DECISION AND ORDER In this action commenced and maintained by 17 plaintiffs, the court conducted an inquest over the course of several days beginning August 10, 2021 and ending September 29, 2021. At the commencement of the inquest, plaintiff made an application to withdraw the first two causes of action in this case and that application was granted. Of the 17 plaintiffs, 5 of them, Deborah Kim, Jae Kwan Park, Ji Yeon Lee, Kyung Soo Kim and Sunhoi Heo, did not present any documentary evidence of payments to the defendants. The Court had ample opportunity to observe and assess the demeanor and credibility of the witnesses and carefully reviewed and considered all exhibits admitted into evidence. The Inquest During the presentation of testimony and documentary evidence at inquest, the plaintiffs relayed essentially the same background of facts. Most of the plaintiffs learned about the defendant, Southern California University School of Oriental Medicine and Acupuncture (hereinafter “SCUSOMA”) from a Korean newspaper advertisement. Others heard about the school through word of mouth. All of the parties in this litigation are Korean. All but one of the plaintiffs required a Korean interpreter for their testimony. Each plaintiff testified that upon contacting the school to inquire about the program, they were required to set up a meeting with at least one of the defendants, usually Sun Uk Park (hereinafter “Park”), who was identified as the Chief of Administration of SCUSOMA, and was the sole person running the New York branch of SCUSOMA. In their testimony, several of the plaintiffs stated that, during their course of study, they also met with Brian H. Kim (hereinafter “Kim”), who was identified as the president of SCUSOMA. Park was typically the point person between the plaintiffs and the SCUSOMA branch in New York. The series of defendants’ transgressions seems to have begun at least as early as in or about September of 2012. The plaintiffs consistently testified they were advised by Park that the school was properly registered and accredited. They further testified Park told them that based upon its status, upon completion of their coursework and exams at SCUSOMA in New York or at its branch in New Jersey, known as Asian Medicine Institute of New Jersey (hereinafter “AMI”), they would be able get licensed in both New York and New Jersey. Kim also made misrepresentations to the plaintiffs concerning their ability to become licensed upon their program completion and passing exams. The location of the school changed a few times, beginning at an independent free-standing site in Flushing, NY. With each relocation, the students were expected to follow. At various points in time, different excuses were given to the plaintiffs as to the reasons for the change of location. Initially, the plaintiffs were told that SCUSOMA was having difficulties with their landlord. Thereafter, it moved to space contained within a beauty school, also in Flushing. Subsequently, the location moved yet again, to New Jersey. This time some of the students were told SCUSOMA was having difficulty obtaining licensure in New York, but that the school had a branch in New Jersey known as the Asian Medicine Institute of New Jersey (hereinafter “AMI”) which was not deficient. All of the plaintiffs were told they would have to travel to New Jersey to complete their program with SCUSOMA. When the New Jersey location shut down, allegedly because AMI did not pay its rent there, some of the plaintiffs were told that to finish their program with SCUSOMA, they would have to attend the school in California. In or about the summer of 2014 and thereafter, eight of the plaintiffs did attend SCUSOMA at the main campus in California for a brief period to participate in an intensified course study program. Based upon Park’s representations that they would be eligible to obtain licenses to practice in New York, after completing the California course work, they attended school in California Monday through Sunday, from 9am to 9pm for 20 days. Unfortunately for them, this was yet another of the vast array of misrepresentations by Park. Ultimately, one of the plaintiffs, Wan Ki Yook, (hereinafter “Yook”) did some research for the group to locate an accredited school whose tuition rates were reasonably priced. Most of those students completed their studies in Virginia at Virginia University of Oriental Medicine (hereinafter “VUOM”). At least two of the plaintiffs, Sangae Kim and Yeung Chu Kim, actually graduated from SCUSOMA in California. Both of them graduated in December 2013. Through their testimony and documentary evidence they demonstrated, that by correspondence in March 2015 and June 2015 respectively, the NYS Education Department (hereinafter “NYSED”) refused to issue a license for either of them, because while SCUSOMA was conducting its course programs in New York and New Jersey, it was only permitted to conduct programs in California. It was not properly registered with NYSED and was not accredited by the Accreditation Commission for Acupuncture & Oriental Medicine (hereinafter “ACAOM”). Therefore, NYSED advised these plaintiffs it was unable to determine whether they fulfilled the educational requirements for obtaining a license. In January 2015, Yook was also in contact with ACAOM and was