When he was running for Clark County sheriff, Jerry Airola said he would run the Metropolitan Police Department like his fast-growing helicopter company.
A year and a half later, Silver State Helicopters, the company he built, filed for Chapter 7 bankruptcy Monday, about 24 hours after suddenly closing its doors at more than 30 locations nationwide. The move left about 750 employees out of work and roughly 2,700 flight students on the hook for thousands of dollars in student loans.
In a statement released Monday, the North Las Vegas-based company blamed the closure on troubles in the U.S. credit markets that cut the availability of student loans and led to a "sharp and sudden downturn in new student enrollment."
According to a former employee who requested anonymity, the shutdown was triggered after student loan lender Citibank told the company on Thursday that it would no longer make loans to its students.
That news followed dismal recruiting numbers at four Florida seminars two weeks ago in which the company enlisted only 30 new students per seminar instead of the usual 100, the former employee said.
The bankruptcy filing calls for liquidation of the company's assets, listed as less than $50,000, and ends the rapid growth of Silver State Helicopters. The filing estimates there are at least 5,000 creditors and that liabilities range between $10 million and $50 million.
Airola helped found the company in 1999 with one helicopter in Henderson and oversaw its expansion to 33 flight schools in 17 states from coast to coast.
In August, Airola sold a 60 percent stake in his company to Eos Partners, a New York-based private equity firm. He gave up day-to-day control of the company but remained on the board of directors, and he was the lone vote against bankruptcy on the four-person board, said Elizabeth Trosper, a spokeswoman with public relations firm Mass Media.
Airola could not be reached for comment Monday.
Eos expects to lose the $30 million it invested in the company, spokesman Michael Frietag said.
In 2006, Airola tried to parlay his business experience into becoming the county's top cop, using slogans such as, "We need a sheriff who can run that department like a business."
He spent more than $3.5 million of his own money trying to win the race for Clark County sheriff, and thanks to a blitz of television ads he finished second in the primary and faced then-Undersheriff Doug Gillespie in the general election.
But he couldn't overcome media coverage exposing his lack of law enforcement credentials and a history of lawsuits claiming he lied to flight school students and didn't provide the helicopter time they needed to complete their training. Airola lost the sheriff's race by nearly a 2-to-1 margin.
Kent Oram, who managed Gillespie's campaign, called news of Silver State Helicopter's bankruptcy "poetic justice."
"We talked about this all the way through the campaign. We believed the guy was bankrupt," he said.
Despite losing the sheriff's race, Airola remained active in state political circles. He served on Gov. Jim Gibbons' public safety transition team a year ago, and last week he hosted a political fundraiser for Gibbons' legal defense fund and co-hosted a Nevada GOP fundraiser, featuring President Bush, with casino executive Sheldon Adelson and other top state Republicans.
Pete Lown, a Georgia lawyer representing 40 former Silver State Helicopter students from Arizona who sued the company, said it was just a matter of time until it collapsed. He called the business a Ponzi scheme that relied on an influx of new students to support the existing students.
"It just finally caught up with him," he said. "It was just a slip-shod, fly-by-night operation."
The plaintiffs in Lown's lawsuit and several others filed across the country claim Airola promised to teach them to fly in 18 months or less. In reality, they said, a lack of helicopters and flight instructors dragged out the training for several years or more. Many students dropped out in frustration even though they still owed $50,000 to $70,000 in loans they took out for the helicopter school.
"The sad thing, for the most part, these are everyday people who were put in severe financial disrepair because of Jerry Airola," Lown said.
Ben Schenk, Silver State Helicopters' chief ground instructor from 2002 to 2005, said he quit because he couldn't work for Airola in good conscience.
The main goal of the company, he said, was to expand its schools without the "dedication to the education" Airola promised. Toward the end of his time with Silver State Helicopters, students were taking out $70,000 in loans at 15 percent interest and not getting the services they paid for, he said.
Airola neglected the schools he was building throughout the country, Schenk said. For example, the company opened its Mesa, Ariz., school with one helicopter and 119 students.
"There was no way we could provide the services he was selling," Schenk said of Airola.
Despite that, Silver State Helicopter flight schools continued to open across the nation. Now the company's 200 helicopter pilots are flooding a job market that doesn't have enough spots for them, he said.
Former student Joe Hinton, one of Lown's clients, said he dropped out of the school after 33 months and no end in sight to his training. He still owes about $58,000 and had to refinance his house to make student loan payments, he said.
But he saw a silver lining in Silver State Helicopters' collapse.
Airola "won't have an opportunity to ruin people's lives like he ruined mine," he said.
Review-Journal staff writers Molly Ball and John Edwards contributed to this report. Contact reporter Brian Haynes at firstname.lastname@example.org or (702) 383-0281. Contact reporter Francis McCabe at email@example.com or (702) 381-2904.