Capri Institute Agrees to Make Restitution to Students, Surrender Licenses to Operate in NJ
TRENTON – Attorney General Matthew J. Platkin and the Division of Consumer Affairs (“the Division”) announced today that a now-defunct New Jersey cosmetology school and its related entities have agreed to pay nearly $640,000 – a majority of which will be used for consumer restitution – to resolve the State’s lawsuit alleging they defrauded students and engaged in substandard business practices that financially harmed students. In a separate settlement with the State Board of Cosmetology and Hairstyling (“the Board”), the school also agreed to surrender its licenses to operate in New Jersey.
Capri Institute of Hair Design, its related corporate entities, and individuals that owned and/or operated the school’s programs at campuses in Paramus, Clifton, Kenilworth, and Brick (collectively, “Capri”) entered the settlements to resolve allegations stemming from an investigation launched after Capri abruptly shut down operations in December 2021 with less than 48 hours prior notice to its roughly 250 enrolled students.
The investigation found that in the weeks following the shutdown, the school allegedly refused to respond to students’ questions about the closure and allegedly refused to provide students with their official transcripts or tuition refunds, making it virtually impossible for them to transfer to another cosmetology school. When Capri briefly reopened three campuses months after the initial shutdown, they allegedly failed to open the attached clinics as required, leaving students without the ability to obtain the necessary clinical hours to become licensed by the Board. The investigation also revealed that prior to the closure, the school allegedly engaged in substandard business practices that financially harmed students and failed to provide students with Board-mandated books and supplies that were included in the cost of tuition.
“New Jersey is committed to ensuring the pathway to success is open to all, including access to the training and education needed to achieve career goals,” said Attorney General Platkin. “Our Division of Consumer Affairs is supporting that mission by ensuring for-profit schools deliver on their promise of a quality education that provides students a meaningful opportunity for success.”
“Capri’s students paid thousands of dollars in tuition, or incurred thousands of dollars in student loan debt, believing they were investing in a brighter financial future,” said Cari Fais, Acting Director of the Division of Consumer Affairs. “Instead, Capri defrauded them. The settlements announced today hold the school and its operators accountable for their actions, provide restitution to affected students, and send a clear message that this kind of unlawful conduct will not be tolerated.”
The Division became aware of Capri’s shutdown upon receiving a flood of complaints from students affected by the abrupt closure in December 2021. The Division launched a two-pronged investigation by its Office of Consumer Protection and its Enforcement Bureau for the professional licensing boards to determine if Capri had acted in violation of consumer protection laws or Board regulations and curriculum requirements.
That investigation led to a civil action filed by the State in Superior Court in Union County on June 3, 2022, alleging Capri and its associated entities violated the Consumer Fraud Act and advertising regulations. The State also filed a Verified Complaint before the Board the same day alleging Capri violated Board curriculum requirements by failing to provide a clinical education component at the three reopened Capri school locations and violated Board regulations by failing to comply with a Board investigative inquiry and by cancelling the bonds it was required to post with the State to operate.
The civil action was resolved by a Final Consent Judgment filed in Superior Court in Union County on November 2, 2023. Under the terms of the agreement, Capri will pay the Division nearly $640,000, up to $500,000 of which is to be allocated to consumer restitution, and the remainder to be allocated at the Division’s discretion to civil penalties, attorneys’ fees, and investigation and litigation costs.
The Division plans to provide cash refunds for students who Capri unenrolled or who withdrew from Capri on or after the school’s December 2021 closure. Students who were able to graduate will receive partial refunds for the disruption to their education.
Capri students who borrowed federal student loans to pay Capri and who were affected by Capri’s closure may qualify for a closed school discharge of their federal student loans. Interested students should contact their student loan servicers to apply for the closed school discharge. More information about closed school discharges of federal student loans can be found here: https://studentaid.gov/manage-loans/forgiveness-cancellation/closed-school. Students who have issues receiving closed school discharges can contact the Federal Student Aid Ombudsman Group here: https://studentaid.gov/feedback-ombudsman/disputes/prepare.
The Final Consent Judgment also includes injunctive relief, including directing Capri:
- not to sell any student debt owed to it to any third party;
- not to seek to collect any monies from its former students; and
- not to engage in any debt collection activity or engage in negative credit reporting, for any student who has ever been enrolled at Capri.
Should Capri own or operate any cosmetology-related programs in the future, the Final Consent Judgment, among other things, requires Capri to:
- provide students all educational supplies and equipment by no later than the third day of class;
- refrain from engaging in unfair or deceptive business practices and comply with all applicable State and Federal rules and laws, including New Jersey’s Consumer Fraud Act and Advertising Regulations;
- provide refunds in a timely manner to students who have overpaid on their accounts; and
- provide official transcripts in a timely manner to students upon request.
The Verified Complaint before the Board was resolved in a Final Consent Order filed on November 6, 2023 that reprimands Capri for violating the Board’s rules and regulations, orders the immediate surrender of the four Board-issued licenses that allowed Capri to operate programs at the four New Jersey campuses, and requires Capri to pay $25,600 in costs and fees to the Board.
The Final Consent Order also stipulates that if Capri or any related entity seek a license to operate a school of cosmetology and hairstyling in the future, they must be prepared to provide the Board with a specific and detailed business plan that includes details specifying how they intend to avoid the issues that led to the investigation into its business practices. The Board reserves the right to condition any future granting of licensure upon such conditions as it deems in the public interest.
Investigator Jennifer Micco of the Office of Consumer Protection within the Division of Consumer Affairs conducted the investigation for the Division.
Investigators in the Enforcement Bureau within the Division of Consumer Affairs conducted the investigation on behalf of the Board.
Assistant Section Chief Chanel Van Dyke and Deputy Attorneys General Renee Cadmus and Ana Atta-Alla, under the supervision of Consumer Fraud Prosecution Section Chief Jesse Sierant and Assistant Attorney General Jennifer S. Schiefelbein within the Division of Law’s Affirmative Civil Enforcement Practice Group represented the State in the matter before the State Superior Court.
Assistant Section Chief David Puteska, under the supervision of Professional Boards Prosecution Section Chief Doreen Hafner, within the Division of Law’s Affirmative Civil Enforcement Practice Group, and Deputy Attorney General Raquel Bristol, under the supervision of Consumer Affairs Counseling Section Chief Steven Flanzman, within the Division of Law’s Administrative Practice Group, represented the State in the Board matter.