in the areas of flight training and other commercial operations.

Silver State initially attracted students by running television advertising in major urban centres, inviting interested people to come to a recruiting seminar and promising an "exciting career flying helicopters". The recruiting seminars featured a "carnival-like atmosphere" of helicopter rides with the charismatic Airola describing their future flying helicopters. The first recruiting seminar was expected to attract 100 people, but over 1,000 attended, convincing Airola that the plan had great potential. As a result he expanded his recruitment efforts throughout the country.

Airola's pitch told seminar attendees that for an "investment" of just US$69,900 a Silver State Helicopter Academy location would take them from ab initio to a commercial helicopter license, certified instructor with an instrument rating in just 18 months. The program was carried out by a combination of classroom instruction, unlimited use of flight simulators at each location and 10 hours a week of helicopter flight time.

The factor that convinced many students to enrol was Airola's promise that most graduates would be hired by Silver State itself. The company provided access to student loan writers and distributed loan applications. Once students had their letter of acceptance they were required to provide a loan application fee of US$500. Students were required to sign a contract and code of conduct with classes starting within three weeks of recruitment. The terms of the student loans included that repayment was to commence at the conclusion of instruction, or after 18 months, whichever came first, at a rate of US$1000 per month. The loan agreements included a clause that the company would be paid one third of the full amount at the conclusion of 30, 60 and 90 days from the start of training, provided that the student was still receiving training at those points. This meant that the company had been fully paid for 18 months of training after only three months.

Silver State was initially interested in pursuing status as a United States Department of Veterans Affairs
United States Department of Veterans Affairs
The United States Department of Veterans Affairs is a government-run military veteran benefit system with Cabinet-level status. It is the United States government’s second largest department, after the United States Department of Defense...

-approved flight school so that training could be provided to military veterans. The administration has much more stringent requirements for refunds than the company was willing to meet and so the company abandoned these plans, rather than change their loan programs. The company Vice President of training operations, Randy Rowles, explained that management informed him that "We only want about 20 percent of these people to finish." In an interview with Rotor & Wing magazine Rowles explained that the company intended from the start that the majority of students would voluntarily cease training after the first three months, leaving them with the full debt for the loan and the company without the expense of training them. Many students did abandon the training because the school locations were understaffed, overcrowded with students and lacked sufficient aircraft. When the students did not complete their training in the 18 month period they had to start paying back their loans, but without having completed their licenses and without employment, forcing many to quit training to try to find jobs. Rowles told management that they must stop recruiting until the backlogs could be cleared, but he was overruled and recruiting was stepped up.

The company's contract, charter and tourism fleet of turbine aircraft were being used predominantly on non-revenue flights between recruiting venues to bolster local school locations and make it appear that they had more aircraft. This also meant that the company did not have jobs available for its graduates. Throughout 2007 the company started selling off aircraft from its training fleet to raise capital to increase recruiting, which further slowed down training. Orders for simulators were cancelled and aircraft ready for delivery from Robinson Helicopter
Robinson Helicopter
The Robinson Helicopter Company, based at Zamperini Field in Torrance, California, is the largest manufacturer of civil helicopters in North America.-History:...

 were not picked up.

Randy Rowles summed up the company philosophy: "Silver State didn’t care about providing the service. Silver State cared about getting paid for the service."

Silver State had expanded their business into training potential Air Traffic Control
Air traffic control
Air traffic control is a service provided by ground-based controllers who direct aircraft on the ground and in the air. The primary purpose of ATC systems worldwide is to separate aircraft to prevent collisions, to organize and expedite the flow of traffic, and to provide information and other...

 candidates through their Air Traffic Control Academy in New Braunfels, Texas
New Braunfels, Texas
New Braunfels is a city in Comal and Guadalupe counties in the U.S. state of Texas that is a principal city of the metropolitan area. Braunfels means "brown rock" in German; the city is named for Braunfels, in Germany. The city's population was 57,740 as of the 2010 census, up 58% from the 2000...

. Silver State claimed 13 of their 15 graduates from their inaugural class were offered employment with the FAA.

Silver State had planned to open another helicopter flight training academy location at Stewart International Airport
Stewart International Airport
Stewart International Airport is located in the southern Hudson Valley, west of Newburgh, New York and over north of Midtown Manhattan, New York City. The airport is located in the Town of Newburgh and the Town of New Windsor."." U.S. Census Bureau...

