KeyBank Enables College Loan Ponzi Scheme

     OAKLAND, CALIF. (CN) – California students trying to learn job skills were ripped off by an Ohio bank that teamed up with sham vocational schools to leave students with piles of debt and no education, according to a class action filed against Keybank USA.




KeyBank Education Resources and Great Lakes Educational Loan Services defraud students at sham vocational schools by offering high-priced loans, and when the schools’ Ponzi schemes collapse, the students are left with piles of debt and no education, a class action claims in Alameda County Court.
     This class action was filed on behalf of California students who enrolled in Silver State Helicopters vocational school (SSH). They accuse KeyBank USA, of Ohio, of predatory lending and enabling fraud.
     The complaint claims that tuition and lending scams at unlicensed and unregulated trade schools have proliferated in recent years, and have only recently been subjected to congressional investigation. “Their growth has been fueled by unscrupulous lenders that have willingly and irresponsibly ‘partnered’ with these sham operations to provide expensive private loans to the high-risk students these schools tend to attract,” the complaint states. “In this particular case, KeyBank partners with SSH as the latter’s ‘preferred’ lender and followed its usual script from which it has reaped millions of dollars over the years. Like KeyBank’s previous failed vocation school ‘partners’, SSH was unregulated and unaccredited and, when its Ponzi scheme collapsed, SSH filed bankruptcy filed bankruptcy, leaving its students with nothing but KayBank’s threats to enforce the loans.”
     Plaintiffs claim the defendants based themselves in Ohio to facilitate their scam.
     “Because the laws of Ohio exempt Ohio-domiciled banks from that state’s consumer protection laws, the Bank, in complicity with the sham schools, has preyed on unsuspecting California resident students with legally repugnant adhesive loan documents containing Ohio choice of law, forum selection, and anti-class action arbitration clauses and, using these perceived impenetrable ‘shields’, has engaged in a long-time pattern of intentionally flaunting both federal and California consumer protection laws,” the complaint states.
     Plaintiffs are represented by Andrew August with Pinnacle Law Group of San Francisco.

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