Capri Institute Defrauded Students, NJ Attorney General Suit Says

NEWARK, NJ — Capri Institute, which abruptly closed its cosmetology school in Brick and other location in December and left students in the lurch, is being sued by the state attorney general's office over accusations that the school defrauded students, officials said.

In addition, state authorities are seeking to suspend the school's licenses to operate in New Jersey, through charges filed with the state Board of Cosmetology and Hairstyling that allege Capri defrauded students, engaged in substandard business practices that financially harmed students, and failed to meet regulations and curriculum requirements for cosmetology schools, Acting Attorney General Matthew Platkin said.

The state Division of Consumer Affairs began investigating shortly after Capri Institute of Hair Design shut down its campuses in Paramus, Clifton, Kenilworth, and Brick with less than 48 hours notice to its roughly 250 students, Platkin's office said.

After the shutdown, Capri refused to respond to students’ questions about the closure and refused to provide students with their official transcripts or tuition refunds, making it virtually impossible for them to transfer to another cosmetology school, the attorney general's office said.

"Despite representing to students and advertising on its website that campuses would reopen in 30 days, it was 45 days before Capri began 'haphazardly' reopening certain campuses," the complaint said.

Capri later reopened classroom-based instruction at three campuses — Brick remains closed — but did not reopen clinics attached to the schools, officials said. That violates curriculum requirements for beauty schools in New Jersey, because students are required to complete the clinical hours to become licensed as cosmetology and hair styling professionals in the state.

"Students who pursue career education in order to improve their job prospects or to obtain a professional license have every right to expect a return on their financial investments," Platkin said.

"Capri’s students paid thousands of dollars in tuition — or incurred thousands of dollars in student loan debt — in an effort to obtain a professional cosmetology and hairstyling license to improve their quality of life. As a result of the school’s alleged unlawful conduct, that dream has been put on hold — perhaps permanently,” said Cari Fais, acting director of the Division of Consumer Affairs.

The lawsuit, filed in Superior Court in Union County on Friday, alleges Capri and its associated entities violated the Consumer Fraud Act and advertising regulations, Platkin's office said.

The state lawsuit alleges Capri Corporate Management, Inc., Capri Training Centers Inc. and Capri’s president Lorelei K. Muenster violated the state’s Consumer Fraud Protection Act and advertising regulations in the following ways:

• systematic and continuing failure to provide students with Board-mandated books and supplies that were included in the cost of tuition;
• failure to provide prior written notice to students or the Board of Capri’s closure;
• failure to provide refunds or official transcripts to students after Capri announced its closure;
• failure to maintain its telephone lines or answer and/or respond to students’ questions about the closure;
• failure to provide timely and accurate records to the Board regarding the number of hours students had completed;
• failure to properly maintain the facilities at the Brick and Kenilworth campuses;
• failure to refund students who had overpaid on their accounts;
• misrepresenting their operating status to the public;
• reopening programs at three campuses that failed to meet Board curriculum requirements;
• advertising on the Capri website that federal tuition assistance is available to students after Capri lost its eligibility to obtain such funding from the federal Department of Education;
• failure to inform students before they returned to Capri that they would have to pay out of pocket for tuition that was no longer covered by federal financial aid even though Capri lost the funding as a result of its own substandard business practices; and
• advertising on the Capri website that classes would start on January 11, 2022, when all four campuses remained closed through that date.

The state seeks restitution and penalties "for the defendants’ alleged unlawful and deceptive commercial practices, misrepresentations, and advertising violations, to terminate Capri’s business registration, to recover attorney’s fees and investigative costs, to bar any ongoing or future violations of the CFA and advertisement regulations, and to personally find Lorelei K. Muenster responsible for Capri’s violation of the CFA and advertising regulations.

The complaint filed before the Board, the State alleges that Capri is engaging in professional or occupational misconduct by:

• failing to provide a clinical education component at the three reopened Capri school locations, in violation of Board curriculum requirements;

• canceling the bonds it had posted with the State – in the amount of $40,000 per campus –effective June 30, 2022, in violation of Board regulations; and

• failing to comply with a subpoena ordering Capri’s principal, Muenster, to appear for sworn video testimony before the Board for an investigative inquiry.

In addition to seeking immediate, temporary suspension of the licenses held by Capri, pending a plenary hearing in the Office of Administrative Law, the State is asking the Board to mitigate the harm Capri visited upon its vulnerable student population through the following measures:

• ordering Capri to provide to the Board a list with all known contact information of any current student or prospective student that includes the specific amount they paid to Capri and the manner in which those funds were paid;
• ordering Capri to provide without cost updated transcripts reflecting all completed credit hours to any student who requests it and to provide the Board with copies of those transcripts;
• having Board staff, with assistance of additional staff from the Division, contact each student to inform them of the temporary suspension of Capri’s licenses and to assist their transition to another cosmetology and hairstyling school and, ultimately, licensure by the Board; and
• relaxing or waiving (as permitted by law) any Board rule or regulation applicable to student transfers as to minimize any harm visited upon students by Capri’s conduct.