- Associated Press - Sunday, November 2, 2014

DES MOINES, Iowa (AP) - The owner of cosmetology schools in Iowa, Illinois and Nebraska is asking a judge to dismiss a consumer fraud lawsuit filed by the Iowa attorney general’s office, claiming the allegations are too vague.

Iowa Attorney General Tom Miller’s office filed a petition on Aug. 28 alleging Cynthia Becher, majority owner of a company that operates La’ James International Colleges, and its cosmetology schools violated Iowa’s Consumer Fraud Act.

Miller alleges the schools failed to adequately staff classrooms with instructors, required students to sell products from La’ James’ salons and perform janitorial duties, failed to fully inform students of important information and assessed improper charges for students not finishing the program on time.

On Oct. 23 Becher’s lawyers filed a motion to dismiss the case, saying it’s based on vague allegations.

“The current scattershot approach leaves La’ James in the untenable position of defending against an amorphous, moveable target without any clarity as to the legal and factual framework at play for the allegedly ‘fraudulent’ conduct,” they wrote.

The attorney general’s office plans to respond in a court filing next week.

“Our office stands by the allegations in the state’s lawsuit,” said Geoff Greenwood, a spokesman for Miller.

La’ James has schools in the Iowa cities of Cedar Falls, Cedar Rapids, Davenport, Fort Dodge, Iowa City and Johnston as well as East Moline, Illinois, and Fremont, Nebraska.

They teach students how to cut and color hair and other aspects of cosmetology, including massage, nail technology and esthetics, a skin care specialty.

The schools are accredited by the National Accrediting Commission of Career Arts and Sciences and are approved to operate in Iowa by the Iowa Board of Cosmetology Arts & Sciences.

Becher, who has owned the schools since 1992, said she enjoys seeing students - some who have struggled with school and careers - learn a skill and earn a paycheck. She said the state’s allegations are offensive and have hurt business.

“That word fraud just gives you chills,” she said. “We did not do anything fraudulent and never would because that’s just not our game and I just can’t live with that word.”

The state cosmetology board last summer said inspectors found unsanitary practices and other violations at La’ James schools in Iowa City and Johnston. Becher settled with the board by paying a $10,000 fine and thought matters were resolved, but the attorney general’s office launched its own investigation. The office’s Consumer Protection Division has received 23 complaints about La’ James since 2003, including five this year, Greenwood said.

Becher said she’s provided reams of documents showing the allegations are unfounded, but it’s made no difference.

Miller’s lawsuit said Becher’s company and its subsidiaries earned $3.4 million in 2010, nearly $3 million in 2011 and almost $2 million in 2012.

For-profit colleges are facing increasing scrutiny from state and federal officials about cost, loan defaults and graduation rates.

The U.S. Department of Education announced Thursday a new rule requiring that the estimated annual loan payment of a typical for-profit school graduate cannot exceed 20 percent of the student’s discretionary income or 8 percent of total earnings.

Schools with loan payments exceeding those percentages could lose access to federal student-aid programs.

Miller has gone after for-profit colleges before, settling a complaint in May against Ashford University in Clinton, Iowa, involving statements made to prospective students and fee refunds. The school denied Miller’s allegations but paid the state $7.25 million.

Becher said Miller’s office also has offered to settle with her.

“At this point they did put a figure out in front of us,” she said. “It was offensive and it was ridiculous and at this point we’re going to fight.”

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