Filed 11/05/2009 Page 1 of 28 Case 2:09-cv-14345-LPZ-MKM Document 1 1

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF

CARRIE McCLUSKEY, on behalf of herself and a class consisting of all of those similarly situated, and EVELYN REISDORFF, and JAIME YANEZ, Case No. 2:09 Plaintiffs, Hon. v.

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN, and JOHN DOES 1-25,

Defendants.

COMPLAINT AND JURY DEMAND

Plaintiff Carrie McCluskey, on behalf ofherself and the class of those similarly situated, and

Plaintiffs Evelyn Reisdorff and Jaime Yanez, on behalf of themselves, by and through their attorneys, The Googasian Firm, P.C., allege as follows:

NATURE OF ACTION

1. This is a class action seeking injunctive relief, damages and other remedies for

Plaintiffs and a class of similarly situated individuals.

2. In this civil action, Plaintiffs seek recovery for fraud through an Internet scam perpetrated upon each ofthem and on other similarly situated persons seeking a high school diploma

or General Education Development (GED) test. Due to the fraud, Plaintiffs and the class of

thousands ofsimilarly situated individuals who have sought to better themselves through completion Case 2:09-cv-14345-LPZ-MKM Document 1 Filed 11/05/2009 Page 2 of 28 2

of their high school education are owed millions of dollars in damages arising from payment of tuition to the operators of a purported online high school program that does not really administer legitimate equivalency tests or confer legitimate academic credentials.

3. Belford High School holds itself out to be a legitimate high school offering legitimate equivalency tests and offering valid, accredited high school diplomas via the Internet, when in fact it is not.

4. Plaintiff Carrie McCluskey and each ofthe Plaintiffs in the class of similarly situated individuals contracted with Belford High School to obtain the accredited and valid high school diploma Defendants represented Belford High School would provide them. Defendants Belford

High School and International Accrediting Agency for Online Universities ("IAAOU") represented to Plaintiffs and the public that IAAOU is an accrediting agency and that Belford High School is accredited by IAAOU. Defendants Belford High School and Universal Council for Online Education

Accreditation ("UCOEA") represented to Plaintiffs and the public that UCOEA is an accrediting agency and that Belford High School is accredited by UCOEA. Upon information and belief, Belford

High School is a sham, and the supposed accrediting agencies it lists are either utterly fictitious entities or are active participants in this fraud.

PARTIES. JURISDICTION AND VENUE

5. At all relevant times, Plaintiff Carrie McCluskey ("McCluskey") was a resident and citizen of Flint Michigan.

6. At all relevant times, Plaintiff Evelyn Reisdorff was a resident and citizen ofTucson,

Arizona.

7. At all relevanttimes, PlaintiffJ aime Yanez was a resident and citizen of Sacramento,

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California.

8. At all relevant times, Defendant Belford High School was a foreign corporation doing business via interactive websites www.belfordhighschool.com and www.belfordhighschool.org, around the United States and Michigan with its principal offices, on information and belief, at 5715

Will Clayton Parkway, #1301, Humble, 77338.

9. At all relevant times, Defendant Belford University was a foreign corporation doing business via interactive websites www.belforduniversity.org and www.belforduniversitv.net throughout the United States and in Michigan, with its principal offices, on information and belief, at 5715 Will Clayton Parkway, #1301, Humble, Texas 77338.

10. At all relevant times, Defendant Education Services Provider, Inc. ("Education

Services Provider"), was a foreign corporation doing business via an interactive website www.educationsp.com throughout the United States and in Michigan. Upon information and belief,

Education Services Provider had its principal offices at 8721 Santa Monica Blvd, Suite 1079, West

Hollywood, CA 90069.

11. At all relevant times, Defendant International Accreditation Agency For Online

Universities ("IAAOU") was or was held to be an accrediting agency doing business via an

interactive website at yvww.iaaou.org throughout the United States and in Michigan.

12. At all relevant times, Defendant Universal Council For Online Education

Accreditation ("UCOEA") was or was held out to be an accrediting agency doing business via an

interactive website at V.lWVv'.ucoea.org throughout the United States and in Michigan.

13. Defendant Melville P. Crowe is identified as the President of Belford High School

and Belford University.

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14. Defendant Dan Robertson is identified as the "Superintendent" of Belford High

School.

15. Defendant Sydney Goldstein is identified as "Administration Head" of Belford High

School.

16. Defendant William J. McTiernen is identified as Registrar of Belford High School.

17. Defendant Ken Calvert is identified as the Secretary ofthe School Board of Belford

High School.

18. Defendant John Doe #1, whose name is currently unknown, is identified as the

Principal of Belford High School.

19. Defendant John Doe #2, whose name is currently unknown, is identified as the

President of the School Board of Belford High School.

20. The identities of Defendants John Doe #3 through John Doe #25 are currently unknown. Defendants John Doe #3 through John Doe #25 are along with the other Defendants, on information and belief, members of an association in fact under the Racketeer Influenced And

Corrupt Organizations (RICO) statutes.

21. Defendants John Does #3-10 established, published to the internet, and maintain the websites at www.belforduniversity.org, WWW.laaou.com, www.ucoea.com, www.belfordhighschooLcom, www. belfordhighschoolscam.com, and www.belfordhighschool.org.

22. Defendants John Does #11-15 established, published to the internet, and maintain

www.educationsp.com. the website for Defendant Education Services Provider, Inc., and receive,

process, and transfer the funds obtained fraudulently from Plaintiffs and the class.

23. Defendants John Does #16 - 25 answer calls to the toll free numbers provided by

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Belford High School, Belford University, Education Services Provider, IAAOU and UCOEA, make calls to prospective students, answer online chats, arrange for the sophisticated and coordinated

Internet marketing campaign to drive students to Belford High School, and communicate with prospective students, or the schools and employers to which they have attempted to apply their diploma, and are otherwise involved in the scheme.

24. From at least 2003 to the present, Defendants acting in concert have defrauded a class ofcurrent and former students by representing that Belford High School offers valid, accredited high school diplomas and engaged in a pattern ofracketeering activity that included mail, wire fraud, and money laundering.

25. During this period, Belford High School, Belford University, Melville P. Crowe, Dan

Robertson, Sydney Goldstein, Ken Calvert, William J. McTiemen and John Does 1-25 have furthered the fraudulent activity by issuing documents purporting to be high school diplomas to a class that numbers, on information and belief, in the thousands around the country, including, but not limited to, Plaintiffs.

26. Belford High School's fraudulent conduct from early 2003 to the present with regard to its accreditation and diploma granting authority has induced Plaintiffs and, on information and belief, thousands of other similarly students to enroll, take online equivalency tests, pay tuition and

forego other educational and work opportunities.

27. Plaintiffs are members of a class of similarly situated persons who are now or have

been enrolled as students at Belford High School ("the Class") at any time from early 2003 to the

present to pursue a high school diploma from Belford High School.

28. This Court has original jurisdiction over this action pursuant to 28 U.S.c. § 1331 and

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28 U.S.C. §1332(d).

29. Venue exists pursuant to 28 U.S.c. § 1391(a).

30. The amount in controversy exceeds $5,000,000 exclusive of interest and costs.

Class Action Allegations

31. Plaintiffs hereby incorporate by reference the preceding allegations.

32. Representative Plaintiff Carrie McCluskey contracted with Belford High School for a valid, accredited high school diploma to be awarded after she completed what Defendants represented to be an online equivalency test.

33. Ms. McCluskey paid substantial tuition in order to obtain an accredited high school

diploma from Belford High School.

34. The Class includes all students who, like Ms. McCluskey, are or have been enrolled

in Belford High School at any time from early 2003 to the present.

35. On information and belief, the Class includes thousands ofsimilarly situated persons

from around the country.

36. The Class is so numerous that joinder of all members is impracticable.

37. There are questions of law or fact common to the members of the Class that

predominate over questions affecting only individual members and a class action is superior to other

available methods for the fair and efficient adjudication of the controversy.

38. The claims of the representative plaintiff are typical of the claims of the other

members of the Class.

39. The representative plaintiff will fairly and adequately assert and protect the interests

of the Class.

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40. The maintenance of the action as a class action will be superior to other available methods of adjudication in promoting the convenient administration of justice.

General Allegations

41. Plaintiffs incorporate by reference the preceding allegations.

42. Defendants are operating an Internet fraud scam and in doing so have deceived numerous students. On information and belief, Defendants have duped thousands of students throughout the United States.

43. Defendants operate a website at www.belfordhighschool.com that they represent to be a legitimate and accredited high school program offered online.

44. At the time of the filing of this complaint, Defendants were paying for their website, www.belfordhighschool.com to appear at the top of a list of sponsored results each time a Ooogle search was performed for "high school diploma," "online high school," "OED," or "online OED."

45. At the time of the filing ofthis complaint, Defendants were paying for their website, www.belfordhighschool.com. to appear in sponsored links results for similar searches on Yaboo,

Dogpile, and other Internet search engines.

46. At the time of the filing of this Complaint, a search for "online high school" would reveal sponsored results for www.belfordhighschool.com representing "Become a high school

graduate. Earn your diploma at home."

47. At the time of the filing of this Complaint, a search for "online OED" would reveal

sponsored results forwww.be1fordhighschool.com stating "Eam your high school diploma at home

and get more than a OED."

48. Defendants represent to prospective students that Belford High School is accredited.

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49. Defendants represent to prospective students that Belford High School "[h]olds valid accreditation from reputable accrediting agencies including IAAOU and UCOEA."

50. IAAOU and UCOEA, in turn, represent on their web sites that Belford High School is fully approved by their "evaluation committee."

51. Belford High School does not possess any valid accreditation from any reputable accrediting agency.

52. Belford High School appears to be owned and operated by Belford University, to which graduates of Belford High School are directed for enrollment. Defendants represent that students of Belford High School can obtain valid and accredited college degrees through Belford

University. Belford University has profited from these representations.

53. Defendants encourage students to enroll at Belford High School by representing that students of Belford High School have an advantage in that they can obtain admission to Belford

University, at www.beIfordhighschool.comlschool/insideBelford.html. According to the website,

"[i]n accordance with an alliance agreement, Belford University proudly offers its life experience degrees to Belford High School graduates."

54. Defendants represent that Belford University and Belford High School are accredited by IAAOU and UCOEA.

55. The supposed accreditation certificates from lAAOU and UCOEA for Belford High

School and Belford University are identical, with the exception of the replacement of the words

"High School" with "University."

56. Defendants falsely represent at www.belfordhighschool.com/schoollwhv uni.asp that students can "Get An Accredited High School Diploma Online" from Belford.

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57. On infonnation and belief, IAAOU is a sham organization and fictitious entity created for the purposes of providing the appearance of legitimacy to Belford High School to individuals considering obtaining an online high school diploma through Belford High School and www.belfordhighschool.com or an online college degree through Belford University at www.belforduniversity.org.

58. On infonnation and belief, UCOEA is a sham organization and fictitious entity created for the purposes of providing the appearance of legitimacy to Belford High School to individuals considering obtaining an online high school diploma through Belford High School and www.belfordhighschoo1.com or an online college degree through Belford University at www.belforduniversity.org.

59. UCOEA is not recognized by the United States Department of Education.

60. IAAOU is not recognized by the United States Department of Education.

61. Defendants falsely represent to prospective students that Belford High School's

accreditation by UCOEA and IAAOU provides "[a]ssurance that the institution's diplomas will be

widely accepted by employers, professional associations, other schools, colleges and universities."

62. Defendants falsely represent that IAAOU and UCOEA are the same as legitimate

accrediting agencies like the North Central Association of Colleges and Schools, Middle States

Association of Colleges and Schools, and other similar organizations, stating "[ a]l1 these boards and

agencies are well-known and institutions receiving their accreditation hold the same level of

credibility and recognition worldwide." \vvvw. belfordhighschool.org/school/accredit.htmL

63. Defendants falsely represent that "Belford High School is an accredited institution

recognized by two renowned accreditation agencies for on-line education, namely the International

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Accrediting Agency for Online Universities (IAAOU) and Universal Council for Online Education

Accreditation (UCOEA). When you get a high school diploma from Belford, you benefit from having the recognition of these accrediting agencies." www.belfordhighschool.comlschool!accredit.html.

64. The representation that IAAOU and UCOEA are "'renowned accreditation agencies for on-line education" is false. On information and belief, IAAOU and UCOEA are fictitious entities created to give Belford High School the appearance of legitimacy to prospective students.

65. Neither IAAOU and UCOEA appear to have a physical address.

66. Belford's website, www.belfordhighschool.com. depicts a building with the name

"Belford High School" on the side, representing that an actual building exists housing Belford and its campus. On information and belief, this representation is false because no such school building or campus exists.

67. Defendants falsely represent that Belford High School has an actual campus and offers jobs. "Belford offers exciting and prestigious job prospects to its students. The university has a variety of on campus and off campus jobs and internship opportunities that students can explore," according to www.belfordhighschool.com/schoollinsideBelford.html.

68. On information and belief, neither Belford High School nor Belford University has a campus, and neither offers internships or jobs.

69. Defendants represent on the Belford High School website (at www.belfordhighschool.comlschoollinsideBelford.html) that a letter is printed from Belford

University President and Defendant Melville P. Crowe. The letter invites Belford High School

students to enroll at Belford University. The signature matches the signature of the "President" of

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Belford High School contained on documents sent to students through the mails.

70. Defendants falsely represent that Belford High School "deliver[s] superior quality education through the internet."

71. Defendants falsely represent that Belford High School will permit students to obtain

"a credible high school diploma."

72. On information and belief, Defendants also operate www.belfordhighschoolscam.com. which purports to be an independent site providing unbiased information about Belford High School. The site is another sham set up by Defendants to deceive students and to direct them to obtain their high school diploma from www.belfordhighschool.com.

