Legally this would break down to reasonable discisions.
If the instructor within reason had known that this student was going to abuse his instruction THEN the instructor is partly at fault.
IF the instructor could reasonably assume the person was of average moral character he is then not responsible.
So my question is ... did the student ever display / say / indicate that he was here to beat people up?
LOTS of people join a dojo learn some moves and then go out and try their hand at the street. All it really does is make everyone sad when it happens.
Choices are owned by the people who make them. If you can say, "Well I would have made that choice again knowing them what I knew then." I'd say morally ethically and emotionally in the clear.
What is worse teaching no one because someone might use it for ill or teaching those that need it and hope they will make the right choices?
I love moral imperitives