A defunct cosmetology school that operated two locations in the Charleston area and its chief executive officer have been hit with a $9.3 million court judgment.
U.S. Attorney Bill Nettles said the judgment against Lacy School of Cosmetology and its CEO, Ernest “Jay” Lacy, was for presenting false claims to the U.S. Department of Education for federal student loans and grants.
Lacy and the school never responded to the original lawsuit, which was filed as a whistleblower case.
“Through its investigation, the government learned that the school misappropriated funds by knowingly failing to comply with numerous federal program regulatory requirements, making unauthorized disbursements of federal student aid funds, failing to refund student credit balances, and concealing its actions by submitting false statements of compliance,” Nettles’ office said in a statement Wednesday.
Lacy also was president of the school, which had campuses in Aiken, Charleston, Goose Creek and Lexington. A Citadel Mall location was closed in the fall of 2013, according to a news report. The others closed in March 2014. Lacy registered the school with the S.C. Secretary of State’s office in 1999.
Federal Judge J. Michelle Childs found that the government’s actual damages totaled about $2.2 million in grants and loans. The judgment included triple damages required under the False Claims Act of more than $6.55 million and a civil penalty of about $2.73 million.
The case was the result of a coordinated effort between prosecutors from the U.S. Attorney’s Office for the District of South Carolina and agents with the Education Department.