73. Defendants, through www.belfordhighschoolscam.com. falsely represent that an education at Belford High School is "worth [a student's] money, time and effort":

High school is most imperative aspect of anyone's education life. . . . Many employers and educational institutes give high school diploma and institution from where it has been taken a lot of importance.... An education institute, whose objective is to make education available to everyone, can never do anything unauthentic or dubious. So if you are planning to take your high school diploma from Belford High School, go for it. It is worth your money, time and effort.

74. Defendants falsely represent to prospective students that Belford High School "[i]s the only fully accredited high school providing high school diplomas based upon your life experience or online equivalency test." www.belfordhighschool.com/schoollwhyuni.asp.This representation

is false because Belford High School is not accredited and does not provide valid high school

diplomas and the online test it offers is not the equivalent of a GED test.

75. After prospective students inquire about the school online, they are contacted by one

or more Defendants who assure students by phone that the Belford High School diploma they will

11

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receive is accredited and universally accepted.

76. Students who complain to Defendants after having their Belford High School diplomas rejected are told to complete numerous steps designed to discourage them from pursuing refunds.

77. Even after students comply with all the requirements set up by Belford High School to discourage them from pursuing refunds, Belford High School refuses to provide refunds.

78. When students are charged for the diploma, charges are made by and paid to

Defendant Education Services Provider. These charges appear on credit and debit card statements transmitted electronically and/or through the mails as charges to "educationsp.com." Education

Services Provider represents itself as a provider of consulting and other educational services.

79. Plaintiffs have reasonably relied on Defendants' many misrepresentations.

80. In early April 2009 ,Representative PlaintiffCarrie McCluskey began to search online for a high school diploma program or GED program.

8l. The search brought up www.belfordhighschool.com.

82. Ms. McCluskey clicked on the search result for www.belfordhighschoo1.com.

83. Ms. McCluskey took a test online and was then contacted by representatives of

Belford High School, who telephoned her at her home in Michigan.

84. On AprilS, 2009, "educationsp.com" debited a $99 purchase on a debit card held by

Ms. McCluskey.

85. On April 6, 2009, "educationsp com" debited a payment of$137.55 from a card in

the name of Ms. McCluskey.

86. After passing what she understood to be the online equivalency test and making the

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required payments, Ms. McCluskey received a package in the mails from Defendants.

87. The package received in the mail from Belford High School was comprised of a folder containing several documents, including a certification, a diploma, and other documents.

88. The package received in the mail from Belford High School contained a certification dated April 3, 2009, and signed by Defendant Melville P. Crowe and Defendant William J.

McTiernen.

89. The package mailed by Belford High School contained a diploma from "Belford High

School," stating "[u ]pon recommendation of the Faculty, and by virtue of its vested authority, the

Belford School Board confers upon Carrie M McCluskey the respectable High School Diploma."

90. The "diploma" purports to show signatures from a superintendent, principal, president of the school board, and secretary ofthe school board.

91. Defendant Dan Robertson signed the diploma as Superintendent.

92. Defendant Ken Calvert signed the diploma as Secretary of the School Board of

Belford High School.

93. Defendant John Doe # 1 signed the diploma as the Principal ofBelford High School.

94. Defendant John Doe #2 signed the diploma as President of the School Board of

Belford High School.

95. The package contained other documents signed by Sydney Goldstein, who is

identified as "Administration Head."

96. Evelyn Reisdorffwent online looking for information about high school diplomas.

97. Defendants' website, 'lNvvvv.belfordhighschool.com appeared in response to a search

related to high school diplomas. Ms. Reisdorff clicked on 'IN'Vvw.belfordhighschool.com. where

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Belford High School represented that it was accredited, and offered legitimate, valid high school diplomas to those who passed an online equivalency test.

98. In reliance on the representations by Defendants that Belford High School was accredited to offer a valid high school diploma or its equivalent, Ms. Reisdorff decided to proceed.

She took an online equivalency test at vvww.belfordhighschool.com, but did not pass the test on her first try. She studied using materials from www.belfordhighschool.com. and passed the test after retaking it.

99. On January 24,2009, after she submitted the online test and information, Defendants called Ms. Reisdorff and encouraged her to complete the paperwork and pay the funds necessary.

100. Defendants represented to Ms. Reisdorff in a phone call that Belford High School was accredited, the diploma was legitimate, and would be accepted as valid by employers and colleges.

101. Within days of completing the online equivalency test and making payment through www.educationsp.com.DefendantssentapackagetoMs.Reisdorffthrough a common carrier.

102. The package received in the mail from Belford High School was comprised of a folder containing several documents, including a certification, a diploma, and other documents.

103. The package received through the mails from Belford High School contained a certification dated March 24,2009. The certification was signed by Defendant Melville P. Crowe and Defendant William J. McTiemen.

104. The package mailed by Belford High School contained a diploma from "Belford High

School" dated March 24, 2009, stating "[u]pon recommendation of the Faculty, and by virtue of its vested authority, the Belford School Board confers upon Evelyn Reisdorff the respectable High

School Diploma."

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105. The "diploma" purports to show signatures from a superintendent, principal, president of the school board, and secretary of the school board.

106. Defendant Dan Robertson signed the diploma as Superintendent.

107. Defendant Ken Calvert signed the diploma as Secretary of the School Board of

Belford High School.

108. Defendant John Doe #1 signed the diploma as the Principal of Belford High School.

109. Defendant John Doe #2 signed the diploma as President of the School Board of

Belford High School.

110. The package contained other documents signed by Sydney Goldstein, who is identified as "Administration Head."

111. Ms. Reisdorfftook the diploma to her employer and was told that the employer would not accept her Belford High School diploma as a legitimate high school diploma.

112. Ms. Reisdorffthen contacted the Texas department of education and was advised by the State of Texas that Belford High School was a scam.

113. Ms. Reisdorff asked for a refund ofthe money she paid vvww.educationsp.com for

the online high school diploma, but Defendants have failed and refused to refund her money.

114. In early March 2009, Jaime Yanez went online looking for information about

obtaining a high school diploma or aGED. Mr. Yanez performed a search looking for information

about a high school diploma online, and a link to the Belford High School website appeared. Mr.

J anez clicked onto the site where Belford High School represented that it was accredited, and offered

legitimate, valid high school diplomas to those who passed on online equivalency test.

115. In reliance on the representations by Defendants that Belford High School was

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accredited to offer a valid high school diploma, Mr. Yanez decided to proceed. He took and passed an online equivalency test at Vfv{,v.belfordhighschool.com.

116. Defendants then charged Mr. Janez approximately $250 through Education Services

Provider.

117. Within ten days of completing the online equivalency test and making the payment,

Defendants sent a package to Mr. Janez through a common carrier.

118. The package received in the mail from Belford High School was comprised of a folder containing several documents, including a certification, a diploma, and other documents.

119. The package received through the mails from Belford High School contained a certification dated March 4, 2009, signed by Defendant Melville P. Crowe and Defendant William

J. McTiernen.

120. The package mailed by Belford High School contained a diploma from "Belford High

School" dated March 4,2009, stating "[u]pon recommendation ofthe Faculty, and by virtue of its vested authority, the Belford School Board confers upon Jaime Yanez the respectable High School

Diploma."

121. The "diploma" purports to show signatures from a superintendent, principal, president of the school board, and secretary of the school board.

122. Defendant Dan Robertson signed the diploma as Superintendent.

123. Defendant Ken Calvert signed the diploma as Secretary of the School Board of

Belford High School.

124. Defendant John Doe # 1 signed the diploma as the Principal of Belford High School.

125. Defendant John Doe #2 signed the diploma as President of the School Board of

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Belford High School.

126. The package contained other documents signed by Sydney Goldstein, who is identified as "Administration Head."

127. Mr. Yanez requested a refund of the money he paid to Defendants through www.educationsp.com for his high school diploma, but Defendants have failed and refused to refund his money.

Count I

Breach of Contract

128. Plaintiffs hereby incorporate by reference the preceding allegations.

129. Defendants entered into express orimplied contracts with each Plaintiff under which

Belford High School agreed it was authorized and accredited to grant valid high school diplomas to students upon the successful completion of a course of study or testing.

130. Defendants breached their obligations under these contracts because Belford High

School was and is not authorized to grant any high school diplomas or any other academic credential, nor was it accredited, nor do employers or academic institutions recognize its diplomas as valid.

131. Plaintiffs have been damaged as a proximate result of Defendants' actions.

WHEREFORE, Plaintiffs pray that this Court enter judgment in their favor, and against

Defendants for whatever damages they are found to be entitled to recover, plus interest, costs and

attorney's fees, including, but not limited to, direct damages, incidental damages, consequential

damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

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Count II

Fraud

132. Plaintiffs hereby incorporate by reference the preceding allegations.

133. In order to induce students to enroll at Belford High School, Defendants made material representations outlined above, including but not limited to that: Belford High School was an actual academic institution, Belford High School offered valid high school diplomas, Belford

High School was accredited to offer high school diplomas by legitimate accrediting agencies that actually exist, IAAO U was an actual, legitimate accrediting agency with accrediting authority within the United States, UCOEA is an actual, legitimate accrediting agency with accrediting authority· within the United States, Belford High School diplomas would be accepted by employers, and

Belford High School diplomas would be recognized by colleges and universities.

134. The representations made by Defendants were false.

135. When making these representations, Defendants knew or should have known the

representations were false.

136. Plaintiffs acted upon Defendants' false representations and suffered damages as a

result. Among other things, Plaintiffs were induced to enter into contracts with Defendants and to

incur financial and other obligations.

WHEREFORE, Plaintiffs pray that this Court enter judgment in their favor, and against

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs

and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential

damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

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Count III

Negligent or Innocent Misrepresentation

137. Plaintiffs hereby incorporate by reference the preceding allegations.

138. Plaintiffs detrimentally relied on one or more false representations made by

Defendants.

139. Plaintiffs suffered an injury as a result of their reliance.

140. Plaintiffs' reliance was such that the injury they suffered inured to Defendants' benefit.

WHEREFORE, Plaintiffs pray that this Court enter judgment in their favor, and against

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

Count IV

Promissory Estoppel

141. Plaintiffs hereby incorporate by reference the preceding allegations.

142. . Defendants made promises alleged above to Plaintiffs including, but not limited to,

that Belford High School was accredited, Belford High School had the authority to grant high school

diplomas or other academic credentials, and that the high school diplomas offered by Belford High

School are valid and recognized by employers and other academic institutions.

143. Defendants' promises were definite and clear.

144. Defendants should have reasonably expected to induce action of a definite and

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substantial character on the part of Plaintiffs.

145. Plaintiffs acted in reliance on Defendants' promises as outlined above, including by applying for admission, enrolling, paying tuition, and taking other actions all in the manner the

Defendants expected.

146. Defendants' promises must be enforced if injustice is to be avoided.

WHEREFORE, Plaintiffs pray that this Court enter judgment in their favor, and against

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

Count V

Unjust EnrichmentIBreach of Quasi-contract

147. Plaintiffs hereby incorporate by reference the preceding allegations.

148. Defendants have received benefits from Plaintiffs in the form of tuition and fees,

among other benefits.

149. It is inequitable to allow Defendants to retain these benefits granted to them by

Plaintiffs.

WHEREFORE, Plaintiffs pray that this Court enter judgment in their favor, and against

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs

and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential

damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

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Court deems just.

Count VI

Equitable Estoppel

150. Plaintiffs hereby incorporate by reference the preceding allegations.

151. Defendants, by representations, admissions or silence intentionally or negligently induced Plaintiffs to believe facts alleged above, including but not limited to the facts that Belford

High School was accredited, Belford High School had the authority to grant high school diplomas or other academic credentials, and that the high school diplomas offered by Belford High School are valid and recognized by employers and other academic institutions.

152. Plaintiffs justifiably relied and acted in belief ofthose facts.

153. Plaintiffs will be prejudiced if Defendants are permitted to assert any statute of limitations defenses when their fraud and misrepresentation were concealed from Plaintiffs.

WHEREFORE, Plaintiffs pray that this Court enter judgment in their favor, and against

Defendants, for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs

and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential

damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

Count VII

Concert of Action

154. Plaintiffs hereby incorporate by reference the preceding allegations.

155. Defendants acted in concert to defraud and deceive Plaintiffs.

21 Case 2:09-cv-14345-LPZ-MKM Document 1 Filed 11/05/2009 Page 22 of 28 22

WHEREFORE, Plaintiffs pray that this Court enter judgment in their favor, and against

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

Count VIII

Racketeer Influenced and Corrupt Organizations Act (RICO)

156. Plaintiffs hereby incorporate by reference the preceding allegations.

157. An enterprise existed including Defendants and others operating as an association in fact in conducting a pattern of racketeering activity.

158. Defendants and others operated the association in fact to conduct the pattern of racketeering activities through coordinated activities and a sophisticated fraudulent scheme involving several interrelated websites, organizations and entities. Specifically, Defendants established websites for Belford High School and represented to the public and prospective students that Belford

High School offered accredited valid high school diplomas. Defendants furthered these false

representations by establishing web sites for supposed accrediting bodies at WI.VW.iaaou.org and

www.ucoea.orgintendedtolegitimizeBelfordHighSchoolintheeyesofprospectivestudents.as

well as the employers and colleges to whom the Belford High School diplomas would be presented

for recognition. Defendants obtained funds from students through charges that were sought and

accepted by Education Services Provider, Inc., at wv{w.educationsp.com. and the funds obtained

were used to further the enterprise by paying for sponsored links and other online advertising aimed

at ensuring that students searching for information about OED or high school diplomas were directed

22 Case 2:09-cv-14345-LPZ-MKM Document 1 Filed 11/05/2009 Page 23 of 28 23

to www.belfordhighschooI.com and www.belfordhighschool.org, and from there to www.belforduniversity.org. The association also includes individuals whose identities are currently unknown who staff the toll free phones used to further the fraud and to encourage students to pay the money, those individuals with live chats on the websites, and those who set up and maintain the websites.

