Antitrust Law Daily Wrap Up, ADVERTISING NEWS: California AG reaches $168.5M settlement with charter school operator, (Jul 8, 2016)
Organizations Mentioned:California Department of Justice | K12 Inc.
By Greg Hammond, J.D.
The Bureau of Children’s Justice and False Claims Unit of the California Department of Justice has reached a $168.5 million settlement with K12 Inc.—a for-profit online charter school operator—and 14 affiliated non-profit schools known as the California Virtual Academies, disposing of allegations that the defendants violated California’s false advertising, unfair competition, and false claims laws.
The Attorney General’s office claimed that K12 and the California Virtual Academies it operates in California: (1) misled parents in order to induce them to enroll their children in K12 schools by publishing misleading ads; (2) submitted inflated student attendance numbers and collected more dollars in state funding from the California Department of Education than they were entitled to; and (3) influenced nonprofit online charter schools to enter into unfavorable contracts that put them deep in a financial hole.
The settlement, which is subject to court approval, requires K12 to provide roughly $160 million in debt relief to the non-profit schools it manages and pay $8.5 million in settlement of all claims. K12 has also agreed to implement reforms of its contracts with the California Virtual Academies, undergo independent reviews of its services for students with disabilities, ensure accuracy of all ads, provide teachers with sufficient information and training to prevent improper claiming of attendance dollars, and change policies and practices to prevent the types of conduct that led to the investigation.
"All children deserve, and are entitled under the law, to an equal education," stated Attorney General Kamala D. Harris. "K12 and its schools misled parents and the State of California by claiming taxpayer dollars for questionable student attendance, misstating student success and parent satisfaction, and loading nonprofit charities with debt. As my office continues an industry-wide examination of for-profit academic institutions, this settlement ensures K12 and its schools are held accountable and make much-needed improvements."
Companies: K12 Inc.
News: Advertising ConsumerProtection StateUnfairTradePractices