, about 50 nautical miles (92.6 km) north of New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...

, including establishing a shuttle service from Stewart to Manhattan
Manhattan
Manhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...

 by the end of 2007.

Bankruptcy

Silver State Helicopters filed a petition with the US Bankruptcy Court for liquidation under Chapter 7
Chapter 7, Title 11, United States Code
Chapter 7 of the Title 11 of the United States Code governs the process of liquidation under the bankruptcy laws of the United States...

 of the bankruptcy code and ceased all operations at 1733 hours Pacific Standard Time on February 3, 2008. At the time operations ended, the company had more than 800 employees and 2500 students who had no warning of the bankruptcy filing. A company statement released at the time said that the closure without warning was due to “a rapid, unprecedented downturn in the U.S. credit markets
Subprime mortgage crisis
The U.S. subprime mortgage crisis was one of the first indicators of the late-2000s financial crisis, characterized by a rise in subprime mortgage delinquencies and foreclosures, and the resulting decline of securities backed by said mortgages....

” which had curtailed the availability of student loans for the company’s students and that this then resulted in a “sharp and sudden downturn in new student enrollment.” Silver State Helicopters' assets were listed at US$50,000 following the bankruptcy filing. Silver State Helicopters owes 5,000 creditors between US$10 and $50 million dollars.

The company websites were all removed by February 6, 2008. On February 26, 2008 a special website for the Trustee for Silver State Helicopters Bankruptcy was launched. It listed 194 helicopters and five fixed wing aircraft for disposal.

In mid-February 2008 former Silver State students and their attorneys announced that they were planning class-action lawsuits against the company and its owner Jerry Airola. They announced that they may also sue the banks that lent student loans due to the high interest rates and terms of the loans.

Nicole Moon, spokesperson for Nevada
Nevada
Nevada is a state in the western, mountain west, and southwestern regions of the United States. With an area of and a population of about 2.7 million, it is the 7th-largest and 35th-most populous state. Over two-thirds of Nevada's people live in the Las Vegas metropolitan area, which contains its...

 Attorney General
Attorney General
In most common law jurisdictions, the attorney general, or attorney-general, is the main legal advisor to the government, and in some jurisdictions he or she may also have executive responsibility for law enforcement or responsibility for public prosecutions.The term is used to refer to any person...

 Catherine Cortez Masto, indicated that the Nevada Bureau of Consumer Protection is investigating potential criminal charges. Some of the other 16 states in which Silver State Helicopters had bases are also examining pursuing criminal charges.

Key Bank
Key Bank
KeyBank is a regional bank headquartered in Key Tower within Cleveland, Ohio's Public Square. , it is the 19th largest bank in the United States based on total deposits...

, who was a primary lender for student loans for Silver State students, has been named as a defendant, by Pinnacle Law Group of San Francisco representing two former Silver State students in a California law suit as of 14 May 2008. The suit alleges that the bank and Silver State colluded to "ensnare" students to take out loans and pay Silver State the full amount of US$69,900 for their future flight training in advance. The Pinnacle suit also alleges that the bank "intentionally omitted" federally required consumer protection clauses in the loan documents. "We hope to obtain an injunction preventing the bank from enforcing its promissory notes and from contacting credit agencies regarding the notes," stated Pinnacle attorney Kevin Rooney.

Analysis

On 23 May 2008 US Senator
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...

 Bill Nelson
Bill Nelson
Clarence William "Bill" Nelson is the senior United States Senator from the state of Florida and a member of the Democratic Party. He is a former U.S. Representative and former Treasurer and Insurance Commissioner of Florida...

 (D
Democratic Party (United States)
The Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...

-Fla
Florida
Florida is a state in the southeastern United States, located on the nation's Atlantic and Gulf coasts. It is bordered to the west by the Gulf of Mexico, to the north by Alabama and Georgia and to the east by the Atlantic Ocean. With a population of 18,801,310 as measured by the 2010 census, it...

) called for a Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...

 investigation of Silver State, indicating that he believes that it was a Ponzi scheme
Ponzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation...