159. The enterprise had a common purpose and ongoing structure or organization supported by Defendants and others, and is distinct from Defendants and the pattern of racketeering activity.

160. Defendants conducted and participated in the conduct of the association in fact enterprise through a pattern of racketeering activity, including mail fraud, wire fraud, and money laundering in violation of 18 U.S.C. §1962(c) and conspired to conduct the enterprise through a pattern of racketeering activity in violation of 18 U.S.C. §1962(d).

161. Defendants, through the commission oftwo or more predicate acts including acts of mail fraud, wire fraud and money laundering that occurred within ten years of each other, engaged in a pattern of racketeering activity.

162. The enterprise affects interstate or foreign commerce.

163. Defendants engaged and conspired to engage in a scheme to defraud through a pattern

of racketeering activity, and Defendants used the mails and interstate wires in furtherance of the

fraud, and engaged in money laundering with the proceeds of the fraudulent scheme.

164. For each transaction Defendants engaged in with each Class member from at least the

beginning of 2003 to the present, it was foreseeable that the mails could be used to advance the

fraudulent scheme.

23 Case 2:09-cv-14345-LPZ-MKM Document 1 Filed 11/05/2009 Page 24 of 28 24

165. Defendants engaged and conspired to engage in a scheme to defraud, and Defendants used interstate electronic communications in furtherance of the scheme.

166. For each transaction Defendants engaged in with each Class member, it was foreseeable that a wire communication would be used to advance the fraudulent scheme.

167. Ms. McCluskey and all Class members were injured in their business or property as a result of the pattern of racketeering activity.

168. The mailing ofthe high school diploma package to Ms. McCluskey and each similarly situated class member was an act ofmail fraud. Defendants, having devised a scheme to defraud and for the purpose of executing the scheme or attempting to do so, placed false high school diploma

documents in a post office or authorized depository or to be delivered by a private or commercial

interstate carrier.

169. The April 3, 2009 mailing ofthe diploma package to Ms. McCluskey was an act of

mail fraud.

170. Each of the two charges to Ms. McCluskey's debit cards by Education Service

Provider, on AprilS, 2009 and April 6, 2009 respectively, and the charges to each similarly situated

class member was an act of wire fraud, using an interstate electronic communication in furtherance

ofthe fraud.

171. Each ofthe charges to Ms. McCluskey'S debit cards also constitutes a separate act

of wire and mail fraud because each charge was made with the knowledge that the use of the mails

and wires would occur in the ordinary course of business as a result of the transactions.

172. The credit card charge for Ms. Reisdorff s diploma was an act of wire fraud, and

caused a separate act ofmail or wire fraud in furtherance ofthe scheme because the charge was made

24 Case 2:09-cv-14345-LPZ-MKM Document 1 Filed 11/05/2009 Page 25 of 28 25

with the knowledge that use of the mails and wires would occur in the ordinary course of business.

173. The credit card charge for Mr. Yanez's diploma was an act of wire fraud, and caused a separate act of mail or wire fraud in furtherance ofthe scheme because the charge was made with the knowledge that use of the mails and wires would occur in the ordinary course of business.

174. On information and belief, Defendants, and Education Services Provider in particular, wired or mailed the funds relating to each Class member's transactions to the enterprise, an additional act of mail or wire fraud, or both.

175. Defendants knowingly engaged in monetary transactions involving criminally derived property of a value greater than $10,000.

176. Each of the telephone conversations with Class members prior to their purchase assuring them that the high school diploma was authentic, valid, and accredited, was an act of wire fraud.

177. Each ofthe telephone conversations with Class members subsequent to their purchase lulling them by reassuring them that the high school diploma was authentic, valid, and accredited was an act of wire fraud.

178. Each of the identical high school diploma packets contained a document certifying that the student had been awarded a high school diploma that instructed employers, schools and others want verification of the diploma to access the Belford High School Website. "If you'd like to personally verify [the student]'s academic documents, enter the provided graduate ID and

Password in the link given below: http://wv,,'W.belfordhighschoo1.org/verification/''.

179. Each of the packets contained a graduate ID and password to permit "verification"

of the diploma.

25 Filed 11/05/2009 Page 26 of 28 Case 2:09-cv-14345-LPZ-MKM Document 1 26

180. Defendants knew that employers, colleges and others wishing to verify the diploma would log onto the \NWW. belfordhighschool.com site following these instructions from Defendants, and that wire transactions would result.

Count IX

Civil Conspiracy

181. Plaintiffs hereby incorporate by reference the preceding allegations.

182. Beginning at least 2003, Defendants actively participated in a scheme to defraud

Plaintiffs.

183. During this period, agents and employees ofDefendants engaged in concerted action to continue the scheme to defraud Plaintiffs.

WHEREFORE, Plaintiffs pray that this Court enter judgment in their favor, and against

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

WHEREFORE, Plaintiffs respectfully request that the Court enter an order:

• certifying this case as a class action;

• ordering the reliefpermitted by 18 U.S. C. 1964(a), including ordering that any person

involved divest himself or herself of any direct or indirect interest in any enterprise,

imposing reasonable restrictions on the future activities or investments of those

involved, prohibiting any person from engaging in the same type of behavior as the

enterprise engaged in, ordering dissolution or reorganization of any enterprise, and

26 Filed 11/05/2009 Page 27 of 28 Case 2:09-cv-14345-LPZ-MKM Document 1 27

making due provisions for the rights of innocent persons.

• enjoining Belford High School, v,;w\v.belfordhighschool.com,

and www.belfordhighschool.org from operating;

• enjoining IAAOU and vlww.iaaou.org from operating;

• enjoining UCOEA and www.ucoea.org from operating;

• enjoining Belford University or www.belforduniversity.org from operating;

• enjoining www.educationsp.com from operating;

• awarding Plaintiffs actual, exemplary, punitive and treble damages for their injuries;

• awarding Plaintiffs their attorney fees; and

• granting whatever other or further relief the Court deems just under the

circumstances.

THE GOOGASIAN FIRM, P.C.

By /s/ Thomas H. Howlett Thomas H. Howlett (P57346) Dean M. Googasian (P53995) Attorneys for Plaintiffs 6895 Telegraph Road Bloomfield Hills, MI 48301-3138 248/540-3333 E-mail: [email protected] [email protected]

Dated: November 5, 2009

27 Case 2:09-cv-14345-LPZ-MKM Document 1 Filed 11/05/2009 Page 28 of 28 28

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN

CARRIE McCLUSKEY, on behalf of herself and a class consisting of all of those similarly situated, and EVELYN REISDORFF, and JAIME YANEZ, Case No. 2:09 Plaintiffs, Hon. v.

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN, and JOHN DOES 1-25,

Defendants.

JURY DEMAND

Plaintiffs hereby demand a trial by jury in this action.

THE GOOGASIAN FIRM, P.C.

By /s/ Thomas H. Howlett Thomas H. Howlett (P57346) Dean M. Googasian (P53995) Attorneys for Plaintiffs 6895 Telegraph Road Bloomfield Hills, MI 48301-3138 248/540-3333 E-mail: [email protected] [email protected] Dated: November 5, 2009 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 1 of 32 29

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN

CARRIE McCLUSKEY, on behalf of herself and a class consisting of all of those similarly situated, and EVELYN REISDORFF, and J AIME YANEZ, Case No. 2:09-cv-14345-LPZ-MKM

Plaintiffs, Hon. Lawrence J. Zatkoff v.

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN, and JOHN DOES 1-35,

Defendants.

FIRST AMENDED COMPLAINT AND JURY DEMAND

Plaintiff Carrie McCluskey, on behalf of herself and the class of those similarly situated, and

Plaintiffs Evelyn Reisdorff and Jaime Yanez, on behalf of themselves, by and through their attorneys, The Googasian Finn, P.C., allege as follows:

NATURE OF ACTION

1. This is a class action seeking injunctive relief, damages and other remedies for

Plaintiffs and a class of similarly situated individuals.

2. In this civil action, Plaintiffs seek recovery for fraud through an Internet scam perpetrated upon each ofthem and on other similarly situated persons seeking a high school diploma or General Education Development (GED) test. Due to the fraud, Plaintiffs and the class of Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 2 of 32 30

thousands of similarly situated individuals who have sought to better themselves through completion of their high school education are owed millions of dollars in damages arising from payment of tuition to the operators of a purported online high school program that does not really administer legitimate equivalency tests or confer legitimate academic credentials.

3. Belford High School holds itself out to be a legitimate high school offering legitimate equivalency tests and offering valid, accredited high school diplomas via the Internet, when in fact it is not.

4. Plaintiff Carrie McCluskey and each of the Plaintiffs in the class of similarly situated individuals contracted with Belford High School to obtain the accredited and valid high school diploma Defendants represented Belford High School would provide them. Defendants Belford

High School and International Accrediting Agency for Online Universities ("IAAOU") represented to Plaintiffs and the public that IAAOU is an accrediting agency and that Belford High School is accredited by IAAOU. Defendants Belford High School and Universal Council for Online Education

Accreditation ("UCOEA") represented to Plaintiffs and the public that UCOEA is an accrediting agency and that Belford High School is accredited by UCOEA. Upon information and belief, Belford

High School is a sham, and the supposed accrediting agencies it lists are either utterly fictitious entities or are active participants in this fraud.

PARTIES, JURISDICTION AND VENUE

5. At all relevant times, Plaintiff Carrie McCluskey ("McCluskey") was a resident and citizen of Flint Michigan.

6. At all relevant times, Plaintiff Evelyn Reisdorffwas a resident and citizen ofTucson,

Arizona.

2 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 3 of 32 31

7. At all relevant times, Plaintiff Jaime Yanez was a resident and citizen of Sacramento,

California.

8. At all relevant times, Defendant Belford High School was a foreign corporation doing business via interactive websites www.belfordhighschool.com and www.belfordhighschooI.org, around the United States and Michigan with its principal offices, on infonnation and belief, at 5715

Will Clayton Parkway, #1301, Humble, Texas 77338.

9. At all relevant times, Defendant Belford University was a foreign corporation doing business via interactive websites ww\v.belforduniversity.org and www.belforduniversity.net throughout the United States and in Michigan, with its principal offices, on infonnation and belief, at 5715 Will Clayton Parkway, #1301, Humble, Texas 77338.

10. At all relevant times, Defendant Education Services Provider, Inc. ("Education

Services Provider"), was a foreign corporation doing business via an interactive website www.educationsp.com throughout the United States and in Michigan. Upon infonnation and belief,

Education Services Provider had its principal offices at 8721 Santa Monica Blvd, Suite 1079, West

Hollywood, CA 90069.

11. At all relevant times, Defendant International Accreditation Agency For Online

Universities ("IAAOU") was or was held to be an accrediting agency doing business via an interactive website at www.iaaou.org throughout the United States and in Michigan.

12. At all relevant times, Defendant Universal Council For Online Education

Accreditation ("UCOEA") was or was held out to be an accrediting agency doing business via an

interactive website at \VVvw.ucoea.org throughout the United States and in Michigan.

13. At all relevant times, Defendant Zunch Worldwide, Inc., was a corporation organized

3 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 4 of 32 32

under the laws of the State of Texas, and can be served with legal process through its registered agent, James Sadler, at 15770 North Dallas Parkway, Suite 450, Dallas, Texas, 75248.

14. At all relevant times, Defendant Zunch China, Inc. was, upon information and belief, a foreign corporation organized under the laws of the state of Texas, and can be served with legal process through its registered agent, John G. Sanchez, at 15770 North Dallas Parkway, Suite 450,

Dallas, Texas, 75248.

15. Defendant Melville P. Crowe is identified as the President of Belford High School and Belford University.

16. Defendant Dan Robertson is identified as the "Superintendent" of Belford High

School.

17. Defendant Sydney Goldstein is identified as "Administration Head" of Belford High

School.

18. Defendant William J. McTiemen is identified as Registrar of Belford High School.

19. Defendant Ken Calvert is identified as the Secretary of the School Board of Belford

High School.

20. Defendant John Doe #1, whose name is currently unknown, is identified as the

Principal of Belford High School.

21. Defendant John Doe #2, whose name is currently unknown, is identified as the

President of the School Board of Belford High School.

22. The identities of Defendants John Doe #3 through John Doe #35 are currently unknown. Defendants John Doe #3 through John Doe #35 are, along with the other Defendants, on information and belief, members of an association in fact under the Racketeer Influenced And

4 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 5 of 32 33

Corrupt Organizations (RICO) statutes.

23. Defendants John Does #3-10 established, published to the internet, and maintain the websites at www.belforduniversity.org, www.iaaou.com, www.ucoea.com, www.belfordhighschool.com, wvvw. belfordhighschoolscam.com, and www.belfordhighschool.org.

24. Defendants John Does #11-15 established, published to the internet, and maintain www.educationsp.com. the website for Defendant Education Services Provider, Inc., and receive, process, and transfer the funds obtained fraudulently from Plaintiffs and the class.

25. Defendants John Does #16 - 25 answer calls to the toll free numbers provided by

Belford High School, Belford University, Education Services Provider, IAAOU and UCOEA, make calls to prospective students, answer online chats, arrange for the sophisticated and coordinated

Internet marketing campaign to drive students and traffic to Belford High School and its related web sites, and communicate with prospective students, or the schools and employers to which they have attempted to apply their diploma, and are otherwise involved in the scheme.

26. Defendants John Does #26-30 prepare and print the high school diploma packets sent to Plaintiffs and the class.

27. Defendants John Does #31-35 mail or otherwise transmit the high school diploma packets to Plaintiffs and the class.

28. From at least 2003 to the present, Defendants acting in concert have defrauded a class of current and former students by representing that Belford High School offers valid, accredited high school diplomas and engaged in a pattern ofracketeering activity that included mail, wire fraud, and money laundering.

29. During this period, Belford High School, Belford University, Melville P. Crowe, Dan

5 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 6 of 32 34

Robertson, Sydney Goldstein, Ken Calvert, William J. McTiemen and John Does 1-35 have furthered the fraudulent activity by issuing documents purporting to be high school diplomas to a class that numbers, on information and belief, in the thousands around the country, and includes

Plaintiffs.

