Robert W. Keats v. U.S. Department of Education, et al.

District Court, W.D. Kentucky·Decided July 22, 2026·No. 3:26-cv-00597·Unknown

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

ROBERT W. KEATS, Plaintiff, v. Civil Action No. 25-3594 (CKK)

U.S. DEPARTMENT OF EDUCATION, et al., Defendants.

MEMORANDUM OPINION (July 22, 2026)

This action relates to a bankruptcy proceeding that is pending in the Western District of Kentucky. The Defendants have moved to transfer this action to that District and to extend their deadline to respond to the Plaintiff’s Complaint. Upon consideration of the parties’ submissions,1 the relevant legal authority, and the entire record, the Court shall GRANT the Defendants’ [6] Motion to Transfer Case to the U.S. District Court for the Western District of Kentucky and GRANT IN PART and DENY WITHOUT PREJUDICE IN PART the Defendants’ [7] Motion for Extension of Time to Answer. The Defendants’ obligation to respond to the Plaintiff’s Complaint shall remain STAYED until seven days after this case is docketed in the U.S. District Court for the Western District of Kentucky, within which time the Defendants may renew their motion for extension of time to file an Answer or otherwise respond to the Plaintiff’s Complaint.

1 The Court’s consideration has focused on the following documents, including the attachments and exhibits thereto: • The Plaintiff’s Complaint (“Compl.”), Dkt. No. 1; • The Defendants’ Motion to Transfer Case to the U.S. District Court for the Western District of Kentucky and for Extension of Time to Answer (“Defs.’ Mot.”), Dkt. Nos. 6 and 7; • The Plaintiff’s Opposition to the Defendants’ Motion (“Pl.’s Opp’n”), Dkt. No. 8; and • The Defendants’ Reply (“Defs.’ Reply”), Dkt. No. 9.

In an exercise of its discretion, the Court concludes that oral argument is not necessary to the resolution of the issues pending before the Court. See LCvR 7(f). I. BACKGROUND A. Factual Background The Plaintiff in this action is the Trustee in Bankruptcy for the Estate of Decker, Inc., d/b/a Decker College, Inc. Compl. at 1 & ¶ 8. Decker College was a vocational school that was founded in Louisville, Kentucky in 1989 and accredited by the Council for Occupational Education (“COE”) in 1992. Id. ¶¶ 2, 14–15.

In 2002, Decker began developing “hybrid” programs in multiple construction-related fields that combined online and in-person instruction. Id. ¶ 17. Decker enrolled approximately 4,500 students in these and other programs in the 2004–2005 academic year. Id. ¶ 20. Like most colleges, Decker relied for its operations on its ability to enroll students receiving federal financial aid. See Compl. ¶¶ 1, 22. In June 2005, the Kansas City office of the Department of Education’s Office of Federal Student Aid (“FSA”) opened an inquiry that led to a change in how Decker received and processed student financial aid funding. See id. ¶¶ 26–30. After this change, instead of receiving federal funds from the Department and then disbursing those funds to student borrowers, Decker was required to advance its own funds to student borrowers and submit requests to the FSA for reimbursement. Id. ¶¶ 27–28. This change placed Decker in a precarious

financial position. See id. Nonetheless, following the new procedure, Decker submitted reimbursement requests in July 2005, August 2005, and September 2005. Id. ¶¶ 1, 29–30. The FSA rejected Decker’s July 2005 request on grounds that Decker disputed. Id. ¶ 29. Decker then prepared two new reimbursement requests, which it submitted in August 2005 and September 2005. Id. ¶ 30. By late September 2005, the Department had not processed any of the requested reimbursements. See id. ¶¶ 29–32. On September 30, 2005, Decker’s CEO received a letter from FSA denying Decker’s request for recertification to participate in federal financial aid programs. Compl. ¶ 32. The letter alleged that Decker’s construction-related programs had not been accredited by COE, meaning that Decker had violated federal rules by awarding federal funds to students enrolled in those programs. Id. Decker’s Trustee alleges that this letter “came as a surprise.” Id. Three weeks later, on October 21, 2005, the Federal Bureau of Investigation (“FBI”) seized “nearly all of Decker’s physical and electronic records” in connection with an investigation by the

Department of Education’s Office of Inspector General. Compl. ¶¶ 39–40, 48. The Trustee states that this investigation did not result in any findings of wrongdoing, civil liabilities, or criminal proceedings, but that the FBI nonetheless retained Decker’s records until 2009. Id. ¶ 39. Decker shut down on the day of this seizure, and it did not reopen. Compl. ¶ 40. Decker’s creditors filed an involuntary bankruptcy petition in the Western District of Kentucky later that month. Id. ¶ 41. Decker’s Trustee alleges that many of the events leading to the school’s closure resulted from acts by a specific employee of the Department of Education, Ralph LoBosco, who allegedly harbored a grudge against Decker’s then-Chief Executive Officer, William F. Weld. See Compl.

¶¶ 2, 23–27, 34–37. The Trustee alleges that Mr. LoBosco was previously a senior official at a private educational institution that closed after a fraud investigation and prosecution that Mr. Weld led while he was serving as U.S. Attorney in Massachusetts. Id. ¶ 23. The Trustee further alleges that Mr. LoBosco “told [a former Decker employee] that the change in position caused by [this institution’s] closure significantly affected his and his wife’s lifestyle.” Id. ¶ 24. According to the Trustee, Mr. LoBosco led the office responsible for overseeing Decker’s compliance with federal financial aid requirements and was personally involved in many of the events that precipitated Decker’s closure. Id. ¶¶ 25–27, 34–37. The Trustee alleges that Decker later learned through Freedom of Information Act Requests that, prior to Decker’s closure, Mr. LoBosco had been communicating directly with Gary Puckett, the Executive Director of Decker’s accreditor, COE, about Decker and its construction programs. Compl. ¶ 34. Following these communications, Mr. Puckett sent a letter to the Department claiming that COE had not approved Decker’s construction programs to be offered online. Id. ¶ 37. B. Procedural History

In March 2006, after Decker had closed, the Department issued a Final Program Review Determination (“FPRD”) stating the final findings and proposed liabilities assessed by the FSA in connection with the review of Decker’s operations that it opened in June 2005. Compl. ¶ 43. The FPRD asserted that Decker had improperly awarded approximately $31.6 million in federal financial aid to students enrolled in its allegedly unaccredited construction programs. Id. ¶ 44. The FPRD also asserted a series of other violations resulting in smaller liabilities, for a total liability of approximately $32.1 million. See id. ¶¶ 44–47. The Department later filed a proof of claim in Decker’s bankruptcy proceeding based on the liabilities asserted in the FPRD. Id. ¶ 49. The Department also sent Decker a letter denying its outstanding requests for reimbursement, citing the ineligibility of Decker’s construction programs due to their alleged lack

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Robert W. Keats v. U.S. Department of Education, et al., (W.D. Ky. 2026).

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