. Senator Nelson said:
Writing in Rotor and Wing magazine in March 2009, Ernie Stephens concluded:

Former Management






































Officer Office
  • Jerry Airola
  • Founder and CEO
  • Steve Pickett
  • Chief Financial Officer
  • Rick Reyes
  • Chief Operations Officer, Flight Training
  • Nathan Todd
  • Chief Operations Officer, Commercial Operations
  • Doug Swenson
  • Chief Technology Officer
  • Robbie Cunningham
  • Chief Administrative Officer
  • Tim Nelson
  • Chief of Staff.
  • Gina Paglione
  • Vice President of Legal Affairs

    Phoenix case

    In one case reported by the Las Vegas Business Press, a case was filed in the U.S. District Court in Phoenix, plaintiffs claimed Silver State failed to deliver on its promise to train aspiring helicopter pilots. The case was dismissed in April 2007 but the parties involved are negotiating to reach a settlement.

    In the Phoenix case, 18 plaintiffs were demanding a US$5 million minimum, not including attorney fees, for their failed promises by Silver State training schools in Arizona.
    One of the plaintiffs, Paul Mischel, claims he refinanced his house in order to pay a $55,000 loan to pay for 7 helicopter certificates/ratings which were supposed to be completed in 18 months, as advertised by Silver State Helicopters. 27 months into the program and he only had 3 of those certificates, which he claims are worthless.

    Mischel and other plaintiffs claim that the school they attended did not have adequate helicopters, simulators and instructors to teach a class with 78 students. Mischel claimed he never completed his training but the way the loan was structured through Key Bank, the banking institution already paid Silver State the full amount in 10 months.

    San Diego case

    In a June 2006 lawsuit filed in the U.S. District Court in San Diego, 21 plaintiffs claimed Airola often made promises he didn't keep. The plaintiffs are asking for refunds of their tuition, which range from $50,000 to $75,000 per student. Silver State Helicopters claims it has reimbursed 19 of the 21 students involved in the San Diego lawsuit.

    Silver State Helicopters student debt case settled

    Student Loan Xpress
    Student Loan Xpress
    Student Loan Xpress is a member company of New York-based CIT Group Inc.. SLX became a wholly owned subsidiary of CIT Group, Inc in 2005. They ceased originating loans on April 3, 2008. On May 19, 2008, CIT Group closed the San Diego office of Student Loan Xpress laying off 128 people...

    , a member company of New York-based CIT Group Inc., agreed to forgive almost $113 million in debts for students of Silver States Helicopters flight school. The $112.7 million agreement involved 12 states; California, Nevada, Utah, Florida, Georgia, Idaho, Illinois, Missouri, Montana, Oklahoma, Oregon and Washington. Loan Xpress will forgive 75 percent of the amount borrowed by the majority of Silver State Helicopter's 2,700 students with the percentage of loan forgiveness per individual will vary by the amount of training that students successfully completed.

    Fleet

    Silver State Helicopters fleet at time of bankruptcy:

    Helicopters:
    • 139 x Robinson R22
      Robinson R22
      The Robinson R22 is a two-bladed, single-engine light utility helicopter manufactured by Robinson Helicopter. The two-seat R22 was designed in 1973 by Frank Robinson and has been in production since 1979.-Development:...

    • 38 x Robinson R44
      Robinson R44
      |-See also:-External links:* * * * * *...

    • 1 x Bell B206B-3
      Bell 206
      The Bell 206 is a family of two-bladed, single- or twin-engine helicopters, manufactured by Bell Helicopter at its Mirabel, Quebec plant. Originally developed as the Bell YOH-4 for the United States Army's Light Observation Helicopter program, the 206 failed to be selected...

    • 6 x Bell B206L-1 / L-4
      Bell 206
      The Bell 206 is a family of two-bladed, single- or twin-engine helicopters, manufactured by Bell Helicopter at its Mirabel, Quebec plant. Originally developed as the Bell YOH-4 for the United States Army's Light Observation Helicopter program, the 206 failed to be selected...

    • 2 x Bell 407
      Bell 407
      The Bell 407 is a four-blade, single-engine, civil utility helicopter; a derivative of the Bell 206L-4 LongRanger. The 407 uses the four-blade rotor with composite hub developed for the United States Army's OH-58D Kiowa Warrior instead of the two-blade, semi-rigid rotor of the 206L-4...

    • 5 x Bell B222
      Bell 222
      The Bell 222 is a twin-engined light helicopter built by Bell Helicopter. The Bell 230 is an improved development with different engines and other minor changes. A cosmetically modified version of the 222 was used as the titular aircraft in the US television series Airwolf.-Development:In the late...