advised that SCUSOMA was not even accredited in California. Therefore, the plaintiffs would not be eligible to obtain licenses in New York after studying in California, despite the assurances by Park to the contrary. Apparently, Deborah Kim was the only individual of this group of plaintiffs who graduated from the SCUSOMA program in New York. According to her testimony, she was the last person to be granted licensure in New York based upon SCUSOMA’s program. She graduated in or about September 2014. At or about the time Ms. Kim was entering her last semester of classes, she was told by Park that for her to complete her schooling with SCUSOMA, she would have to attend the rest of her classes in New Jersey, with SCUSOMA’S affiliate, AMI. Ms. Kim, like many of the other plaintiffs, was given excuses about why the New York and New Jersey locations were required to shut down. Just as Mr. Yook contacted ACAOM to inquire about SCUSOMA’s accreditation status, Ms. Kim did as well. While she was permitted to obtain licensure without objection by ACAOM in New York, she was precluded from securing her license in New Jersey, because despite Park’s assurances to the contrary, SCUSOMA was not authorized and accredited in New Jersey. All of the plaintiffs who testified were given false and misleading representations regarding the status of this purported educational institution, as well as false assurances as to their eligibility to become licensed practitioners of “Oriental Medicine”. Although the defendants were aware of the actual status of the New York chapter of SCUSOMA and AMI, they concealed this knowledge and withheld vital information from the plaintiffs. Discussion Other than Margaret H. Cho, someone who seems to have been a minor player in this sham of an educational program, Park and Kim were the embodiment of SCUSOMA. Its very existence was dependent upon the two of them, their misdeeds and their falsehoods. The entire operation of this purported learning institution was nothing more than a scam they perpetrated upon an unwitting public. Park and Kim are not shielded from personal liability, because as Chief of Administration and President of SCUSOMA, they were in the best position to know SCUSOMA was not properly registered with NYSED and was unaccredited in New York. The defendants were not acting in good faith when they lured unsuspecting members of the public into their web of deceit. Park and Kim personally defrauded and intentionally misled the plaintiffs down the garden path to believing they were attending a legitimate learning institution that would provide them with the foundation necessary to become licensed professionals. Therefore, as corporate officers, Park and Kim are individually liable, because they had knowledge of and participated in the fraud. Polonetsky v.Better Homes Depot, Inc., 97 N.Y.2d 46, 735 N.Y.S.2d 479 (2001). What makes this behavior more egregious is that the defendants were in a position of trust. The plaintiffs relied upon the defendants and trusted them as fellow Koreans, as one would with someone who shares their same cultural identity and background. The defendants took advantage of the plaintiffs and abused this trust. The defendants preyed upon the plaintiffs, who merely wanted to be able to provide therapeutic services to patients in need of relief from pain. These predatory actions by Park and Kim cannot be construed as behavior of disclosed agents of a corporation, whose status would shield them from personal liability. As far as can be discerned, they were the only ones who gained from this scheme. Their status as corporate agents cannot be considered to protect them from personal liability. See Buckley v. 112 Central Park South, 285 App.Div. 331, 334, 136 N.Y.S.2d 233 (1st Dep’t. 1954); LaLumia v. Schwartz, 23 A.D.2d 668, 257 N.Y.S.2d 348 (2nd Dep’t. 1965). In Buckley, the appellate court stated it is “…clear that when the corporate officer commits independent torts or predatory acts directed at another, he may not seek refuge behind the mantle of immunity.” 285 App.Div. at 334, 136 N.Y.S.2d 233. Ackerman v. Vertical Club Corp., 94 A.D.2d 665, 666, 462 N.Y.S.2d 657, 660 (1st Dep’t. 1983). Park and Kim engaged in conduct that was materially deceptive and misleading to the plaintiffs. These practices caused the plaintiffs to incur significant monetary damages. Park and Kim made false representations regarding the legitimacy and licensing status of SCUSOMA in New York, which was not properly registered with NYSED and ACAOM. They also misrepresented that AMI, the New Jersey affiliate of SCUSOMA, was properly registered with ACAOM. This malfeasance impinged upon the plaintiffs’ ability to obtain what is referred to in the field as an “acupuncture and oriental medicine” degree and professional license. The defendants falsely represented and advertised that SCUSOMA was a legitimate educational institution acknowledged by NYSED and ACAOM. Defendants also falsely represented and advertised that AMI was properly accredited by ACAOM. The defendants assured the plaintiffs that once they graduated, and passed the board examinations, they would be able to obtain professional licenses to work in several states in this country including New York, New Jersey, and Texas, and ultimately become licensed practitioners. These