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Ray Rhoden's first solo flight was scheduled for early in the morning on Feb. 28. At 6:30 p.m. the night before, his flight instructor called, telling Rhoden to get a good night's rest. His dream of becoming an airline pilot -- which he'd traveled from Jamaica to pursue -- was inching closer to reality.

Fifteen minutes later Rhoden's flight instructor called back. There would be no flight. The flight school, Airline Training Academy, was out of business.

Like many ATA students, Rhoden got an $80,000 loan from the ATA-recommended lender, Key Bank of Cleveland. And like most students, he was lured to ATA by its promise of a locked-in price for training -- $60,000, no matter how long he was in the program -- and by the school's claim of a 98 percent job-placement rate.

Today, Rhoden, along with more than 200 fellow students, is mired in debt and has no flight training to parlay into a potentially lucrative career to help pay his way out.

"I will ultimately end up flying," Rhoden says. "Currently, I'm trying to get a job and pay my way. I'm kind of wary right now of flight schools. I'm trying to get some money and move on."

But Rhoden and his fellow students aren't just licking their wounds. They've pooled their resources, hired a lawyer and forced the family that owns ATA into Chapter 7 bankruptcy. On May 12, the students finally got their day in court. There, thanks to the testimony of ATA's chief financial officer, Melissa Williams, students discovered that even though they are in debt, lavish salaries, big houses and questionable business practices were the norm for ATA's owners.

ATA is owned and operated by the Williams family, members of which also owned Discover Air Inc., a Sanford-based charter service that closed last month amidst a Federal Aviation Authority investigation into shoddy maintenance work on its planes. It was the second time in six months the FAA closed Discover.

But even as Discover had its problems and the airline industry as a whole slumped post 9/11, ATA chairman James "Captain Jim" Williams told ATA students that all was well. Student Carl Reda recalls James Williams saying, "We have money, we have money," at his weekly "pilot talk" meetings.

However, ATA spent at least $3 million propping up the nearly penniless Discover -- run by Scott Williams -- since 1998, according to Melissa Williams' testimony.

And it was also paying Williams family members handsomely. In fact, after 9/11, the six family members involved in the business all got raises; in Melissa Williams' case, from a salary of $30,000 a year in 1997, to $255,000 a year in 2002.

A year before ATA closed, James Williams' son Robert Williams, an unpaid ATA vice president, bought a $321,000 house on Waterwitch Point Drive in Orlando with his wife, Melissa Williams. About the same time, James Williams' other son, Jeffrey Williams, and his wife, Christine Williams, also ATA employees, bought a one-third acre lot in Oviedo for $401,500 and built a house there. The couple also purchased $8,000 worth of goods through an ATA student named Aaron Fenwick, who worked as a furniture salesman to help pay his way through school. Fenwick told Orlando Weekly that Jeffrey and Christine Williams' furniture was delivered to their home a week before the school shut down.

Five of the six Williams who ran the school -- James and his wife Ruth, Scott (James' son), Jeffrey and his wife Christine -- were making $100,000 a year when the school closed, according to Melissa Williams' testimony. Melissa Williams, made $255,000 according to financial statements available in court documents. (During bankruptcy hearings she told the court repeatedly that she made $200,000.)

Also, according to testimony, in the month before the school closed it took in $193,000 in tuition, and accepted students until a week before shutting the doors. On March 3, four days after ATA closed, the Williams wrote an $80,000 check to cover Discover's late insurance payment.

Under Chapter 7 rules, the government seeks any assets it can find to liquidate and repay creditors. That quest isn't proving to be an easy one. ATA didn't own its building or its furniture, and leased half of its 50 planes. Secured creditors, including SunTrust Bank, which hold liens against the planes the Williams' did own, get first crack. Unsecured creditors can try to reclaim whatever's left.

"There was no way to pay [the students] back," Melissa Williams said in court May 12.

When asked in court about the whereabouts of James and Ruth Williams, Melissa Williams said only that the couple is "traveling." Robert White, an attorney and corporate officer for ATA, did not return phone calls for this story.

Phil D'Aniello, the students' attorney, compared ATA to American Airlines, which told pilots and mechanics they had to take pay cuts to keep the company afloat while executives voted themselves extravagant raises.

Now that they are trying to get money back, students will have to prove fraud and go after personal assets, or show that ATA improperly funneled company money into personal accounts for protection, says D'Aniello. "[The money is] likely gone," he says. "There are a lot of things we need to investigate. When we discover something, we'll go after it. We're trying to find out if they did take any money beyond their salary."

The students' problems don't end with ATA. They've still got outstanding student loans from Key Bank to repay.

Shortly after ATA closed, Key Bank sent out notices telling students that, since they were no longer full-time students, their deferment had expired and monthly payments on loans would begin in August.

ATA's policy was to have student-loan checks sent directly to the school, subtract the tuition and refund the rest to students as needed for living expenses. But some students, including Rhoden, never requested living-expense money from ATA, so they never got it. Still, they are liable for more money than the school actually charges in tuition. The upshot of ATA's student-loan policy is that the company used income from the loans, and pre-paid tuition, to finance Discover.

Key Bank's position is that, ATA policy notwithstanding, the loans were made to the students, not the school. And the students are ultimately responsible for almost $7 million in unpaid loans. To date, Key Bank has only offered students a 10 percent deduction off current debt, and 10 percent off any future loan they take, says D'Aniello. Key Bank officials refused to comment for this story.

Some students wish ATA had been honest with them about the school's money problems up front. "[Captain Jim] blew smoke up our butt[s]," says Carl Reda. "They should have given us a better heads-up. I think they knew they were in trouble. They should have said something."

Others are more cynical about the Williams' intentions. "It's one thing to go broke in business," says Dickie McNeil. "It's another thing to be a thief."


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