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Justice News

Department of Justice
U.S. Attorney’s Office
Eastern District of Oklahoma

Monday, March 10, 2014

Owner Of Cosmetology Schools Reaches $50,000 Settlement Regarding Submission Of False Department Of Education Tuition Claims

Muskogee, Oklahoma - The United States Attorney’s Office for the Eastern District of Oklahoma and the Department of Education announce the settlement of a civil lawsuit brought by the United States of America, acting on behalf of the U.S. Department of Education, against Shirley Zey Smith, a cosmetology school owner.

Ms. Smith was the owner, manager and operator of cosmetology schools located in Oklahoma, Arkansas, and Texas, including the School of Hair Design, Poteau Beauty College, Texarkana Cosmetology Careers, Sherman Cosmetology College, and Mena Cosmetology College. Both School of Hair Design and Poteau Beauty College were approved by the Department of Education to participate in the “Title IV Funding” program, which provides assistance to students for their tuition and fees through grant money and student loans. The other three schools were not approved to participate in “Title IV Funding”.

The lawsuit alleged Shirley Zey Smith and her staff caused students attending her three unapproved schools to submit false claims to the Department of Education, by applying for federal financial aid using the federal school code assigned to the two approved schools.

Pursuant to the settlement agreement, Smith will pay $50,000.00 in penalties and damages.

The case was investigated by the United States Department of Education Regional Inspector General’s Office located in Dallas, Texas. Assistant United States Attorney Robert Gay Guthrie represented the United States in the United States District Court for the Eastern District of Oklahoma, located in Muskogee, Oklahoma.

Updated March 12, 2015