The Ninth Circuit Court of Appeals precedentially affirmed the $12 million judgment entered against loan servicer Vervent Inc. and its CEO David Johnson in favor of students enrolled in a predatory and fraudulent private student loan program for the now-bankrupt ITT Technical Institute. In the opinion, Judge Mendoza recognized that “fraud rarely announces itself,” holding that there was sufficient evidence to support the jury’s finding that the conspirators’ efforts at concealment delayed borrowers’ discovery that the loan program was fraudulent. As the Court further explained, “Simply put, ordinary borrowers are not required to assume that seemingly routine financial obligations conceal a high-level, sophisticated fraudulent scheme involving major institutions, securitized trusts, and complex financial arrangements.” The decision affirmed a jury verdict following a two-week trial held in San Diego in June 2023 over the predatory lending scheme.
“Not only does this opinion represent a decisive win for the defrauded student borrowers in this case, but more broadly the Ninth Circuit recognized and called out the vast disparities in information possessed by sophisticated institutions and ordinary consumers that permits unscrupulous businesses to carry out complex financial frauds. This win advances the interests of consumers everywhere.” Irv Ackelsberg.
John J. Grogan, Irv Ackelsberg and David A. Nagdeman of Langer Grogan & Diver PC represented the student borrowers along with co-counsel Tim Blood, James Davis and Paula Brown of Blood, Hurst and O’Reardon and the late Paul Arons of The Law Office of Paul Arons.
A related case against the same defendants is currently pending in the California Superior Court.
9th Circ. Upholds Ex-ITT Students’ $12M Loan Fraud Win – Law360.