Judge orders National College to pay $147,000 for refusing to cooperate in state investigation

myoung@herald-leader.com.June 25, 2014 

Kentucky Attorney General Jack Conway won a key victory this week in his ongoing legal battle with National College, a for-profit school with six campuses in Kentucky.

Franklin Circuit Court Judge Phillip Shepherd affirmed a previous ruling and ordered National College on Tuesday to pay $147,000 in fines for refusing to comply with a 2010 civil subpoena for documents that Conway's office sought during an investigation of for-profit schools in Kentucky.

Conway subpoenaed records from six for-profit colleges operating in Kentucky, seeking information about their student loan default rates, recruitment practices and job placements.

National College filed suit against Conway's office, challenging his authority to issue the subpoena. It also questioned whether Conway had sufficient information to issue the subpoena, and whether the request for documents was overly broad.

Shepherd ruled the subpoena valid in March 2011 and the Court of Appeals and the Kentucky Supreme Court denied subsequent appeals from National College.

In the ruling handed down Tuesday, National College was ordered to pay $1,000 for each day it failed to comply with the subpoena from August 5, 2013 to December 23, 2013, and $500 dollars for each day from January 1, 2014 to February 11, 2014. Grasch Law PSC, the law firm representing National College, also was ordered to pay $10,000 for the delay.

"When a hearing was finally held on the scope of the [subpoena], National College and its council still could not present any legitimate objections on its claims that the [subpoena] was invalid," Shepherd wrote.

It was clear the college was "attempting to delay a valid investigation," he wrote.

In a statement, Conway said that "National's actions to date have to make you wonder what they're trying to hide from investigators, their students, and prospective students."

Mark Hurst, an attorney for National College, said Tuesday in a statement that Conway's subpoena was "unlimited in scope, and such unchecked exercises of power are not in the best interest of Kentucky, or its citizens."

In an interview, Hurst said National College has the legal right to litigate the scope of the subpoena; however, Shepherd wrote that "there were absolutely no reasonable grounds asserted to support withholding the requested documents," which he said "all other for-profit colleges replied to in a matter of days."

National College will appeal the decision, Hurst said.

Conway filed a separate consumer protection lawsuit against National College of Kentucky in September 2011, which is still ongoing. The lawsuit claims that the college misrepresented its job placement numbers for graduates.

In the lawsuit, filed in Fayette Circuit Court, Conway accused National College of displaying job placement rates on its website that were significantly higher than those the college reported to its accrediting agency, the Accrediting Council for Independent Colleges and Schools.

If National College violated the consumer protection law, the agency could invoke a range of penalties, including revocation of its accreditation, a spokesman for ACICS said.

Matt Young: (859) 231-1324. Twitter: @mattyoungnow.

Lexington Herald-Leader is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service