The now-defunct Capri Institute of Hair Design and its related entities have agreed to a settlement of nearly $640,000 in response to a fraud lawsuit filed by the state of New Jersey.
In a statement, Attorney General Matthew Platkin and the Division of Consumer Affairs emphasized that a significant portion of the funds will be dedicated to consumer restitution.
The allegations against Capri stem from an investigation initiated after the school abruptly shut down in December 2021, leaving about 250 enrolled students in the lurch with less than 48 hours’ notice.
The state’s investigation found that in the aftermath of the closure, Capri allegedly refused to respond to students’ inquiries and withheld official transcripts and tuition refunds, hindering students’ ability to transfer to other cosmetology schools.
Capri, which operated campuses in Paramus, Clifton, Kenilworth and Brick, faced further accusations when it briefly reopened three campuses months after the initial shutdown. The school allegedly failed to open required clinics, leaving students unable to obtain the necessary clinical hours for licensure by the State Board of Cosmetology and Hairstyling.
The investigation also uncovered substandard business practices before the closure, including financial harm to students and a failure to provide board-mandated books and supplies included in tuition costs.
“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,” Platkin said. “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.”
The Division of Consumer Affairs received a flood of complaints from affected students in December 2021, prompting an investigation. The state filed a civil action on June 3, 2022, alleging violations of the Consumer Fraud Act and advertising regulations. Simultaneously, a verified complaint was filed before the board, alleging violations of curriculum requirements and failure to comply with investigative inquiries.
The final consent judgment, filed in Superior Court in Union County on Nov. 2, outlines the terms of the settlement. Capri will pay the division nearly $640,000, with up to $500,000 designated for consumer restitution and the remainder at the division’s discretion for civil penalties, attorneys’ fees, and investigation and litigation costs.
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“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 … 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 plans to issue cash refunds to students who were unenrolled or withdrew from Capri after the December 2021 closure. Graduates will receive partial refunds to address the disruption to their education. Also, students who took out federal loans to attend Capri and were affected by the closure may qualify for a closed-school discharge of their loans.
Capri has also agreed to surrender its licenses to operate in New Jersey as part of a separate settlement with the State Board of Cosmetology and Hairstyling.
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