30. Belford High School's fraudulent conduct from early 2003 to the present with regard to its accreditation and diploma granting authority has induced Plaintiffs and, on information and belief, thousands of other similarly students to enroll, take online equivalency tests, pay tuition and forego other educational and work opportunities.

31. Plaintiffs are members of a class of similarly situated persons who are now or have been enrolled as students at Belford High School ("the Class") at any time from early 2003 to the present to pursue a high school diploma from Belford High School.

32. This Court has original jurisdiction over this action pursuant to 28 U.S.C. § 1331 and

28 U.S.C. §1332(d).

33. Venue exists pursuant to 28 U.S.C. § 1391(a).

34. The amount in controversy exceeds $5,000,000 exclusive of interest and costs.

Class Action Allegations

35. Plaintiffs hereby incorporate by reference the preceding allegations.

36. Representative Plaintiff Carrie McCluskey contracted with Belford High School for a valid, accredited high school diploma to be awarded after she completed what Defendants represented to be an online equivalency test.

37. Ms. McCluskey paid substantial tuition in order to obtain an accredited high school diploma from Belford High School.

6 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 7 of 32 35

38. The Class includes all students who, like Ms. McCluskey, are or have been enrolled in Belford High School at any time from early 2003 to the present.

39. On information and belief, the Class includes thousands of similarly situated persons from around the country.

40. The Class is so numerous that joinder of all members is impracticable.

41. There are questions of law or fact common to the members of the Class that predominate over questions affecting only individual members and a class action is superior to other available methods for the fair and efficient adjudication of the controversy.

42. The claims of the representative plaintiff are typical of the claims of the other members of the Class.

43. The representative plaintiff will fairly and adequately assert and protect the interests of the Class.

44. The maintenance of the action as a class action will be superior to other available methods of adjudication in promoting the convenient administration of justice.

General Allegations regarding Zunch

45. Plaintiffs incorporate by reference the preceding allegations.

46. Defendant Zunch Worldwide, Inc. and/or Defendant Zunch China, Inc. (collectively,

"the Zunch Defendants") are, upon information and belief, corporations that are successors in interest to another entity, Zunch Communications, Inc. ("Zunch Communications").

47. The Zunch Defendants, upon information and belief, are legally responsible for the actions of Zunch Communications.

48. On information and belief, Zunch Communications has shared such a unity ofinterest

7 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 8 of 32 36

and ownership with one or both of the Zunch Defendants that its separate status as a corporation ceased to exist.

49. On infonnation and belief, Zunch Communications is and has been a mere instrumentality or a device to avoid legal obligations ofthe Zunch Defendants.

50. Upon infonnation and belief, the Zunch Defendants, directly and/or by and through

Zunch Communications, have conspired with Defendant Belford High School and the other

Defendants identified herein to help Belford High School's websites become more visible to the target market of people interested in a OED program and/or earning a high school diplomas, even though Belford High School is not a legitimate and accredited high school.

51. Upon infonnation and belief, the Zunch Defendants, directly and/or by and through

Zunch Communications, have provided so-called search engine optimization to further these improper goals.

52. For example, the Zunch Defendants, directly and/or by and through Zunch

Communications, have issued a press release announcing the "conducting" of "search engine optimization services for Belford High School (w"\,,"\v.belfordhighschool.com), an affordable high school diploma program that allows professionals and working adults to earn a high school diploma on the basis of prior life experience or online equivalency test."

53. The press release quotes an agent or employee of the Zunch Defendants, stating,

"Belford High School is an accredited online high school program that is committed to providing its students with a quality education. Our search engine optimization team is excited and looking forward to improving its online visibility."

54. The press release further states, "Students can receive an accredited high school

8 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 9 of 32 37

diploma without admission in high school, attending classes or submitting assignments within seven days."

55. The Zunch Defendants further state that "Belford High School is the only fully accredited high school providing high school diplomas based on life experiences or online equivalency test. Its high school diploma program provide[s] a rich learning experiences for working adults without requiring them to attend classes or take admission in a high school."

56. The Zunch Defendants' statements regarding Belford High School's accreditation and the education it provides to students are false.

57. Upon information and belief, the Zunch Defendants have implemented and maintained a variety of search engine optimization tactics to assist Defendants, including, but not limited to, researching popular keywords people use when conducting an online search and positioning Belford High School to better incorporate these keywords into Belford High School's website copy and structure.

58. Upon information and belief, the Zunch Defendants assist Defendants in using search engine optimization to cause adults seeking OED programs and other means of completing high school requirements to be directed to Defendant Belford High School's websites, where Defendants falsely represented that Belford High School was a legitimate and accredited high school program offered online.

59. Upon information and belief, the Zunch Defendants provide regular reports to

Defendants containing information regarding the success of their efforts to mislead adults seeking

OED programs and other means of completing high school requirements, including, but not limited to, where Belford High School's website ranked in search engines and regarding optimization of

9 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 10 of 32 38

keywords.

General Allegations regarding Belford's Scheme

60. Plaintiffs incorporate by reference the preceding allegations.

61. The tenn "Defendants" herein refer to Defendants Belford High School, Belford

University, Education Services Provider, Inc., IAAOU, UCOEA, Zunch Worldwide, Inc., Zunch

China, Inc., Melville P. Crowe, Dan Robertson, Sydney Goldstein, William J. McTiernen, Ken

Calvert, and John Does #1-35.

62. Defendants are operating an Internet fraud scam and in doing so have deceived numerous students. On infonnation and belief, Defendants have duped thousands of students throughout the United States.

63. Defendants operate a website at \vww.belfordhighschool.com that they represent to be a legitimate and accredited high school program offered online.

64. At the time of the filing of this complaint, Defendants were paying for their website, www.belfordhighschool.com to appear at the top of a list of sponsored results each time a Ooogle search was perfonned for "high school diploma," "online high school," "OED," or "online OED."

65. At the time of the filing of this complaint, Defendants were paying for their website, www.belfordhighschool.com. to appear in sponsored links results for similar searches on Yahoo,

Dogpile, and other Internet search engines.

66. At the time of the filing of this Complaint, a search for "online high school" would reveal sponsored results for www.belfordhighschool.com representing "Become a high school graduate. Eam your diploma at home."

67. At the time ofthe filing of this Complaint, a search for "online GED" would reveal

10 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 11 of 32 39

sponsored results for V'v'VVW. belfordhighschool.com stating "Earn your high school diploma at home and get more than a OED."

68. Defendants represent to prospective students that Belford High School is accredited.

69. Defendants represent to prospective students that Belford High School "[h]olds valid accreditation from reputable accrediting agencies including IAAOU and UCOEA."

70. IAAOU and UCOEA, in tum, represent on their websites that Belford High School is fully approved by their "evaluation committee."

71. Belford High School does not possess any valid accreditation from any reputable accrediting agency.

72. Belford High School appears to be owned and operated by Belford University, to which graduates of Belford High School are directed for enrollment. Defendants represent that students of Belford High School can obtain valid and accredited college degrees through Belford

University. Belford University has profited from these representations.

73. Defendants encourage students to enroll at Belford High School by representing that students of Belford High School have an advantage in that they can obtain admission to Belford

University, at www.belfordhighschool.com/school/insideBelford.html. According to the website,

"[i]n accordance with an alliance agreement, Belford University proudly offers its life experience degrees to Belford High School graduates."

74. Defendants represent that Belford University and Belford High School are accredited by IAAOU and UCOEA.

75. The supposed accreditation certificates from IAAOU and UCOEA for Belford High

School and Belford University are identical, with the exception of the replacement of the words

11 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 12 of 32 40

"High School" with "University."

76. Defendants falsely represent atwww.belfordhighschool.com/sc hool/why uni.aspthat students can "Get An Accredited High School Diploma Online" from Belford.

77. On information and belief, IAAOU is a sham organization and fictitious entity created for the purposes of providing the appearance of legitimacy to Belford High School to individuals considering obtaining an online high school diploma through Belford High School and www.belfordhighschool.com or an online college degree through Belford University at www.belforduniversity.org.

78. On information and belief, UCOEA is a sham organization and fictitious entity created for the purposes of providing the appearance of legitimacy to Belford High School to individuals considering obtaining an online high school diploma through Belford High School and www.belfordhighschool.com or an online college degree through Belford University at www.belforduniversity.org.

79. UCOEA is not recognized by the United States Department of Education.

80. IAAOU is not recognized by the United States Department of Education.

81. Defendants falsely represent to prospective students that Belford High School's accreditation by UCOEA and IAAOU provides "[a]ssurance that the institution's diplomas will be widely accepted by employers, professional associations, other schools, colleges and universities."

82. Defendants falsely represent that IAAOU and UCOEA are the same as legitimate accrediting agencies like the North Central Association of Colleges and Schools, Middle States

Association of Colleges and Schools, and other similar organizations, stating "[ a]ll these boards and

agencies are well-known and institutions receiving their accreditation hold the same level of

12 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 13 of 32 41

credibility and recognition worldwide." www.belfordhighschool.org/schoollaccrcdit.html.

83. Defendants falsely represent that "Belford High School is an accredited institution recognized by two renowned accreditation agencies for on-line education, namely the International

Accrediting Agency for Online Universities (lAAOU) and Universal Council for Online Education

Accreditation (UCOEA). When you get a high school diploma from Belford, you benefit from having the recognition of these accrediting agencies." www.belfordhighschool.comlschoollaccredit.html.

84. The representation that IAAOU and UCOEA are "renowned accreditation agencies for on-line education" is false. On information and belief, IAAOU and UCOEA are fictitious entities created to give Belford High School the appearance of legitimacy to prospective students.

85. Neither IAAOU and UCOEA appear to have a physical address.

86. Belford's website, www.belfordhighschool.com. depicts a building with the name

"Belford High School" on the side, representing that an actual building exists housing Belford and its campus. On information and belief, this representation is false because no such school building or campus exists.

87. Defendants falsely represent that Belford High School has an actual campus and offers jobs. "Belford offers exciting and prestigious job prospects to its students. The university has a variety of on campus and off campus jobs and internship opportunities that students can explore," according to "vvvw.belfordhighschool.comlschoollinsideBelford.html.

88. On information and belief, neither Belford High School nor Belford University has a campus, and neither offers internships or jobs.

89. Defendants represent on the Belford High School website (at

13 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 14 of 32 42

www.belfordhighschool.comlschoollinsideBelford.html) that a letter is printed from Belford

University President and Defendant Melville P. Crowe. The letter invites Belford High School students to enroll at Belford University. The signature matches the signature of the "President" of

Belford High School contained on documents sent to students through the mails.

90. Defendants falsely represent that Belford High School "deliver[s] superior quality education through the internet."

91. Defendants falsely represent that Belford High School will permit students to obtain

"a credible high school diploma."

92. On information and belief, Defendants also operate www.belfordhighschoolscam.com. which purports to be an independent site providing unbiased information about Belford High School. The site is another sham set up by Defendants to deceive students and to direct them to obtain their high school diploma from www.belfordhighschool.com.

93. Defendants, through www.belfordhighschoolscam.com. falsely represent that an education at Belford High School is "worth [a student's] money, time and effort":

High school is most imperative aspect of anyone's education life.... Many employers and educational institutes give high school diploma and institution from where it has been taken a lot of importance.... An education institute, whose objective is to make education available to everyone, can never do anything unauthentic or dubious. So if you are planning to take your high school diploma from Belford High School, go for it. It is worth your money, time and effort.

94. Defendants falsely represent to prospective students that Belford High School "[i]s the only fully accredited high school providing high school diplomas based upon your life experience or online equivalency test." www.belfordhighschool.comlschoollwhyuni.asp.This representation is false because Belford High School is not accredited and does not provide valid high school

14 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 15 of 32 43

diplomas and the online test it offers is not the equivalent of a GED test.

95. After prospective students inquire about the school online, they are contacted by one or more Defendants who assure students by phone that the Belford High School diploma they will receive is accredited and universally accepted.

96. Students who complain to Defendants after having their Belford High School diplomas rejected are told to complete numerous steps designed to discourage them from pursuing refunds.

97. Even after students comply with all the requirements set up by Belford High School to discourage them from pursuing refunds, Belford High School refuses to provide refunds.

98. When students are charged for the diploma, charges are made by and paid to

Defendant Education Services Provider. These charges appear on credit and debit card statements transmitted electronically and/or through the mails as charges to "educationsp.com." Education

Services Provider represents itself as a provider of consulting and other educational services.

99. Plaintiffs have reasonably relied on Defendants' many misrepresentations.

100. In early April 2009, Representative Plaintiff Carrie McCluskey began to search online for a high school diploma program or GED program.

101. The search brought up www.belfordhighschool.com.

102. Ms. McCluskey clicked on the search result for www.belfordhighschool.com.

103. Ms. McCluskey took a test online and was then contacted by representatives of

Belford High School, who telephoned her at her home in Michigan.

104. On April 5, 2009, "educationsp.com" debited a $99 purchase on a debit card held by

Ms. McCluskey.

15 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 16 of 32 44

105. On April 6, 2009, "educationsp com" debited a payment of$137.55 from a card in the name of Ms. McCluskey.

106. After passing what she understood to be the online equivalency test and making the required payments, Ms. McCluskey received a package in the mails from Defendants.

107. The package received in the mail from Belford High School was comprised of a folder containing several documents, including a certification, a diploma, and other documents.

108. The package received in the mail from Belford High School contained a certification dated April 3, 2009, and signed by Defendant Melville P. Crowe and Defendant William J.

McTiemen.

109. The package mailed by Belford High School contained a diploma from "Belford High

School," stating "[u]pon recommendation of the Faculty, and by virtue of its vested authority, the

Belford School Board confers upon Carrie M McCluskey the respectable High School Diploma."

