Turrey v. Vervent (formerly Aliff v. Vervent), No. 20cv00697 (S.D. Cal.) was brought on behalf of student borrowers who paid more than $80 million dollars on private student loans related to attendance at ITT. Plaintiffs allege that the entire “PEAKS” loan program (an acronym for “Program for Education Access & Knowledge”) was a scheme to defraud ITT investors and the U.S. Department of Education, with the students being the foreseeable, necessary and direct victims of the scheme.  The Department of Education in August 2022 issued a discharge for all students still burdened with federal loans for attendance at ITT, with the Secretary for Education, Miguel Cardona, noting that “It is time for student borrowers to stop shouldering the burden from ITT’s years of lies and false promises.”  In this case, the defendant is not ITT, but the loan servicing entity Vervent once known as First Associates, and its senior leadership. Plaintiffs allege that Vervent conspired with ITT and others to service and then collect on loans that it knew or should have known were fraudulent.  The ruling is an important milestone in the use of RICO to hold business who provide seeming routine business services to fraudulent actors.

Federal District Judge Dana M. Sabraw, Chief Judge of the Southern District of California, granted plaintiffs’ motion for class certification, paving the way for a trial to determine whether Vervent conspired in the fraudulent scheme. Class Certification Opinion. The opinion follows the Court’s earlier opinion that denied a defense motion for summary judgment. Summary Judgment Opinion. One of the plaintiffs’ lawyers, Irv Ackelsberg of Langer, Grogan and Diver, P.C. in Philadelphia commented: “We are grateful for the Judge’s decision and are now anxious to move expeditiously to bring this case to trial.” Another of plaintiffs’ counsel, John J. Grogan commented that “this decision should help to put to rest the canard that one cannot violate RICO through what seems like normal business activity. No matter how ‘normal’ the conduct, if it is done with the knowledge that it is further a criminal enterprise, it is illegal and there will be consequences.”  Plaintiffs are hoping to recover the monies students paid on the suspect loans. 

The Turrey case is another in a series of cases that Langer Grogan & Diver have brought using RICO to hold mainstream financial actors accountable for their role in furthering fraud harming consumers. Commonwealth of Pennsylvania v. Think Finance, Inc., 14-7139 (E.D. Pa. 2021), Reyes v. Netdeposit, LLC, 802 F.3d 469 (3d Cir. 2015), Faloney v. Wachovia Bank N.A. 254 F.R.D. 204, 2008 WL 2631360 (E.D. Pa.).

LGD attorneys, John J. Grogan, Irv Ackelsberg, and David Nagdeman, represent plaintiffs with co-counsel Timothy G. Blood, Leslie Hurst of Blood Hurst & Reardon, LLP and Paul Arons of the Law Office of Paul Arons.