assurances could not have been further from the truth. The advertisements generated by and for the defendants also violated New York State General Business Law §350. That section of the GBL proclaims false advertising in the conduct of business as unlawful and provides a private right of action to the plaintiffs. As proven by the plaintiffs, the defendants clearly engaged in deceptive business practices and therefore, the plaintiffs have prevailed on their third cause of action, which alleged false advertising and deceptive business practices. Relying on these misrepresentations, the plaintiffs applied, registered and enrolled in the New York branch of SCUSOMA. Many of the plaintiffs invested several years of their lives and expended a substantial amount of money, in anticipation of obtaining an acupuncture and oriental medicine degree and ultimately becoming licensed practitioners in their chosen fields. Defendants materially and intentionally misled the plaintiffs, by failing to disclose information regarding SCUSOMA’s failure to obtain/maintain its proper registration with NYSED and ACAOM. Moreover, these were not simply acts of omission. The defendants affirmatively stated that SCUSOMA was appropriately registered and accredited. As a result of these false representations, plaintiffs spent considerable sums of money for registration, tuition, fees, transportation costs, hotel accommodations and other necessary expenses for their travel to various locations in different states to finish their course of study. While the plaintiffs attempted to maintain a claim against the defendants for breach of contract, that cause of action cannot be sustained. The agreement was not to be performed within one year. Therefore, the agreement was subject to the Statute of Frauds. General Obligations Law §5-701. The plaintiffs did not submit any written contract in this case and therefore, they cannot prevail on their fourth cause of action. Nonetheless, defendants all have been unjustly enriched at the plaintiffs’ expense by receiving tuition, registration fees and other expenses from plaintiffs and failing to provide a legitimate education to plaintiffs to prepare them to obtain licenses in their chosen fields of practice. As such, the defendants have obtained the benefit of the funds expended by plaintiffs without providing a legitimate education and course credits from an accredited educational institution to allow plaintiffs to obtain licenses upon successful completion of their coursework and exams. Consequently, the Court finds that while there was no valid, enforceable contract with respect to any of the plaintiffs’ claims, the plaintiffs have prevailed on their fifth cause of action of unjust enrichment. This Court has no doubt Park and Kim knew the accreditation status of the school. Therefore, at the various times they made their misrepresentations to the plaintiffs, they clearly knew their statements were false. Park and Kim purposefully made those representations to dupe the plaintiffs into enrolling and remaining as students of SCUSOMA in New York and/or AMI in New Jersey. The plaintiffs reasonably relied on SCUSOMA’s agents’ representations about the caliber of education they would receive at the defendants’ campus in New York. Plaintiffs materially changed their positions in reliance on the representations made by defendants by taking time away from their families, their work and their lives while spending their money pursuing worthless courses of study. Plaintiffs’ collective testimony demonstrated that defendants clearly intended to defraud plaintiffs. The defendants fraudulently induced them to enroll at SCUSOMA in NY. Defendants knew these representations were false at the time they were made. Despite the fact that they knew their statements were false, the defendants made those representations to deceive the plaintiffs and have them remain as students of SCUSOMA in New York and/or AMI. The defendants willfully and fraudulently concealed the fact that the New York branch of SCUSOMA was not properly registered with the NYSED and ACAOM. Defendants also willfully and fraudulently concealed the fact that AMI was not properly accredited by ACAOM. As a direct result of the defendants’ false representations and fraudulent inducement, plaintiffs were injured and suffered significant losses of funds expended for registration and tuition fees as well as incidental expenses associated with travel to and lodging at various locations in different states to complete their studies. These damages are compensable. This fraud was not inflicted merely upon a handful of individuals. Nor was it an isolated incident, but one which continued for years. It was calculated, deliberate and predatory. The advertisements in the news media created a fraud upon the public at large and the plaintiffs individually as consumers. On this basis, punitive damages are appropriate and are awarded to the plaintiffs against the defendants. Jacobson v. New York Property Insurance Underwriting Association, 120 AD2d 433, 501 NYS2d 882 (1st Dep’t. 1986). Further, the defendants willfully and fraudulently concealed the fact that NYSED would not be able to determine whether credits earned by students attending the New York branch of SCUSOMA “fulfilled the education requirements for