110. The "diploma" purports to show signatures from a superintendent, principal, president of the school board, and secretary of the school board.

111. Defendant Dan Robertson signed the diploma as Superintendent.

112. Defendant Ken Calvert signed the diploma as Secretary of the School Board of

Belford High School.

113. Defendant John Doe #1 signed the diploma as the Principal of Belford High School.

114. Defendant John Doe #2 signed the diploma as President of the School Board of

Belford High School.

115. The package contained other documents signed by Sydney Goldstein, who IS identified as "Administration Head."

16 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 17 of 32 45

116. Evelyn Reisdorffwent online looking for information about high school diplomas.

117. Defendants' website, www.belfordhighschool.com appeared in response to a search related to high school diplomas. Ms. Reisdorff clicked on www.belfordhighschoo1.com. where

Belford High School represented that it was accredited, and offered legitimate, valid high school diplomas to those who passed an online equivalency test.

118. In reliance on the representations by Defendants that Belford High School was accredited to offer a valid high school diploma or its equivalent, Ms. Reisdorff decided to proceed.

She took an online equivalency test at www.belfordhighschool.com. but did not pass the test on her first try. She studied using materials from www.belfordhighschool.com. and passed the test after retaking it.

119. On January 24, 2009, after she submitted the online test and information, Defendants called Ms. Reisdorff and encouraged her to complete the paperwork and pay the funds necessary.

120. Defendants represented to Ms. Reisdorffin a phone call that Belford High School was accredited, the diploma was legitimate, and would be accepted as valid by employers and colleges.

121. Within days of completing the online equivalency test and making payment through www.educationsp.com.DefendantssentapackagetoMs.Reisdorff through a common carrier.

122. The package received in the mail from Belford High School was comprised of a folder containing several documents, including a certification, a diploma, and other documents.

123. The package received through the mails from Belford High School contained a certification dated March 24,2009. The certification was signed by Defendant Melville P. Crowe and Defendant William J. McTiemen.

124. The package mailed by Belford High School contained a diploma from "Belford High

17 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 18 of 32 46

School" dated March 24,2009, stating "[u]pon recommendation of the Faculty, and by virtue of its vested authority, the Belford School Board confers upon Evelyn Reisdorff the respectable High

School Diploma."

125. The "diploma" purports to show signatures from a superintendent, principal, president of the school board, and secretary of the school board.

126. Defendant Dan Robertson signed the diploma as Superintendent.

127. Defendant Ken Calvert signed the diploma as Secretary of the School Board of

Belford High School.

128. Defendant John Doe #1 signed the diploma as the Principal of Belford High School.

129. Defendant John Doe #2 signed the diploma as President of the School Board of

Belford High School.

130. The package contained other documents signed by Sydney Goldstein, who is identified as "Administration Head."

131. Ms. Reisdorfftook the diploma to her employer and was told that the employer would not accept her Belford High School diploma as a legitimate high school diploma.

132. Ms. Reisdorffthen contacted the Texas department of education and was advised by the State of Texas that Belford High School was a scam.

133. Ms. Reisdorff asked for a refund of the money she paid \v\Vw.educationsp.com for the online high school diploma, but Defendants have failed and refused to refund her money.

134. In early March 2009, Jaime Yanez went online looking for information about obtaining a high school diploma or aGED. Mr. Yanez performed a search looking for information about a high school diploma online, and a link to the Belford High School website appeared. Mr.

18 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 19 of 32 47

J anez clicked onto the site where Belford High School represented that it was accredited, and offered legitimate, valid high school diplomas to those who passed on online equivalency test.

135. In reliance on the representations by Defendants that Belford High School was accredited to offer a valid high school diploma, Mr. Yanez decided to proceed. He took and passed an online equivalency test at www.belfordhighschool.com.

136. Defendants then charged Mr. J anez approximately $250 through Education Services

Provider.

137. Within ten days of completing the online equivalency test and making the payment,

Defendants sent a package to Mr. J anez through a common carrier.

138. The package received in the mail from Belford High School was comprised of a folder containing several documents, including a certification, a diploma, and other documents.

139. The package received through the mails from Belford High School contained a certification dated March 4, 2009, signed by Defendant Melville P. Crowe and Defendant William

J. McTiernen.

140. The package mailed by Belford High School contained a diploma from "Belford High

School" dated March 4,2009, stating "[u]pon recommendation of the Faculty, and by virtue of its vested authority, the Belford School Board confers upon Jaime Yanez the respectable High School

Diploma."

141. The "diploma" purports to show signatures from a superintendent, principal, president of the school board, and secretary of the school board.

142. Defendant Dan Robertson signed the diploma as Superintendent.

143. Defendant Ken Calvert signed the diploma as Secretary of the School Board of

19 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 20 of 32 48

Belford High School.

144. Defendant John Doe #1 signed the diploma as the Principal of Belford High School.

145. Defendant John Doe #2 signed the diploma as President of the School Board of

Belford High School.

146. The package contained other documents signed by Sydney Goldstein, who is identified as "Administration Head."

147. Mr. Yanez requested a refund of the money he paid to Defendants through www.educationsp.com for his high school diploma, but Defendants have failed and refused to refund his money.

Count I

Breach of Contract

148. Plaintiffs hereby incorporate by reference the preceding allegations.

149. Defendants entered into express or implied contracts with each Plaintiff under which

Belford High School agreed it was authorized and accredited to grant valid high school diplomas to students upon the successful completion of a course of study or testing.

150. Defendants breached their obligations under these contracts because Belford High

School was and is not authorized to grant any high school diplomas or any other academic credential, nor was it accredited, nor do employers or academic institutions recognize its diplomas as valid.

151. Plaintiffs have been damaged as a proximate result of Defendants' actions.

WHEREFORE, Plaintiffs request that this Court enter judgment in their favor, and against

Defendants for whatever damages they are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential

20 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 21 of 32 49

damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

Count II

Fraud

152. Plaintiffs hereby incorporate by reference the preceding allegations.

153. In order to induce students to enroll at Belford High School, Defendants made material representations outlined above, including but not limited to that: Belford High School was an actual academic institution, Belford High School offered valid high school diplomas, Belford

High School was accredited to offer high school diplomas by legitimate accrediting agencies that actually exist, IAAOU was an actual, legitimate accrediting agency with accrediting authority within the United States, UCOEA is an actual, legitimate accrediting agency with accrediting authority within the United States, Belford High School diplomas would be accepted by employers, and

Belford High School diplomas would be recognized by colleges and universities.

154. The representations made by Defendants were false.

155. When making these representations, Defendants knew or should have known the representations were false.

156. Plaintiffs acted upon Defendants' false representations and suffered damages as a result. Among other things, Plaintiffs were induced to enter into contracts with Defendants and to incur financial and other obligations.

WHEREFORE, Plaintiffs request that this Court enter judgment in their favor, and against

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential

21 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 22 of 32 50

damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

Count III

Negligent or Innocent Misrepresentation

157. Plaintiffs hereby incorporate by reference the preceding allegations.

158. Plaintiffs detrimentally relied on one or more false representations made by

Defendants.

159. Plaintiffs suffered an injury as a result of their reliance.

160. Plaintiffs' reliance was such that the injury they suffered inured to Defendants' benefit.

WHEREFORE, Plaintiffs request that this Court enter judgment in their favor, and against

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

Count IV

Promissory Estoppel

161. Plaintiffs hereby incorporate by reference the preceding allegations.

162. Defendants made promises alleged above to Plaintiffs including, but not limited to, that Belford High School was accredited, Belford High School had the authority to grant high school diplomas or other academic credentials, and that the high school diplomas offered by Belford High

22 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 23 of 32 51

School are valid and recognized by employers and other academic institutions.

163. Defendants' promises were definite and clear.

164. Defendants should have reasonably expected to induce action of a definite and substantial character on the part of Plaintiffs.

165. Plaintiffs acted in reliance on Defendants' promises as outlined above, including by applying for admission, enrolling, paying tuition, and taking other actions all in the manner the

Defendants expected.

166. Defendants' promises must be enforced if injustice is to be avoided.

WHEREFORE, Plaintiffs request that this Court enter judgment in their favor, and against

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

Count V

Unjust Enrichment/Breach of Quasi-contract

167. Plaintiffs hereby incorporate by reference the preceding allegations.

168. Defendants have received benefits from Plaintiffs in the form of tuition and fees, among other benefits.

169. It is inequitable to allow Defendants to retain these benefits granted to them by

Plaintiffs.

WHEREFORE, Plaintiffs request that this Court enter judgment in their favor, and against

23 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 24 of 32 52

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

Count VI

Equitable Estoppel

170. Plaintiffs hereby incorporate by reference the preceding allegations.

171. Defendants, by representations, admissions or silence intentionally or negligently induced Plaintiffs to believe facts alleged above, including but not limited to the facts that Belford

High School was accredited, Belford High School had the authority to grant high school diplomas or other academic credentials, and that the high school diplomas offered by Belford High School are valid and recognized by employers and other academic institutions.

172. Plaintiffs justifiably relied and acted in belief ofthose facts.

173. Plaintiffs will be prejudiced if Defendants are permitted to assert any statute of limitations defenses when their fraud and misrepresentation were concealed from Plaintiffs.

WHEREFORE, Plaintiffs request that this Court enter judgment in their favor, and against

Defendants, for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

Count VII

Concert of Action

24 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 25 of 32 53

174. Plaintiffs hereby incorporate by reference the preceding allegations.

175. Defendants acted in concert to defraud and deceive Plaintiffs.

WHEREFORE, Plaintiffs request that this Court enter judgment in their favor, and against

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

Court deems just.

Count VIII

Racketeer Influenced and Corrupt Organizations Act (RICO)

176. Plaintiffs hereby incorporate by reference the preceding allegations.

177. An enterprise existed including Defendants and others operating as an association in fact in conducting a pattern of racketeering activity.

178. Defendants and others operated the association in fact to conduct the pattern of racketeering activities through coordinated activities and a sophisticated fraudulent scheme involving several interrelated web sites, organizations and entities. Specifically, Defendants established websites for Belford High School and represented to the public and prospective students that Belford

High School offered accredited valid high school diplomas. Defendants furthered these false representations by establishing websites for supposed accrediting bodies at \v\vw.iaaou.org and www.ucoea.orgintendedtolegitimizeBelfordHighSchoolintheeyesofprospectivestudents.as well as the employers and colleges to whom the Belford High School diplomas would be presented for recognition. Defendants obtained funds from students through charges that were sought and

25 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 26 of 32 54

accepted by Education Services Provider, Inc., at www.educationsp.com. and the funds obtained were used to further the enterprise by paying for sponsored links and other online advertising aimed at ensuring that students searching for information about OED or high school diplomas were directed to www.belfordhighschool.com and www.belfordhighschool.org, and from there to www.belforduniversity.org. The association also includes individuals whose identities are currently unknown who staff the toll free phones used to further the fraud and to encourage students to pay the money, those individuals with live chats on the websites, and those who set up and maintain the websites.

179. The enterprise had a common purpose and ongomg structure or organization supported by Defendants and others, and is distinct from Defendants and the pattern of racketeering activity.

180. Defendants conducted and participated in the conduct of the association in fact enterprise through a pattern of racketeering activity, including mail fraud, wire fraud, and money laundering in violation of 18 U.S.C. §1962(c) and conspired to conduct the enterprise through a pattern of racketeering activity in violation of 18 U.S.c. § 1962(d).

181. Defendants, through the commission of two or more predicate acts including acts of mail fraud, wire fraud and money laundering that occurred within ten years of each other, engaged in a pattern of racketeering activity.

182. The enterprise affects interstate or foreign commerce.

183. Defendants engaged and conspired to engage in a scheme to defraud through a pattern of racketeering activity, and Defendants used the mails and interstate wires in furtherance of the fraud, and engaged in money laundering with the proceeds of the fraudulent scheme.

26 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 27 of 32 55

184. For each transaction Defendants engaged in with each Class member from at least the beginning of 2003 to the present, it was foreseeable that the mails could be used to advance the fraudulent scheme.

185. Defendants engaged and conspired to engage in a scheme to defraud, and Defendants used interstate electronic communications in furtherance ofthe scheme.

186. For each transaction Defendants engaged in with each Class member, it was foreseeable that a wire communication would be used to advance the fraudulent scheme.

187. Ms. McCluskey and all Class members were injured in their business or property as a result of the pattern of racketeering activity.

188. The mailing ofthe high school diploma package to Ms. McCluskey and each similarly situated class member was an act of mail fraud. Defendants, having devised a scheme to defraud and for the purpose of executing the scheme or attempting to do so, placed false high school diploma documents in a post office or authorized depository or to be delivered by a private or commercial interstate carrier.

189. The April 3, 2009 mailing of the diploma package to Ms. McCluskey was an act of mail fraud.

190. Each of the two charges to Ms. McCluskey's debit cards by Education Service

Provider, on April 5, 2009 and April 6, 2009 respectively, and the charges to each similarly situated class member was an act of wire fraud, using an interstate electronic communication in furtherance of the fraud.

191. Each of the charges to Ms. McCluskey's debit cards also constitutes a separate act of wire and mail fraud because each charge was made with the knowledge that the use of the mails

27 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 28 of 32 56

and wires would occur in the ordinary course of business as a result of the transactions.

192. The credit card charge for Ms. Reisdorffs diploma was an act of wire fraud, and caused a separate act ofmail or wire fraud in furtherance ofthe scheme because the charge was made with the knowledge that use of the mails and wires would occur in the ordinary course of business.

193. The credit card charge for Mr. Yanez's diploma was an act of wire fraud, and caused a separate act of mail or wire fraud in furtherance ofthe scheme because the charge was made with the knowledge that use of the mails and wires would occur in the ordinary course of business.

194. On infonnation and belief, Defendants, and Education Services Provider in particular, wired or mailed the funds relating to each Class member's transactions to the enterprise, an additional act of mail or wire fraud, or both.

