COLUMBIA -- The director of the state's licensing agency said Friday that cosmetology licenses were sold, and this prompted an arrest and police investigation.

Labor, Licensing and Regulation Department Director Catherine Templeton told a Senate panel of the investigations and an arrest as she provided an update on the agency she's headed since January.

"The charge was that the employee was selling licenses and presumably to support the human trafficking that goes on through the nation," Templeton said.

"The licenses were provided to individuals that have not met the statutory requirements for the licenses and allowed people who were not otherwise qualified to work in South Carolina," she added.

The woman selling the licenses was arrested and entered a pre-trial intervention program, Templeton said.

Templeton told the AP that the agency's internal investigation shows 50 licenses issued to people who do not exist.

The State Law Enforcement Division issued three warrants for Jasmin Reales of Columbia in February 2010 for forgery. Reales told The Associated Press she did not sell licenses.

Templeton offered a glimpse of an agency rife with problems. She told the panel of unconfirmed allegations that salons might have been warned that inspectors were coming or that inspectors took payoffs. She said she's addressed that issue by not giving notice to inspectors of which places they'd go to; conducting follow-up inspections and putting the inspection operation under the control of an investigative unit.

At the same time, Templeton said, her agency was in the middle of a federal probe "regarding the rest of that particular area in LLR. The FBI came in and they interviewed our cosmetology inspectors. They asked us for documentation. It is not ongoing to my knowledge."

In the midst of that FBI probe, Templeton said, the man overseeing the cosmetology operation was allowed to retire. Templeton emphasized that he was not a target of the investigation. Once he left, there were no more inquiries from federal investigators, she said.

Templeton said there was also a federal investigation involving the cosmetology school World Beauty, which shut down before Templeton took control of the agency. Templeton said there were concerns about people getting licenses without studying.

The state issued hundreds of licenses for the school before it shut down. While it can't be verified, Templeton said, "we have gotten to a point where we find that those people may or may not have even ever entered the building."

Employees told the agency that some people didn't speak English and doubted they could have taken the English-only exams. Templeton said people might not be able to speak English but can take tests in English.

"We don't know. We can't get into that well enough to definitively deny somebody their license," she said.

People with licenses tied to World Beauty will get more scrutiny when their licenses come up for renewal, Templeton said.