Office of the Attorney General
Judge Affirms Sanctions on National College for Failing to Respond to Attorney General's Subpoena
Attorney General Jack Conway today announced that the Franklin Circuit Court affirmed its previous order requiring National College to pay civil penalties for its failure to comply with a subpoena issued by the Office of the Attorney General.
The court fined National College $1,000 per day from Aug. 5, 2013, to Dec. 23, 2013, and $500 per day from Jan. 31, 2014, to Feb. 11, 2014, the date when National College finally complied with the subpoena. The total fine imposed by the court is $147,000. The court also affirmed the $10,000 fine it levied on National College’s attorneys for their role in delaying the Office of the Attorney General’s investigation.
“I appreciate the court’s careful consideration on this matter,” Attorney General Conway said. “The actions of National College and its attorneys in failing to cooperate with my office on this important issue have been simply beyond the pale. Rest assured that my fight to protect consumers against the deceptive business practices of some for-profit schools will not stop.”
The court’s order follows three-and-a-half years of litigation over a civil subpoena seeking information about potential violations of Kentucky’s Consumer Protection Act. The Attorney General issued the subpoena to National College in December 2010 as part of his investigation of some for-profit colleges operating in the Commonwealth. National refused to respond to the subpoena and instead filed suit to block the Attorney General's investigation.
"National's actions to date have to make you wonder what they're trying to hide from investigators, their students, and prospective students," Attorney General Conway said.
In March 2011, the Franklin Circuit Court ruled in the Attorney General's favor, finding that the subpoena was reasonable and supported by valid concerns under the Consumer Protection Act. Additionally, the court found that the Attorney General was acting both lawfully and in the public interest. National College appealed that decision to both the Court of Appeals and the Kentucky Supreme Court, but the appeals were denied. The litigation was then remanded to Franklin Circuit Court for further consideration of the scope of the subpoena.
Following numerous motions and lengthy hearings, the court determined that National College could present no legitimate argument or basis for its challenges to the subpoena. Specifically, the court noted that “National College and its counsel … could not present any legitimate objections on its claims that the [subpoena] was invalid. At that point, it became abundantly clear that National College, through counsel, was attempting to delay a valid investigation by the Attorney General.” Further, the court added that because “there were absolutely no reasonable grounds asserted to support withholding the requested documents,” National College’s “responses to the [subpoena] were continuously deficient and counsel could not establish a credible basis for the incompleteness.”
In assessing the $10,000 penalty against National College's attorneys under the Kentucky Rules of Civil Procedure, the court sanctioned the attorneys for failure to comply with a court order on discovery issues and reaffirmed “all of its previous findings regarding the conduct of counsel, and continues to believe the conduct of counsel crossed the line between zealous advocacy and obstructionist tactics.”
In a separate action filed in September 2011, the Attorney General filed suit against National College in Fayette Circuit Court alleging that National College violated the Kentucky Consumer Protection Act by posting false job-placement rates for National College graduates on its website. That litigation is currently pending.
More information on the National College lawsuit is available here: http://migration.kentucky.gov/newsroom/ag/nationalcollegesuit.htm.
For a copy of the Franklin Circuit Court’s June 24, 2014, order, visit http://goo.gl/QXgI2H.
You can follow Attorney General Conway on Twitter @kyoag, visit the Attorney General’s Facebook page or view videos on our YouTube channel.