Court Orders For-Profit College To Pay $1,000/Day For Sidestepping Subpoena

National College has 30 campuses in six states.

For three years, the Kentucky Attorney General’s office has been trying to enforce a subpoena related to its investigation into the operators of the for-profit National College schools in the state. Today, a court ordered a $1,000/day civil penalty against the school, retroactive to July 31.

That means that the school already owes $126,000 in fines and that the amount will continue to grow every day until National College honors the subpoena from Kentucky AG Jack Conway.

Additionally, lawyers for the school have been ordered [PDF] to pay $10,000 to the AG’s office, with the court saying that the school has “repeatedly abused the legal system to obstruct a valid investigation by the Attorney General.”

This case goes all the way back to December 2010, when Conway’s office issued a subpoena related to its investigation into allegations of misleading marketing practices at for-profit schools operating in Kentucky.

National attempted to block the subpoena, claiming that disclosing the information requested by the state would be in violation of the Family Education Rights and Protection Act (FERPA), which requires student and/or parent permission to release information from a student’s education record.

But Conway’s office argued that FERPA is intended to protect students, not institutions, and that the requested documentation could be provided without the inclusion of any information that would identify any particular students. Additionally, FERPA itself states that prior consent is not required if “the disclosure is to comply with a judicial order or lawfully issued subpoena.”

“In short, National College’s attempt to invoke FERPA is yet another example of a continuing pattern of meritless litigation tactics to obstruct and delay the lawful investigation of the Attorney General,” reads today’s order, which requires that National, which did turn over some requested documents earlier this year, fulfill the remaining requests of the subpoena within 10 days.

If the school can make good on the subpoena request by that deadline, some of the $1,000 daily sanctions may be suspended, but the $10,000 fine against the school’s lawyers remains.

“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.

The state filed suit [PDF] in September 2011, alleging violations oft the Kentucky Consumer Protection Act by the making of false, misleading and deceptive disclosures regarding the rate at which National students were able to obtain employment in their field of study.

According to the state, the school was dramatically overstating the percentage of its graduates that were able to find work. For example, National had posted on its website that the job-placement rate at its Louisville campus was 96% in 2010, but the numbers reported by the school to its accrediting body were only 60.1% for that year. In fact, alleged the AG’s office, National posted highly inflated job-placement stats for at least four of its locations in Kentucky.

The school subsequently adjusted the stats on its website, before doing a complete revamp in recent years. The 2011 lawsuit is still pending.

We’ve reached out to National for comment on today’s court order and will update if we hear anything back.

In addition to the National litigation, Conway’s office earlier this year also filed suit against the operators of the for-profit Spencerian College campuses over similar allegations of misleading job-placement statistics.

by Chris Morran via Consumerist