licensure”. The defendants clearly were aware of this fact, because they knew SCUSOMA was not properly accredited and registered in New York. However, rather than be informed of these deficiencies, the students had to learn this directly from NYSED. Moreover, defendants willfully and fraudulently concealed the fact that AMI was not properly registered with the ACAOM and that AMI was not an ACAOM-accredited academic institution. Defendants had a duty to disclose material information concerning SCUSOMA NY’s registration status with NYSED and ACAOM. Defendants had a duty to disclose material information concerning AMI’s registration and accreditation status with ACAOM. Defendants had a duty to disclose to plaintiffs any and all relevant information concerning plaintiffs’ ability to obtain an acupuncture and oriental medicine degree and eventually become licensed practitioners. Defendants failed to disclose this information to plaintiffs. Plaintiffs reasonably believed representations made by defendants to be true, acted in reliance upon them, and were deceived. Plaintiffs materially changed their position in reliance upon the representations made by defendants. Plaintiffs’ reliance was objectively reasonable; they trusted that the school and its officers and directors would be forthright about the school’s accreditation and licensing status. Plaintiffs were misled by the defendants’ conduct of concealing this material information. Plaintiffs’ collective testimony demonstrated that defendants had a clear scheme to defraud plaintiffs and fraudulently conceal material information from Plaintiffs. Defendants acted together in fostering and promoting this fraudulent scheme to defraud plaintiffs and cause injury to them. As a direct and proximate result of defendants’ false representations and defendants’ willful failure to disclose material information, plaintiffs were injured and suffered significant losses of funds expended for registration and tuition fees, as well as incidental expenses associated with travel to and lodging at various locations in different states to finish their program. Due to the calculated and deliberate behavior of the defendants, which operated as fraudulent misrepresentations and fraudulent concealment inflicted upon the plaintiffs, the plaintiffs have prevailed upon their sixth and seventh causes of action. Therefore, they are entitled to punitive damages on this basis as well. Attorney’s Fees Pursuant to NYS General Business Law §349(h), a private right of action was created for plaintiffs to litigate against defendants for deceptive acts or practices in the conduct of any business, trade or commerce or in providing services. This statute was enacted precisely for the situation at bar. This same section of the GBL provides for the recovery of an award of reasonable attorney’s fees to a prevailing plaintiff. This Court determines that the plaintiffs are prevailing parties who are entitled to an award of attorney’s fees. Conclusion As referenced above, the first two causes of action were withdrawn. The reasoning was that they involved federal criminal statutes, which are not applicable to the instant action. Similarly, the eighth cause of action, which alleges aiding and abetting, sounds in criminal law and is inappropriate here. Therefore, the eighth cause of action is dismissed. The fourth cause of action, which alleged a breach of contract, but the plaintiffs were unable to sustain this claim. There was no written contract and the agreement was incapable of being performed in less than a year. By its nature, the completion of the program was intended after a few years. Therefore, the fourth cause of action is dismissed. With respect to Deborah Kim, Jae Kwan Park, Ji Yeon Lee, Kyung Soo Kim and Sunhoi Heo, they did not present any documentary evidence of payments to SCUSOMA in support of their claims. Therefore, this Court is constrained to dismiss this action as to them. The complaint is also dismissed as to defendants “DOES 1 through 50, inclusive” against whom no evidence was presented; nor was there an application to amend the complaint to substitute an identifiable individual in place and instead of any of the fictitiously named defendants. The remaining plaintiffs have demonstrated their prima facie case against the defendants, which has been unrebutted. This Court awards a money judgment in favor of the plaintiffs collectively and against the defendants jointly and severally in the amount of $265,238.00, in compensatory damages on the fifth cause of action of unjust enrichment and $795,714.00, in punitive damages on the third, sixth and seventh causes of action of deceptive business practices, fraudulent misrepresentation and fraudulent concealment respectively, together with fees, costs and disbursements. The plaintiffs are also granted an award of attorney’s fees on their third cause of action of deceptive business practices, based upon the defendants’ violation of General Business Law §349 the amount of which will be determined at an attorney’s fee hearing. This matter is set down for an inquest on the attorney’s fees on March 1, 2022. The Clerk shall enter an inclusive money judgment after the award of attorney’s fees is determined. This constitutes the Decision and Order of this Court. Dated: January 14, 2022
