Money-For-License Scheme Rooted In Year-Old Allegations

Money-For-License Scheme Rooted In Year-Old Allegations

CREATED Mar 8, 2013

By Jennifer Kraus
Consumer Investigator

NASHVILLE, Tenn. -- The state of Tennessee wants answers about an alleged money-for-license scheme involving licenses issued by the state's Cosmetology Board.

NewsChannel 5 Investigates first revealed last week how more than three dozen immigrants got licenses to do nails, hair, and facials in Tennessee based on falsified applications. They claim they paid a Green Hills salon owner tens of thousands of dollars to get these licenses.

But our investigation discovered that the first hints that there might be a problem came more than a year ago.

"Would you call this an active investigation now underway?" NewsChannel 5 Investigates asked Tennessee Department of Commerce and Insurance spokesman Christopher Garrett.

"Absolutely," he answered.

Garrett now confirms that regulators want to know how more than three dozen Vietnamese immigrants, who speak little English, all wound up with cosmetology licenses based on falsified applications.

At a hearing last week where the state moved to revoke those licenses, the cosmetologists admitted through translators that they did not have the necessary qualifications. All described how they'd paid the same man thousands of dollars and he, in turn, got them a license and "took care of everything."

One licensee, Thanh Nguyen, said at the hearing through a translator, "He said that he would help me get the license for the nail."

"How much did you pay him?" she was asked.


NewsChannel 5 Investigates tracked that man, Lee Phan, down at the nail and hair salon he owns in the heart of Green Hills and initially he admitted that he'd filled out applications and taken money.

"And, you fill out the application?" NewsChannel 5 Investigates asked Phan.

"Uh, yeah. No, I didn't fill it out. They do it sometimes," he answered.

"And, sometimes you do?" we asked.

"Yeah. Yeah," Phan said.

"We've got people telling us you were charging them $3,000 to $5,000?"

Phan replied, "No, no, not that much."

NewsChannel 5 Investigates later asked the Commerce and Insurance spokesman, "Would it be safe to say the state has questions for Mr. Phan too?"

"Absolutely," Christopher Garrett replied. 

Garrett said that last week's hearings is when the state learned of the alleged money for license scheme.

He explained, "The hearings represented the first time that these allegations had been shared with the Department."

But NewsChannel 5 Investigates has learned the state first discovered there may have been problems with the licenses more than a year ago when the Department of Commerce and Insurance was investigated six employees allegedly buying and selling drugs on the job. 

 One of those employees, Latrisha Johnson, worked for the Cosmetology Board handling license applications. 

"So she was processing all of these applications?" NewsChannel 5 Investigates asked Garrett.

"That's right," he responded.

Soon after, Johnson was fired, according to her termination letter, not only "for partaking in illegal drugs on the job," but also because her supervisors had "mounting concerns" about her work and had asked Johnson to "give them 24 files containing the original license applications and supporting documentation."

Johnson, according to the letter, could only find one of the 24 files and indicated that at least some of them had been destroyed.

NewsChannel 5 Investigates asked Christopher Garrett, "They were gone?"


"Any proof they ever existed?"

Garrett answered, "Again, that's something we haven't been able to find. We haven't been able to find the files."

NewsChannel 5 Investigates has learned the missing files include the license applications for all of the people who say they paid Lee Phan for licenses.

After we told Phan these people had been busted by the state for falsified applications, he suddenly changed his story and not only denied he'd filled out any applications, but insisted the applications which are now missing are the only way to prove he was involved.

"Where is the application and where is the paperwork? I have to see," he insisted. "If the state still have all of the application, I see, it'll be in my handwriting. I'm OK."

NewsChannel 5 Investigates has confirmed that a Commerce and Insurance employee met with the TBI late last week about the case, but we are told the TBI has not joined the state's investigation yet.

We also talked with Latrisha Johnson, the woman who processed the applications that are now missing -- and she insists she did nothing wrong. 

The state says it would like to talk with anyone who might know any anything about the falsified applications and licenses that were allegedly sold. If you have any information, you're asked to contact the state's Cosmetology Board at (615) 741-2515.


Related Story:
Immigrants Say They Paid Thousands For Cosmetology Licenses

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