195. Defendants knowingly engaged in monetary transactions involving criminally derived property of a value greater than $10,000.

196. Each of the telephone conversations with Class members prior to their purchase assuring them that the high school diploma was authentic, valid, and accredited, was an act of wire fraud.

197. Each ofthe telephone conversations with Class members subsequent to their purchase lulling them by reassuring them that the high school diploma was authentic, valid, and accredited was an act of wire fraud.

198. Each of the identical high school diploma packets contained a document certifying that the student had been awarded a high school diploma that instructed employers, schools and others want verification of the diploma to access the Belford High School Website. "If you'd like to personally verify [the student]'s academic documents, enter the provided graduate ID and

28 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 29 of 32 57

Password in the link given below: http://www. belfordhighschoo1.org/verification/".

199. Each of the packets contained a graduate 10 and password to pennit "verification" of the diploma.

200. Defendants knew that employers, colleges and others wishing to verify the diploma would log onto the www.belfordhighschoo1.com site following these instructions from Defendants, and that wire transactions would result.

201. WHEREFORE, Plaintiffs request that this Court enter judgment in their favor, and against Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the Court deems just.

Count IX

Civil Conspiracy

202. Plaintiffs hereby incorporate by reference the preceding allegations.

203. Beginning at least 2003, Defendants actively participated in a scheme to defraud

Plaintiffs.

204. During this period, agents and employees of Defendants engaged in concerted action to continue the scheme to defraud Plaintiffs.

WHEREFORE, Plaintiffs request that this Court enter judgment in their favor, and against

Defendants for whatever damages Plaintiffs are found to be entitled to recover, plus interest, costs and attorney's fees, including, but not limited to, direct damages, incidental damages, consequential damages, exemplary damages, attorneys fees, injunctive relief and any other or further relief the

29 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 30 of 32 58

Court deems just.

WHEREFORE, Plaintiffs respectfully request that the Court enter an order:

• certifying this case as a class action;

• ordering the reliefpermitted by 18 U.S.C. 1964(a), including ordering that any person

involved divest himself or herself of any direct or indirect interest in any enterprise,

imposing reasonable restrictions on the future activities or investments of those

involved, prohibiting any person from engaging in the same type of behavior as the

enterprise engaged in, ordering dissolution or reorganization of any enterprise, and

making due provisions for the rights of innocent persons.

• enjoining Belford High School, wvvw.belfordhi!!hschool.com,

and \vww.belfordhighschoo1.org from operating;

• enjoining IAAOU and \vww.iaaou.org from operating;

• enjoining UCOEA and www.ucoea.org from operating;

• enjoining Belford University or www.belforduniversity.org from operating;

• enjoining w\vw.educationsp.com from operating;

• awarding Plaintiffs actual, exemplary, punitive and treble damages for their injuries;

• awarding Plaintiffs their attorney fees; and

• granting whatever other or further relief the Court deems just under the

circumstances.

30 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 31 of 32 59

THE GOOGASIAN FIRM, P.C.

By /s/ Dean M. Googasian Thomas H. Howlett (P57346) Dean M. Googasian (P53995) Attorneys for Plaintiffs 6895 Telegraph Road Bloomfield Hills, MI 48301-3138 248/540-3333 E-mail: [email protected] [email protected]

Dated: December 8, 2009

31 Case 2:09-cv-14345-LPZ-MKM Document 5 Filed 12/08/09 Page 32 of 32 60

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN

CARRIE McCLUSKEY, on behalf of herself and a class consisting of all of those similarly situated, and EVELYN REISDORFF, and JAIME YANEZ, Case No. 2:09-cv-14345-LPZ-MKM

Plaintiffs, Hon. Lawrence J. Zatkoff v.

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN, and JOHN DOES 1-35,

Defendants.

JURY DEMAND

Plaintiffs hereby demand a trial by jury in this action.

THE GOOGASIAN FIRM, P.C.

By lsi Dean M. Googasian Thomas H. Howlett (P57346) Dean M. Googasian (P53995) Attorneys for Plaintiffs 6895 Telegraph Road Bloomfield Hills, MI 48301-3138 248/540-3333 E-mail: [email protected] [email protected] Dated: December 8, 2009 06/30/2010 20:15 From: OGlE Inc 2816645522 Page 1/5 61

OGLE Inc.

Phone: 866-232-7410 Fax:

Fax

To: Dean M. Googasian From:

Fax: +1 (248) 540-7213 Pages:

cc: Date: 7/1/2010 5:44am

Re: Case No. 2:09-14345

Comments: This is the copy of the document for your record which has been submitted to United States District Court. 06/30/2010 20 : 15 Fr OID: OGLE Inc 2816645522 Page 215 62 .' p '.

f'o. ", ~ ,- f' ; " ,

June 28, 20 I 0

VIA FEDERAL EXPRESS

Han. Lawrence 1. Zalkoff Uni ted States Di s ~'i c t Court tor (he Eastern District of Michigan Federal Building 526 Water S~'eet, 2nd Floor Port Huron, l\j] 48060 USA

SUBJECT: CA RRIE McCLUSKEY, and othel's Vs Belfol'd High School and othel's. Case No. 2:09-14345

Dear Judge Zatkon;

We are one of th e defendants in th e above-captioned matter. We are a Panama based educati onal cOlllpany in corporated as pel' the laws of the Republic of Panama. We own and operate Bel tonl University und Bdtord High School :uHI catcr to students globally.

The above case is recentl y brought to our knowledge by one of our Alumni upon which we have gone ti11'Ou gh th e entire contents of th e ma lter up till now. We would like to state that th e complaint of th e Plaintiff is baseless and eX~' e m e l y malicious and O, e conduct of th e Plainlifl's attorn ey is also highly questionable due to til e way he has mi sguided th e coul1.

We would like the honorable comt to go tiu'ough thi s letter and make it a part of thi s case in til e broader interest or ju s ti c~. We re qu~ s t the Honorable Court for a !

F ir s tl y ~ it is eyiuent that w e: art! :..u, intemationai cumpany iUld uur cUlTent juri sdidiull is not tht:: jurisdiction for ti,i s case du e to th e fo ll owing

I . We w'e a nOll- US entity. Wo,; ne ver ad v~r ti se ourselves as US based Uni versity or School. 2. We do not have a sin gle employee in th ~ US. Th e overall operations including, the evaluation of students, processing ,ulll shipm ent or edu cational documents is done Ji'om oulside U,e USA. 3. Nowhere on th e uocwnents provided to th e students and th e sampl es shown to th em pri or to getting th e fees, an address in USA or anY oth er thing depicting the s:un e is presented. 4. As menti oned by O, e plaintiffs th at we have used 3rd party hosting company and do not even have our 0 \ \111 server set-up in USA. O UI" domain nan1es are registered \viUl an internati onal regi:-:trant with our cnmpan)" detail s. 06/301Z01020:15 From: OGLE Inc 2816645522 Page 3/5 63

• • !" '. , ...... ! . ,

, '

5. Since our inception We have used 3rd party billing companies as we do not haw our own bank account in U SA. G. Our te lIDS of service to which every cli ent agrees, a.re present on the home page of QlIr website clearly stating the legal jurisdi ction (or buying our services to be the Republic of Panama. Since th e incepti on of our websi les Ule legal jurisdiction mentioned 0 11 the website has never been USA. These term s of services al one ,u'e enough proof to establish the conectjurisdiction.

Here it is relevant to mentilln that the plaintilYs attull1ey has cleliberatdy ayuicled presenting th e terms of service of our website to the court although legally it' s the primary document th at guvel11s th e relationship between ti1 e merchant 'U1d ti1 e buyer. Any web service purchased globally is bounded by its terms of sen 'ice whi ch serve as a contract between the cli ent ,md website and should be th e fir st document to be reviewed by an attornev. Why th e n th e PlaintifTi; allom ey has not presented this important document , which should be a central document in thi s civil action. 10 th e court?

i\ loreuYer, th e Plaintitt' s atturn ey avuided th e serv ice to lJlU' domain registrar, who, by an established legal course is bound [0 forward any legal communication to U, e domain registrant. where Ul e domain information is hidden by privacy protection. Furthennore, til ~ domain regist.rar is aLsu bound to reveal the domain I'egi. .;;t rant'.-; infunnatioll if rc:quiretl by th e: law. Tht! pri vi1 L:Y protection service provided by dom ain registrars is onl y to safeguard domain registrant's personal informati on and to address issues as sllch as li·eedol11 of speech. 11,e attorney has avoided servillg us deliberately by nol maki ng il clear to U, e court thaI service can be made on our whois in tolmation. This obviously would h:lVe raised th e issue of Jurisdiction.

It is on th e ba,j, of above, we requ est th e Honorable Court th at th e lawsuit should be di smissed ,md plaintifts should be asked to tile it in U, e COITec t jurisdi cti on to ,,11 ich til ey have agreed by buyin g Ollr scryices.

Furtht:":11110re, to avoid any future atk mpls to sabotage our image we consid r:! f it our responsibility to provide following facts related to U, e Plaintiffs baseless claims to exonerate ourselves from those allegati ons.

Statement of Facts exposing Plaintiff' s baseless Oann.

I. Legality of Services: \)Je. need to emphasize tint we afte r diplomas and degrees based on lest:; ~ uld prior learning recognition of individuals. Prior le:.u11ing assessment is an acceptable process adopted even by Ivy League Universities to gi ve credits to individuals. However. tileY have a specitic percentage (15 %- 20 %) of credits to be awarded by ti1i s method. EYen in USA a large number o r U ni v~ r s itie s ,md ~ ntiti es oller 06/30/2010 20: 15 From: OGLE Inc 2616645522 Page 4/5 64 r :.~ .~. ,. ..

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100%, credits on the basis of pri or learning assessment ~uHi Vv'ork experience. This method is I 00% I ~ga l and h~nce th ese el1 titi ~s legally o p ~ rate from within US...\. for yelU·S. Ann e~.. ur" A canies th e names or such US enlities and th eir websites rollowing more or Ie" tlle same process as th e one adopted by us. In USA it is EVEN legal to issue novelty diploma:; and degrees ,vhich are issued fr om th e compa.nies mentioned separately ill Anne,,'lU'e .-\. It is very cte.u·ly establi shed time :Uld again that the above entities and all similar enti ti es ~u·e provc:n kgal and th ey an::. not (;ommining any li aud of an y kind. Hence th e internati onal Uni,rersily /coll ege opera tin g in sllch a Illalmer is I OO~1l l ega l even according to th e US laws. Furthermore, tlte plaintifF; have nut explicitly called this issuance illega l or li"audul ent rath er th ~y have argut:d that th t::: re \-vas mi scumJ11unicalion and false cl aims made by us regarding th e acceptability of tll ese diplomas. This allegation we have addressed bel ow.

2. _·\I!cgation of False claim and ill doing to obtain motlc)' fl'audulctltly: Here we would again like lu slale Ula t our terms or service c1 e:lrly slales tllal th e degrees and diplonus issued are recogniti o n of an individual 's ,vork / life eAlJerience and th e university makes no guaranlees of thei r acceptabilily. Under our lemlS of service students are responsible to validate the acceplability hom Ih ei r in sti lute/organizatiortlj urisdiction It is a lact that our graduales have seen beller prospects when i l comes to tll eir educalion and professional careers neverUleleSs. nowhere on ow' \Vebsite or communications it is claimed that there is any gLHlrantce tiJr a j ob or admission. N owhere on th e websit t: nor in any communication is it being claimed Ulaf V'le were regionally or nati onally accredited by an y US accredi ti ng body. Being an internati onal organizatiun we obtained intemati onal privale accredilation and lhis is "iui we have told sluden ts everywhere. The Plainiil'ts have fa iled to prove where we have claimed regional or national accreditation or accreditation by a body approved by US dep:lIiment uf education. The Plainlitts have again deliheralely aVDi ded pl acing anything fmm our website and avoided presenting ill e tenus of service which is central to an y contractual relationship between us and tll e clients. WrJ request th e courlto v iL! w our term s of service online.

J. Rip-uff schcnu.': The ct::nlral argumenl against PlaintiIls contenti ons reg:lHling ripping orl' potential customers is th e Iile! tlull no rip-ofr scheme can anonl to accept payments on credit cards by til e customers as under the credit cards rules th e customer can simply file a chargeback and get hi s/ller muney back by di sputing the transaction 'vi 1l1 the blUlk on v;u'ious grounds. The b'Ulks and especially th e 3'd p,u·ty billing companies like Paypal etc are extremely stringent md do not (o lerate greater than 1-2% chargeback rale. [fwe ore in operations for G years and consi dering the b ct tllat ow' aimosl 100% or tlle payments are online Ulf ough 3rd party billing th en it mean:; our di ssati s faction ratio is less than 2%. con~'ary to til e plaintitt's clailll which shows that we have ripped ol'l' maj ority of custumers. Furthennurc::, th t! plainti ffs th emsdves have accepted while arguing for st!lv ice to us by fax that our fax number is used to receive faxes containing request for refunds. We would like to stale th at we have a customel~cen~'ic rcJlInd policy which aillls at .0" ,' minimizing any dissati sl

to gd til e refund li'om us or the pavment company in volved or til e Plaintitts bank where they can simply fi le for a chargcback. We have: no record of , my such attempt made by th e PlaintiiIs. We al so request til e court to seek opinion of any credit card expert regarding the possibilitv uf an yune lldi';\uuing peopk by charging on ave:rage $200 plus on th e ir credit card s and not relurnin g their payments in case of di ssati sfaction for consecutive 6 ye:u's? 11,0 court woulu ti, en kn ow til"t til e plaintifts ' allegation is tilse on the bce of it.

Lastl y, th e Plaintills anomey has creal ed a website wlVw. bdJ'l'nllalVsllit. com against liS and is advertising it heavil y with Googk paid adverli '; ing on ow' mune . I-k has al so created a telephone helpline wb ere our stud ents are persuad ed to become a party in thi s lawsuit. However, till date he has been able to gel onl y 4 stuuents. If we were running a rip-otfthen with this exorbitcmt campaign he would have: recruiteti tilOllsands of students.

