FRANKLIN, Tenn.–Southeast Financial Credit Union here has filed suit against The College Network, claiming its owners are illegally attempting to shield remaining assets from creditors.
The credit union filed suit in U.S. District Court in Indianapolis, where The College Network has an office, saying the company owes it more than $12 million. According to The Indianapolis Star, the credit union is seeking to have a court-appointed receiver to take over management of the company.
Southeast Financial CU holds about $35 million in loans taken out by 10,000 TCN customers nationally, the Star reported, adding that TCN had previously agreed to pay for loan defaults by its customers/borrowers.
The Star reported that TCN has sent defaulted loans to a Las Vegas collection agency owned by Gary Eyler, the same person who owns TCN.
The College Network is not a school. Its customers pay up front for years’ worth of the company's online "learning modules,” according to The Indianapolis Star, using personal loans with payments that start immediately. The loans are not student loans and as a result have higher rates and no deferred payment. According to the Star, Southeast Financial was the largest supplier of the loans.
The lawsuit names TCN, Eyler, current TCN executive Mark Ivory and former TCN executive Gary Fair. Ivory said in an e-mail that the company had not yet been served with the lawsuit, the Star reported.
In its suit, Southeast Financial said TCN's internet portal is the company's "sole remaining asset" and that the defendants are trying to move it to a newly formed company to avoid obligations to creditors. The credit union has had a business relationship with TCN since 2003.
Attorneys general in both Indiana and New York have also field suits against TCN.