Thread: CA-Indian Flight Students Caught in 'Ponzi' Scheme

Indian Flight Students Caught in 'Ponzi' Scheme
India West, Lisa Tsering, Posted: Jul 11, 2008

The defunct American School of Aviation in Atwater, Calif., is now facing a rash of complaints and lawsuits since it closed down in the last week of June (I-W, July 4), leaving more than 100 students — most of them from India — empty-handed after each of them prepaid more than $40,000 in tuition.

"We might have to go through bankruptcy," Reny Kozman, who owns the school with her husband, Manpreet "Prince" Singh, told India-West in an e-mail July 2.

"We are working on refunds, and all the airplanes are listed for sale," she said, without specifying the number of airplanes owned by the school. The total amount of their liability is undetermined.

The school's Web site, www.iflyasa.com, which had been recruiting students as recently as last weekend, is now offline.

Kozman claims that two ASA colleagues in Gurgaon, India, stole ASA's money, leading to the school's closure. "We are accusing Lalitha Krishnamurthy and Arvinder Singh of ASA Gurgaon of stealing over $300,000," she told India-West.

The small flight school in central California is being sued by a flight supplier for not paying fuel bills, and the school's failure to pay its water and electricity bill led to the eviction June 27 of around 100 students from housing on the former Castle Air Force Base.

Many of the students are under 25 and have told India-West that their parents in India had mortgaged their homes to afford the ASA's tuition.

"Most likely, I'll go home to Mumbai by month-end," former student Ravi Hegde, 21, told India-West by phone from Atwater July 8. "My parents can't afford to send me to another school."

ASA has also been cited for at least eight violations by the Federal Aviation Administration and is accused of a state code violation for insufficient insurance.

But its problems had persisted for months, said former students, who have filed a lawsuit against ASA.

"Since March, my family and I have been [chasing] behind Prince Singh," former student Bhavana Naik told India-West by phone July 2. "My target is to put him behind bars."

Jeffrey Poindexter, an attorney in Chula Vista, Calif., calls the school's accounting practices a "ponzi scheme" in court documents obtained by India-West.

Poindexter is representing several students, including Hetal Patel, who attended ASA last October.

In her complaint, filed in Superior Court in Merced June 16, Patel alleges breach of contract and demands a refund of $23,292.

Another suit, filed by Poindexter on behalf of 10 Indian students, alleges fraud and demands $200,000 in damages. In this suit, the students said that after prepaying approximately $40,000 in tuition, they were instructed to log on to ASA's Web site to keep track of how much of their money had been deducted for each session of training.

"However, this accounting system was set up to deceive and mislead the students," reads the complaint. "As soon as a student would make a tuition payment of $40,000, the defendants [Kozman and Singh] would spend all of the money. This allegation is premised upon the fact that the defendants have conceded they owe the refunds, but claim they have no money to pay the refunds …

"By immediately spending the entirety of a student's tuition, without providing the promised flight training and education, the defendants either purposefully, recklessly or negligently began operating as a sort of ponzi scheme. Each new student's tuition would go to pay the costs and expense of earlier enrolled students," the lawsuit claims.

Poindexter has also forwarded to India-West letters that ASA sent to students Sherry Jesu, Amit Kumar, Harish Sathya and Vijai Baskaran promising refunds. Poindexter has also provided India-West with copies of bounced refund checks.

Two other students who are not connected with that lawsuit, sisters Bhavana and Bhakti Naik of Merced, Calif., have launched a campaign of their own to provide justice for the unfortunate Indian youths.

In a complaint to Merced County authorities, the Naiks claim that when they approached Singh at a student meeting June 26, they asked him for a refund of their tuition.

Singh refused to do so, and used abusive and foul language toward them, they claim. "[Singh] and Reny Kozman further went on to instigate the other students to assault my daughters," reads a June 30 letter from the young women's father, Y.S. Ranadive, to Merced County Sheriff Mark Pazin.

Ranadive wrote another letter June 29 to the principal operations inspector of the Fresno Flight Standards district office of the FAA warning about Singh and claiming he (Singh) had run flying schools in San Jose and Livermore, Calif., which had both gone bankrupt. Ranadive also wrote complaints about the school and its founders to U.S. Immigration and Customs Enforcement; to Merced County District Attorney Larry D. Morse; and even to David Mulford, the United States ambassador to India.

The Merced County Deputy DA had told India-West earlier that the FBI might get involved with the case, but the Sacramento FBI public affairs officer did not return a reporter's call by press time July 8.

A former instructor who worked for ASA in Atwater contacted India-West to share his experiences with Singh and ASA.

"All of us instructors did not trust him too well," said the man, who requested that his name and his current employer be withheld. "I also left there without ever getting my last paycheck … Really we all knew that the FAA was watching ASA and that sometime they would shut down or they would collapse altogether. The maintenance was not good. I had several emergencies while flying their aircraft," he said.

Even though "I loved working at ASA … I feel very bad for the students," he continued. "I was once in their shoes hoping to get my pilot ratings and now they may have lost their money altogether."

Meanwhile, two other aviation schools run by Indian Americans, after hearing of the students' plight, have announced that they are willing to accept former ASA students and offer them every possible discount and housing assistance.

Flying Vikings School in Hayward, Calif., has taken on about 20 students, said Joe Correa, one owner of the school, who is originally from Goa, India.

"We need the Indian American community to come together to help these students," he told India-West.

Hiren Jetha, owner of the MVP Aero Academy in Houston, Texas, and Hollywood Aviators in Van Nuys, Calif., who read about the students in India-West, has also come forward to offer assistance.

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If they have a school in India also, why are the students coming HERE to learn to fly and why so many of them?!?!?!

A terrible sense of deja vu! Didn't our government learn ANYTHING from 9/11?!?!

sorry, posted twice.

Originally Posted by miguelina

If they have a school in India also, why are the students coming HERE to learn to fly and why so many of them?!?!?!

A terrible sense of deja vu! Didn't our government learn ANYTHING from 9/11?!?!

Was my first thought too--9/11.

Possibly training potential terrorists.