      /B230
    • 1 x Bell UH-1H
      UH-1 Iroquois
      The Bell UH-1 Iroquois is a military helicopter powered by a single, turboshaft engine, with a two-bladed main rotor and tail rotor. The helicopter was developed by Bell Helicopter to meet the United States Army's requirement for a medical evacuation and utility helicopter in 1952, and first flew...

    • 1 x Eurocopter SA315
    • 2 x Hughes 500D


    Fixed wing
    • 3 x Cessna 172
      Cessna 172
      The Cessna 172 Skyhawk is a four-seat, single-engine, high-wing fixed-wing aircraft. First flown in 1955 and still in production, more Cessna 172s have been built than any other aircraft.-Design and development:...

    • 1 x Cessna 414

    Incidents and accidents



    On March 27, 2007 in Ponte Vedra Beach, Florida
    Ponte Vedra Beach, Florida
    Ponte Vedra Beach is an unincorporated seaside community in St. Johns County, Florida, United States. Located eighteen miles southeast of downtown Jacksonville and north of St. Augustine, it is part of the Jacksonville Beaches area. It is an upmarket tourist resort area best known for its...

    , a R-44 Raven II from Silver State at Craig Municipal Airport
    Craig Municipal Airport
    Jacksonville Executive at Craig Airport is a public airport located eight miles east of the central business district of Jacksonville, in Duval County, Florida, United States. It is owned by the Jacksonville Aviation Authority....

     suffered a mechanical failure which led to loss of directional control. The loss of control led to a fatal crash of the aircraft which took the lives of the instructor Tamara Williams and student pilot Juston Wyatt Duncan, 24. The fatal flight was the first flight after a 100/300 hour maintenance inspection was completed which included a 30 minute test flight before returning the aircraft back into service. Tamara's sister Shannon filed a wrongful death lawsuit against Silver State Helicopters in August 2007.

    On February 6, 2006 in Helena, Montana
    Helena, Montana
    Helena is the capital city of the U.S. state of Montana and the county seat of Lewis and Clark County. The 2010 census put the population at 28,180. The local daily newspaper is the Independent Record. The Helena Brewers minor league baseball and Helena Bighorns minor league hockey team call the...

    , a Silver State R-44 N7085U was intentionally crashed by its commercial helicopter instructor pilot in a successful attempt to commit suicide. The National Transportation Safety Board determines the probable cause(s) of this accident as follows: The pilot's intentional suicide. The unauthorized use of a helicopter and impairment by alcohol were factors.

    On September 20, 2005 in Baker, California
    Baker, California
    Baker is a census-designated place located in San Bernardino County, California, USA. As of the 2010 census, the town had a total population of 735.Baker was founded as a station on the Tonopah and Tidewater Railroad in 1908,...

    , a Silver State R-22 Beta N957SH crashed during a positioning flight of new helicopters to their respective destinations. The flight originated at the factory when Silver State took delivery of 12 new helicopters. The accident pilot was assigned to fly his helicopter to North Las Vegas following 3 other Robinson helicopters. The aircraft were spaced about 15 minutes apart. The accident pilot departed Torrance
    Torrance
    -Places:*Torrance, Ontario, Canada*Torrance, East Dunbartonshire, Scotland*Torrance, California, United States*Torrance County, New Mexico, United States-People:Torrance is a surname, and may refer to:...

     Airport
    Airport
    An airport is a location where aircraft such as fixed-wing aircraft, helicopters, and blimps take off and land. Aircraft may be stored or maintained at an airport...

     (Zamperini Field
    Zamperini Field
    Zamperini Field is a city-owned public-use airport located three miles southwest of the central business district of Torrance, in Los Angeles County, California, United States....

    ) at about 2:25 pm local time and was attempting to arrive in North Las Vegas by 4:00 pm. The normal flight time for this route in this type of aircraft is 2.5 to 3 hours. The accident pilot flew into adverse weather conditions which included rain, low clouds, lightning and moderate turbulence. A California Highway Patrol pilot had warned the accident pilot earlier of the rain and lightning to the northeast of the accident pilot's route. The next morning the Silver State office determined the accident pilot did not reach his destination and initiated a search. The pilot was killed in the crash.

    External links

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