We would like 10 state that we are th e only company who states everytlling clearly on its website and in lh e term s of selv ice and which offers refund even after deliyery o f th e documents. 1l1i s tact is of serious concern to some of th e competitors (li sted in Exhibit'-\) who failed to after these I'eatun::s. Thi s can be yc:ritic:tl by rc:v ic\vin g thc:ir activiti es. It is obyiollS to th e: ddendants ' artorn ey thal even if a del'au\t judgment is oblained agai nst an internati onal entity then it ""II onl y be bendicial to its competi tors to be used as . negative pUblicity tool.

We request 0,.[ thi s letter should be made part of th e court proceedings in th e greater interest of justice :Uld our arguments should be appli ed with Jilll laimess to O, e Plaintiff's claims. Also il is prayed that thi s lawsuit should bc dismissed due to th e lack ofjuri sdiclion and sanctions should be levied on PlaintifTs Altomey for mi sguiding the cow·t and wasting its tim e. This letter is uploaded on aliI' website on O,e tll ll o"'ing URL w\vw.belillrdhigilschllol.wm/casej;lctS.

We have fu ll bust in U, e justice system of til e USA.

Regard s,

. -. ---

l\Jatthew Parker Legal Dep,utment Organizati on lor Global Learning anLi Education In c. GlIf31Z010 13 :58 FrOID: OGLE Inc 2816645522 Page 112 66

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July 13, 2010

The Hon. Lav.'fence 1. Zatkoff United States District Court for the Eastern District of Michi gan Federal Building 526 Water Street, 2nd Floor Port Huron, MI 48060 USA

VIA FAX

R E: Case No. 2:09-14345 Request for Extension of Time to Answer or Otherwise Respond to Plaintill's' Complaint

Dear Judge Zatkat!,

I write to you on behalf of the Organi zati on for Global Learning and Education Inc. (OGLE), the corporate owner of defend ants Belfo rd University and Belford High School (coll ectively referred to hereinafler as "Belfo rd") in the above-referenced case. OGLE is an entity fann ed and existing under the laws of Panama.

Belford was recently served with the Complai nt in this case via fax on June 24, 2010. Thi s represented the first ti me that Belford was served. Belford bas not attempted to avoid service but other attempts were sent to an invalid address.

Belford ·seeks to answer or o th er,,~se respond ' to the Com pl aint and fil e a response, if appropriate, to the cUITently-pendin g Motion for Protective Order. It should be noted that· we have responded to the court immedi ately on .Tun e 28, 2010. We however, fee l that itrequire .us to engage a US attorney as pro se filin g may not be pennitted by the COUlt. As a Panamanian entity, Belford is presentl y experi encing difficulti es in retaining an att orney to represent it in defendin g this proposed Class action Ivithin the State of Michi gan, a complex case in a di stant location. We therefore respectfillly request that the Court, in th e interests of justice, grant to Belford a 90-day extension of the deadlin e "~th i ll whi ch to make th ose filin gs, which Belford submits is a reasonabl e peri od of tim e pursuant to Clark v. Richardson, 153 Fed. Appx. 69 (3 rd Cir. 2005), in which in stance the Thi rd Circuit Court of Appeals granted a liti gant 90 days within which to locate counsel to make a filin g. We also respectfu ll y request (a) that the Court not issue any orders that may affect Belford until such time as Belford 's anticipated coun sel appears in this

I Through lhis correspondence. Belford does not waive objections it may hold concernlng personal jurisdiction or venue within the stale of Michigan. Belford reserves the right to raise such objections, or any other, . ._ ... :::::(~j in response Lo the Complaint as appropriate. _ . ·:;:, :.:·:;~Y\~';·:'1;·"'" ·:l~~·Z;::';'·· 07/ 13/2010 13:58 From : OGLE Inc 2816045522 Page 212 67

p.e} Rnx No. O[~ -; GM{) Rep ublic of P:1f Ph'1n€: : 1-866 -232 Email . G8 1 \[email protected] I 1:~ .:i l 0o l

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case; (b) that the court stay all pending di scovery until such time as Belford 's anticipated coun sel appears in thi s case so as to protect Belford 's interest innon-disc1 osure of potentially confidential infornJati on; and (c) that th e Court direct the Plaintiffs or Plaintiffs' counsel to cease it s negative intern et advertising wherein Belford is identified by name, and which is causing a pronounced negative effect upon Belford 's operati ons and punishing Belford without a legal or factual basis.

Your courtesy and consideration is much appreciated. We have called Plaintiffs' coun sel to di scuss thi s proposed extension of time, and he has not shown consent to our request.

Sincerely, l.\;' r

\ \ /~~ _ M ... • ~ \ .. '-.,..:x~ - - ~ ~-=-- -.- ~­

Matthew Parker for the Organizati on for Global Learning and Education Inc.

cc: Clerk ofthe Court (via fax) Couils,el fo r Pl aintiffs (via fax) Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 1 of 21 68

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

CARRIE McCLUSKEY, on behalf of herself and a class consisting of all of those similarly situated, and EVELYN REISDORFF, and JAIME YANEZ, Case No. 2:09-cv-14345-LPZ-MKM Plaintiffs, Hon. Lawrence J. Zatkoff v.

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIYES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CLAVERT, WILLIAM J. McTIERNEN and JOHN DOES 1-35,

Defendants.

DEFENDANTS BELFORD HIGH SCHOOL AND BELFORD UNIVERSITY’S ANSWER TO PLAINTIFF’S SECOND AMENDED COMPLAINT AND JURY DEMAND

Defendants Belford High School and Belford University (the “Belford Defendants”), by and through their attorneys, The Miller Law Firm, P.C., and for their Answer and Affirmative

Defenses to Plaintiff’s Second Amended Complaint state as follows:

NATURE OF ACTION

1. The Belford Defendants deny that this case is proper for class action treatment.

2. The Belford Defendants deny this allegation.

3. The Belford Defendants deny this allegation. Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 2 of 21 69

4. The Belford Defendants deny this allegation.

PARTIES, JURISDICTION AND VENUE

5. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

6. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

7. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

8. The Belford Defendants deny that they conduct any business in Michigan.

9. The Belford Defendants deny this allegation.

10. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

11. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

12. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

13. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

14. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

15. The Belford Defendants state that at one time Melville P. Crowe was the

President of Belford High School and Belford University.

2 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 3 of 21 70

16. The Belford Defendants state that at one time Dan Robertson was the

“Superintendent” of Belford High School.

17. The Belford Defendants state that at one time Sydney Goldstein was the

“Administration Head” of Belford High School

18. The Belford Defendants state that at one time William J. McTiernen was the

Regsitrar of Belford High School.

19. The Belford Defendants neither admit nor deny this allegation.

20. The Belford Defendants neither admit nor deny this allegation.

21. The Belford Defendants neither admit nor deny this allegation.

22. The Belford Defendants deny this allegation.

23. The Belford Defendants deny this allegation.

24. The Belford Defendants deny this allegation.

25. The Belford Defendants deny this allegation.

26. The Belford Defendants deny this allegation.

27. The Belford Defendants deny this allegation.

28. The Belford Defendants deny this allegation.

29. The Belford Defendants deny this allegation.

30. The Belford Defendants deny this allegation.

31. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

32. The Belford Defendants deny that this Court has jurisdiction.

33. The Belford Defendants deny that this Court is a proper venue.

34. The Belford Defendants deny this allegation.

3 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 4 of 21 71

Class Action Allegations

35. The Belford Defendants hereby incorporate by reference the preceding responses.

36. The Belford Defendants deny this allegation.

37. The Belford Defendants deny this allegation.

38. The Belford Defendants deny this allegation.

39. The Belford Defendants deny this allegation.

40. The Belford Defendants deny this allegation.

41. The Belford Defendants deny this allegation.

42. The Belford Defendants deny this allegation.

43. The Belford Defendants deny this allegation.

44. The Belford Defendants deny this allegation.

General Allegations regarding Zunch

45. The Belford Defendants hereby incorporate by reference the preceding responses.

46- 59. These allegations do not pertain to the Belford Defendants and therefore the

Belford Defendants lack sufficient information necessary to respond to this allegation. To the extent a response is required, the Belford Defendants deny these allegations.

General Allegations regarding Belford’s Scheme

60. The Belford Defendants hereby incorporate by reference the preceding responses.

61. The Belford Defendants object to the use of the term “Defendants” throughout the

Complaint as the allegations containing the term Defendants fails to adequately put the Belford

Defendants on notice of claims or allegations are directed to them as opposed to the other

Defendants. The Belford Defendants request that Plaintiffs file a more definite statement to enable them to respond to the Complaint allegations.

4 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 5 of 21 72

62. The Belford Defendants deny this allegation.

63. The Belford Defendants’ websites speak for themselves. Denied that any representations or statements are or were false. The Belford Defendants deny the remaining allegations.

64. The Belford Defendants deny this allegation.

65. The allegation is vague and ambiguous and for that reason denied.

66. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

67. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

68. The Belford Defendants admit this allegation.

69. The Belford Defendants admit this allegation.

70. The allegation is not directed to the Belford Defendants, and the Belford

Defendants therefore deny this allegation.

71. The Belford Defendants deny this allegation.

72. The Belford Defendants deny this allegation as written.

73. The Belford Defendants’ websites speak for themselves. The Belford Defendants deny the remaining allegations.

74. The Belford Defendants admit this allegation.

75. The Belford Defendants deny this allegation as written.

76. The Belford Defendants deny this allegation.

77. The Belford Defendants deny this allegation.

78. The Belford Defendants deny this allegation.

5 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 6 of 21 73

79. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

80. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

81. The Belford Defendants’ websites speak for themselves. Further, the Belford

Defendants deny that any representations or statements are or were false, and the Belford

Defendants deny the remaining allegations.

82. The Belford Defendants’ websites speak for themselves. Further, the remaining allegations are denied.

83. The Belford Defendants’ websites speak for themselves. Further, the Belford

Defendants deny that any representations or statements are or were false, and the Belford

Defendants deny the remaining allegations.

84. The Belford Defendants’ websites speak for themselves. Further, the Belford

Defendants deny that any representations or statements are or were false, and the Belford

Defendants deny the remaining allegations.

85. This allegation is not directed to the Belford Defendants, and no answer is required. To the extent an answer is required, the allegation is denied.

86. The Belford Defendants’ websites speak for themselves, the remaining allegations are denied.

87. The Belford Defendants’ websites speak for themselves. Further, the remaining allegations are denied.

88. The Belford Defendants deny this allegation.

6 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 7 of 21 74

89. The Belford Defendants’ websites speak for themselves. Further, the Belford

Defendants deny that any representations or statements are or were false, and the Belford

Defendants deny the remaining allegations.

90. The Belford Defendants’ websites speak for themselves. Further, the Belford

Defendants deny that any representations or statements are or were false, and the Belford

Defendants deny the remaining allegations.

91. The Belford Defendants’ websites speak for themselves. Further, the Belford

Defendants deny that any representations or statements are or were false. Further, the Belford

Defendants deny the remaining allegations.

92. The Belford Defendants deny this allegation.

93. The Belford Defendants deny this allegation.

94. The Belford Defendants’ websites speak for themselves, the Belford Defendants deny that any representations or statements are or were false, and the Belford Defendants deny the remaining allegations.

95. The Belford Defendants deny this allegation.

96. The Belford Defendants deny this allegation.

97. This allegation is vague and ambiguous and the Belford Defendants therefore deny this allegation.

98. This allegation is vague and ambiguous and the Belford Defendants therefore deny this allegation.

99. This allegation is vague and ambiguous and the Belford Defendants therefore deny this allegation.

7 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 8 of 21 75

100. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

101. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

102. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

103. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

104. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

105. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

106. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

107. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

108. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

109. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

110. The Belford Defendants admit that Melville Crowe and William McTiernen would from time to time sign documents. The remaining allegations are denied.

111. The Belford Defendants admit this allegation.

8 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 9 of 21 76

112. The Belford Defendants deny this allegation as written.

113. The Belford Defendants admit this allegation.

114. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

115. The Belford Defendants deny this allegation.

116. The Belford Defendants deny this allegation.

117. This allegation is vague and ambiguous as to which documents, and further, the documents speak for themselves.

118. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

119. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

120. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

121. The Belford Defendants object because this allegation is vague and ambiguous as to which Defendant allegedly called and is therefore denied.

122. The Belford Defendants object because this allegation is vague and ambiguous as to which Defendants made representations to Plaintiff, and is therefore denied because the institution is accredited and legitimate.

123. The Belford Defendants object because this allegation is vague and ambiguous as to which Defendants made representations and is therefore denied.

124. Admit that Belford provided a certification, diploma and other documents, otherwise denied.

9 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 10 of 21 77

125. Admit that Melville P. Crowe and William J. William J. McTiernen signed a certification, the remaining allegations are denied.

126. The Belford Defendants admit that Belford provided a diploma, the remaining allegations are denied.

127. The Belford Defendants deny this allegation as written.

128. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

129. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

130. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

131. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

132. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

133. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

134. The Belford Defendants deny this allegation.

135. The Belford Defendants deny this allegation.

136. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

137. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

10 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 11 of 21 78

138. This allegation is vague and ambiguous and the Belford Defendants therefore deny this allegation.

139. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

140. Admit that Belford provided a certification, diploma and other documents. The remaining allegations are denied.

141. Admit that Melville P. Crowe and William J. McTiernen signed a certification.

The remaining allegations are denied.

142. The Belford Defendants that Belford provided a diploma, the remaining allegations are denied.

143. The Belford Defendants deny this allegation as written.

144. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

145. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

146. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

147. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

148. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

149. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

11 78 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 12 of 21 79

Count I

Breach of Contract

150. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

151. No response is required as this allegation calls for a legal conclusion. In the event

a response is required, denied.

