EAST ST. LOUIS, Ill. (CN) – Langa Air took more than $170,00 in advance tuition from flight students who never got off the ground, Wells Fargo Bank claims in Federal Court. Wells Fargo claims Langa encouraged prospective students to take out loans from banks, used their advance tuition to fund continuing operations, then abruptly shut down without offering refunds.
The bank seeks restitution and punitive damages for fraud. It sued Langa Air, a Missouri corporation that formerly operated out of Bathalto, Ill.; Scott Langa of Alton, Ill.; and David Melzer of Troy, Ill.
The 24-complaint cites 10 former students whom Langa allegedly owes $172,609.
“As a part of the regular way that they conducted business, defendants convinced or attempted to convince prospective students to enroll at Langa Air and pay full tuition up front,” the complaint states. “Each advanced tuition payment covered many flight instruction classes that would be taken over a multi-year period.
“On information and belief, the substantial up front tuition payments, in many cases approaching $50,000, were used by Langa Air to fund its ongoing provision of flight instruction training to existing students.”
Langa allegedly promised that each student who paid full tuition in advance would be guaranteed a job as a flight instructor at Langa Air upon completing the required FAA certifications, and promised that all advanced tuition would be held in segregated accounts for the benefit of each individual student.
But the bank says, “Langa Air never maintained separate accounts for the benefit of each Student and never segregated any of the tuition paid by any student.”
It adds, “At all relevant times, Melzer and Langa knew that tuition paid by the students would not be segregated for the benefit of each individual student.
“Nonetheless, Langa Air periodically distributed account statements (‘Account Statements’) to the students detailing the total tuition paid, tuition used and the tuition that remained ‘on account’ with Langa Air.”
Langa closed on Aug. 31, 2009 and refused to refund unused tuition, the bank says.
Wells Fargo says it settled students’ claims against it through cash payments and by partially forgiving outstanding student loan balances. It says the students assigned their claims to Wells Fargo.
Wells Fargo is represented by Matthew Landwehr with Thompson Coburn in St. Louis.