Criminal charges have been dropped against the former Green Hills salon owner accused of selling fraudulent cosmetology licenses to immigrants.

NewsChannel 5 Investigates first exposed the scheme some three and a half years ago.

Man Arrested In Cosmetology License Scheme

State Presents Case In Alleged Cosmetology Scheme

We were in court today when prosecutors revealed they didn't have enough to move forward with the case.

Lee Phan no longer faces theft charges or more than a dozen years in jail after prosecutors announced in court, they were essentially dropping the case.

Assistant District Attorney Brian Ewald told the judge, it was, "Based on a re-evaluation of all of the issues that are present in this case."

Judge Randall Wyatt then informed Phan, "The case is going to be nollied. The state is not going forward with its case against you at this time."

Phan, a former Green Hills salon owner was accused of selling fraudulent state cosmetology licenses to dozens of Vietnamese immigrants. At a state disciplinary hearing in early 2013, one by one, they described how they'd paid Phan thousands of dollars each for licenses to cut hair and do nails in Tennessee, licenses, many admitted, they were not qualified for.

Tam Nguyen translated for one of those immigrants after that hearing, telling NewsChannel 5 Investigates, "He just said she didn't need to worry about it."

"She didn't need to take the test?" we asked.

"Yes," she replied.

At the time, we asked Phan, "We've got people telling us you were charging them $3,000 to $5,000 dollars?"

He told us, "No, no, not that much."

The District Attorney's Office charged Phan with theft for taking this money and giving fraudulent licenses in return.

But prosecutors said they realized proving actual theft was going to be tough.

"We would have to prove that all of those people had no idea that this scheme that was going on was possibly the wrong way to go about acquiring a cosmetology license," Ewald explained, adding, he wished the case could have moved forward.

"I think it's frustrating and I think it would be frustrating for the taxpayers to know that this sort of scheme can go on."

After the hearing, Phan, whose case we've been covering now for more than three and a half years, didn't want to talk.

He told us, "You tore my life upside down and I don't want to talk to you." His attorney offered to speak for him.

"Mr. Phan has been through a lot. And he's ready to move on with his life, deal with the civil case and move on after that,"David Von Wiegandt stated.

That civil case came about after the state took Phan's own cosmetology license away after the fraudulent license sales came to light. A state judge agreed that Phan should lose his license. He is now appealing that decision to a higher court.

Investigators long suspected that Phan worked with a now former state employee to sell those fraudulent licenses. No one else though has ever been charged.