The now-defunct Capri Institute of Hair Design will pay more than $640,000 to settle a fraud lawsuit filed by the State of New Jersey, according to authorities.

As part of the agreement announced Nov. 8 by Attorney General Matthew Platkin, up to $500,000 of that money will be allocated to restitution, allowing former students to receive either a full or partial cash refund for tuition or disruption to their education.

The remainder will go toward civil penalties, attorneys’ fees and costs related to litigation and investigation, as per the final consent judgment filed last week in Union County Superior Court.

In a separate settlement with the State Board of Cosmetology and Hairstyling, Capri agreed to surrender its four licenses that allowed the school to operate programs in New Jersey and to pay $26,600 in fees.

Both resolutions stem from an investigation launched after the school abruptly closed its four New Jersey campuses in December 2021 – displacing approximately 250 students on less than two days’ notice, according to authorities.

After the shutdown of its locations in Paramus, Clifton, Brick and Kenilworth, Capri allegedly refused to respond to provide transcripts or tuition refunds, hindering students’ ability to transfer to other cosmetology schools, Platkin said. A few months later, Capri briefly resumed classroom-based instruction at three campuses but did not open required clinics, leaving students unable to obtain the clinical hours needed to become licensed as cosmetology and hair styling professionals in New Jersey, the attorney general said.

The probe also revealed that prior to the closure, Capri reportedly 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, Platkin stated.

After the investigation’s conclusion, the state’s Division of Consumer Affairs brought a civil complaint against Capri in June 2022, accusing the school of violating the Consumer Fraud Act and advertising regulations. The state also filed a verified complaint alleging violations of curriculum requirements and failure to comply with investigative inquiries.

In commenting on the settlement with Capri, Platkin said, “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. 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.”

In a statement, Cari Fais, acting director of the Division of Consumer Affairs, said, “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. 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.”

According to authorities, the Division of Consumer Affairs plans to issue cash refunds to students who were unenrolled or withdrew from Capri after the December 2021 closure and will grant partial refunds to graduates to address the disruption to their education. Students who took out federal loans to attend Capri and were affected by the closure may also qualify for a closed-school discharge.

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.

Additionally, should Capri own or operate any cosmetology-related programs in the future, the resolution, among other things, requires the school 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.