$1,000 per day fine from July 31, $10,000 fine against National’s lawyers
FRANKFORT, Ky. (Dec. 4, 2013) – Tthe Franklin Circuit Court today ordered National College to pay a civil penalty of $1,000 per day, beginning on July 31 and continuing until National College fully responds to a subpoena issued by the Office of the Attorney General, announced AG Jack Conway. To date, that amounts to $126,000 in fines.
In addition to this penalty, the court ordered National College’s attorneys to pay $10,000 to the Office of the Attorney General, after the court determined that National College has “repeatedly abused the legal system to obstruct a valid investigation by the Attorney General.”
“I appreciate the solemn consideration the court gave to this troubling conduct,” Conway said. “National College and its lawyers have abused the legal system in an effort to delay this investigation. It is my hope that National College will stop the games, turn over all of the documents requested, and pay the fine. If National has nothing to hide – the time is now to comply with the court order.”
The action follows nearly three years of litigation concerning a civil subpoena issued to National College in December 2010 by the Attorney General pursuant to an investigation of some for-profit colleges operating in the commonwealth under the Kentucky Consumer Protection Act. 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,” 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 and that the Attorney General was lawfully acting 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 remanded to Franklin Circuit, however, 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, and held that National’s conduct throughout the litigation “poisoned the atmosphere” and “created a climate of ill-will, personal animosity, and distrust.” The court noted that targets of a lawful investigation cannot be permitted to engage in “unwarranted litigation tactics to obstruct and delay … without sanction and accountability.”
In assessing the $10,000 penalty against National College’s attorneys under the Kentucky Rules of Civil Procedure, the court noted that it has never before sanctioned an attorney but that “the litigation tactics engaged in by [National’s] counsel in this case have crossed the line from zealous advocacy into obstruction, delay, harassment, and an unwarranted vendetta against the Attorney General who has done nothing but attempt to fairly enforce the consumer protection laws of this state.”
National College was ordered to produce all documents and information demanded by the subpoena within ten days of the entry of the Order, in which case a portion of the daily civil penalty will be suspended. The $10,000 sanction against its attorneys, however, will not be suspended.
In a separate action, in September, 2011, the Attorney General filed suit against National College in Fayette Circuit Court alleging that National violated the Kentucky Consumer Protection Act by posting false job placement rates for National graduates on its website.