152. The Belford Defendants deny this allegation.

153. The Belford Defendants deny this allegation.

WHEREFORE, the Belford Defendants request that the Second Amended Complaint and

all allegations be dismissed with prejudice and/or that a Judgment of no-cause of action be

entered, and that the Court award costs and attorneys’ fees to Defendants.

Count II

Fraud

154. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

155. The Belford Defendants deny this allegation.

156. The Belford Defendants deny this allegation.

157. The Belford Defendants deny this allegation.

158. The Belford Defendants deny this allegation.

WHEREFORE, the Belford Defendants request that the Second Amended Complaint and

all allegations be dismissed with prejudice and/or that a Judgment of no-cause of action be

entered, and that the Court award costs and attorneys’ fees to Defendants.

Count III

12 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 13 of 21 80

Negligent or Innocent Misrepresentation

159. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

160. The Belford Defendants deny this allegation.

161. The Belford Defendants deny this allegation.

162. The Belford Defendants deny this allegation.

WHEREFORE, the Belford Defendants request that the Second Amended Complaint and

all allegations be dismissed with prejudice and/or that a Judgment of no-cause of action be

entered, and that the Court award costs and attorneys’ fees to Defendants.

Count IV

Promissory Estoppel

163. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

164. The Belford Defendants deny this allegation.

165. The Belford Defendants deny this allegation.

166. The Belford Defendants deny this allegation.

167. The Belford Defendants deny this allegation.

168. No response is required as this allegation calls for a legal conclusion. In the event

a response is required, denied.

WHEREFORE, the Belford Defendants request that the Second Amended Complaint and

all allegations be dismissed with prejudice and/or that a Judgment of no-cause of action be

entered, and that the Court award costs and attorneys’ fees to Defendants.

Count V

13 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 14 of 21 81

Unjust Enrichment/Breach of Quasi-contract

169. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

170. The Belford Defendants state that Plaintiff received a benefit from the Belford

Defendant.

171. No response is required as this allegation calls for a legal conclusion. In the event

a response is required, denied.

WHEREFORE, the Belford Defendants request that the Second Amended Complaint and

all allegations be dismissed with prejudice and/or that a Judgment of no-cause of action be

entered, and that the Court award costs and attorneys’ fees to Defendants.

Count VI

Equitable Estoppel

172. Belford Defendants reassert and incorporate by reference the answers to all

preceding paragraphs and the responses contained therein.

173. The Belford Defendants deny this allegation.

174. The Belford Defendants deny this allegation.

175. The Belford Defendants deny this allegation.

WHEREFORE, the Belford Defendants request that the Second Amended Complaint and

all allegations be dismissed with prejudice and/or that a Judgment of no-cause of action be

entered, and that the Court award costs and attorneys’ fees to Defendants.

Count VII

Concert of Action

14 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 15 of 21 82

176. The Belford Defendants reassert and incorporate by reference the answers to all

preceding paragraphs and the responses contained therein.

177. The Belford Defendants deny this allegation.

WHEREFORE, the Belford Defendants request that the Second Amended Complaint and

all allegations be dismissed with prejudice and/or that a Judgment of no-cause of action be

entered, and that the Court award costs and attorneys’ fees to Defendants.

Count VIII

Racketeer Influenced and Corrupt Organization Act (RICO)

178. Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

179. The Belford Defendants deny this allegation.

180. The Belford Defendants deny this allegation.

181. The Belford Defendants deny this allegation.

182. The Belford Defendants deny this allegation.

183. The Belford Defendants deny this allegation.

184. The Belford Defendants deny this allegation.

185. The Belford Defendants deny this allegation.

186. The Belford Defendants deny this allegation.

187. The Belford Defendants deny this allegation.

188. The Belford Defendants deny this allegation.

189. The Belford Defendants deny this allegation.

190. The Belford Defendants deny this allegation.

191. The Belford Defendants deny this allegation.

15 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 16 of 21 83

192. The Belford Defendants deny this allegation.

193. The Belford Defendants deny this allegation.

194. The Belford Defendants deny this allegation.

195. The Belford Defendants deny this allegation.

196. The Belford Defendants deny this allegation.

197. The Belford Defendants deny this allegation.

198. The Belford Defendants deny this allegation.

199. The Belford Defendants deny this allegation.

200. The allegation is vague and ambiguous and for that reason denied.

201. The allegation is vague and ambiguous and for that reason denied.

202. The Belford Defendants deny this allegation.

203. WHEREFORE, the Belford Defendants request that the Second Amended

Complaint and all allegations be dismissed with prejudice and/or that a Judgment of no-cause of

action be entered, and that the Court award costs and attorneys’ fees to Defendants.

Count IX

Civil Conspiracy

204. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

205. The Belford Defendants deny this allegation.

206. The Belford Defendants deny this allegation.

WHEREFORE, the Belford Defendants request that the Second Amended Complaint and

all allegations be dismissed with prejudice and/or that a Judgment of no-cause of action be

entered, and that the Court award costs and attorneys’ fees to Defendants.

16 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 17 of 21 84

AFFIRMATIVE AND OTHER DEFENSES

The Belford Defendants may rely on the following affirmative defenses at or before trial:

1. Plaintiffs have failed to state claims upon which relief can be granted.

2. Plaintiffs’ claims are barred, in whole or in part, due to lack of personal jurisdiction over Belford Defendants.

3. Plaintiffs’ claims are barred, in whole or in part, due to lack of subject matter jurisdiction.

4. Venue is improper in this District.

5. Plaintiffs’ claims are barred, in whole or in part, by Plaintiffs’ failure to mitigate purported damages.

6. Plaintiffs’ claims may be barred, in whole or in part, under the doctrine of estoppel.

7. Plaintiffs’ claims are barred, in whole or in part, because of Plaintiffs’ failure to plead fraud with particularity.

8. Plaintiffs’ claims may be barred, in whole or in part, because Plaintiffs lack compensable injuries.

9. Plaintiffs’ claims may be barred, in whole or in part, under the doctrine of waiver.

10. Plaintiffs’ claims are barred, in whole or in part, by any applicable statute of limitations.

11. Plaintiffs’ claims may be barred, in whole or in part, under the doctrine of laches.

12. Plaintiffs’ claims may be barred, in whole or in part, by the statute of frauds.

13. Plaintiffs’ claims may be barred, in whole or in part, due to the fault of one or more parties not named in this action.

17 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 18 of 21 85

14. Plaintiffs’ claims may be barred, in whole or in part, by Plaintiffs’ failure to name one or more necessary or indispensable parties.

15. Plaintiffs’ claims may be barred, in whole or in part, by insufficiency of process or service of process.

16. Plaintiffs’ claims may be barred, in whole or in part, by the doctrines of ratification, consent, and acquiescence.

17. Plaintiffs’ claims are barred by Defendants’ Terms of Use.

18. Plaintiffs failed to meet the requirements for class certification under Fed. R. Civ.

P. 23. In addition, Plaintiffs’ class definition is inadequate.

19. Defendants reserve the right to add further and other Affirmative and other defenses as they become known.

20. Plaintiffs’ Second Amended Complaint should be stricken because Plaintiff did not obtain leave to file a Second Amended Complaint.

WHEREFORE, the Belford Defendants request that the Second Amended Complaint and all allegations be dismissed with prejudice and/or that a Judgment of no-cause of action be entered, and that the Court award costs and attorneys’ fees to Defendants.

18 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 19 of 21 86

THE MILLER LAW FIRM, P.C. Attorneys for Defendants

By: _/s/ Marc L. Newman______Marc L. Newman (P51393) David B. Viar (P43479) Courtney B. Ciullo (P71949) Devon P. Allard (P71712) 950 West University Drive, Suite 300 Rochester, Michigan 48307-1887 (248) 841-2200 Dated: July 15, 2010

19 Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 20 of 21 87

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

CARRIE McCLUSKEY, on behalf of herself and a class consisting of all of those similarly situated, and EVELYN REISDORFF, and JAIME YANEZ, Case No. 2:09-cv-14345-LPZ-MKM Plaintiffs, Hon. Lawrence J. Zatkoff

v.

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIYES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CLAVERT, WILLIAM J. McTIERNEN and JOHN DOES 1-35,

Defendants.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that on July 15, 2010, I electronically filed the foregoing paper with the Clerk of the Court using the ECF System which will send notification to the following

ECF attorneys of record:

Dean M. Googasian Email: [email protected]

Thomas H. Howlett Email: [email protected]

Case 2:09-cv-14345-LPZ-MKM Document 38 Filed 07/15/10 Page 21 of 21 88

THE MILLER LAW FIRM, P.C. Attorneys for Defendants

By: _/s/ Marc L. Newman______Marc L. Newman (P51393) David B. Viar (P43479) Courtney B. Ciullo (P71949) Devon P. Allard (P71712) 950 West University Drive, Suite 300 Rochester, Michigan 48307-1887 (248) 841-2200 Dated: July 15, 2010

2 89 Case 2:09-cv-14345-LPZ-MKM Document 55-2 Filed 08/19/10 Page 2 of 5

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

CARRIE McCLUSKEY, on behalf of herself and a class consisting of all of those similarly situated, and EVELYN REISDORFF, and JAIME YANEZ, Case No. 2:09-cv-14345-LPZ-MKM Plaintiffs, Hon. Lawrence J. Zatkoff v.

BELFORD HIGH SCHOOL, et al.

Defendants.

Dean M. Googasian (P57346) Marc L. Newman (P51393) Thomas H. Howlett (P53995) David B. Vial' (P43479) The Googasian Firm, P.C. Courtney B. Ciullo (P71949) Attorneys for Plaintiffs Devon P. Allard (P71712) 6895 Telegraph Road The Miller Law Film, P.c. Bloomfield Hills, MI 48301-3138 Attorneys for Defendants Belford High School 248-540-3333 and Belford University 950 West University Drive, Suite 300 Rochester, Michigan 48307-1887 (248) 841-2200

DECLARATION OF SALEM A. KURESHI

1. My name is Salem A. Kureshi. I am a resident of Pakistan over the age of twenty-one. I have personal knowledge of the following facts, and if called as a witness I would be competent to testify as to the matters contained herein.

2. I am the Managing Coordinator for Belford High School and Belford University.

3. Belford High School and Belford University are located in Panama and conduct no business generally in the State of Michigan. 90 Case 2:09-cv-14345-LPZ-MKM Document 55-2 Filed 08/19/10 Page 3 of 5

4. I have never traveled to the State of Michigan.

5. Neither Belford University nor Belford High School have any officers,agents, or employees located in Michigan, or that perform any work in or directed to Michigan. No one from Belford University or Belford High School has ever visited Michigan or conducted business there.

6. Neither Belford University nor Belford High School advertise in Michigan or target advertising to Michigan.

7. Neither Belford University nor Belford High School have any bank accounts in

Michigan.

8. Of all of the Belford University and Belford High School students worldwide, only approximately 10% of them reside in the United States.

9. Of all of the Belford University and Belford High School students worldwide, only approximately 0.16% are residents of the State of Michigan.

10. Carrie McCluskey, the only Plaintiff who resides in Michigan, made the initial contact to Belford High School. Neither Belford University nor Belford High School solicited her or initiated contact with her. Ms. McCluskey accessed Belford High School's web site and registered as a student.

11. The only contact Belford High School had with Ms. McClusky to form their relationship was limited to two instances: (1) a Belford High School representative responded to an inquiry from Ms. McCluskey by calling her on the telephone, and (2) a Belford High School representative mailed one piece of correspondence to her.

12. The telephone call placed to Ms. McCluskey in response to her inquiry about

Belford High School was placed by an agent from a call center located in Southeast Asia.

2 91 Case 2:09-cv-14345-LPZ-MKM Document 55-2 Filed 08/19/10 Page 4 of 5

13. The correspondence that was sent to Ms. McCluskey was not mailed from within the United States.

14. No one met with Ms. McCluskey in Michigan or anywhere else, and no further correspondence was sent.

15. Neither Belford High School nor Belford University use or possess any real or tangible personal property in Michigan.

16. Neither Belford High School nor Belford University have direct or indirect vendors in the State of Michigan.

17. Belford University did not direct any correspondence or telephone calls to Ms.

McCluskey in Michigan or anywhere else.

18. Neither Belford University nor Belford High School directed any activities to

Michigan with respect to any other Plaintiff.

19. Both Belford High School and Belford University's websites and other e- commerce activities are managed by their e-commerce company located outside the United

States and then outsourced to different companies in the United States, none of which are in

Michigan.

20. Neither Belford High School nor Belford University's advertising is directed to

Michigan and neither targets Michigan residents in any way. Rather, both Belford High School and Belford University buy ads on Google's search engine, which are able to be accessed by anyone with Internet service, anywhere in the world

21. Neither Belford High School nor Belford University consented to personal jurisdiction in Michigan.

3 92

22. Both Belford High School and Belford University's websites expressly offer a refund to any students who are dissatisfied. None of the Plaintiffs, including Ms. McClusky, ever requested a refund.

23. The Terms of Service, located on the web sites of both Belford University and

Belford High School at the time Ms. McClusky became a student of Belford High School, explicitly stated:

THE CLIENT HAS CHECKED DILIGENTLY WITH LOCAL LEGISLATION IN THE JURISDICTION OF RESIDENCE AND THE INTENDED JURISDICTION OF USE OF THE AWARD THAT THE POSSESSION AND USE OF THE PRIVATELY ACCREDITED DEGREE CONFORMS WITH LOCAL LEGISLATION.

24. The Terms of Service, located on the websites of both Belford University and

Belford High School at the time Ms. McClusky became a student of Belford High School, explicitly stated that the student's relationship would be governed by the laws of the Panama.

I declare (or certify, verity, or state) under penalty of perjury under the laws of the United

States of America, and pursuant to 28 U.S.C. § 1746, that the foregoing is true and correct.

By: Salem A. Kureshi

Date: August 19, 2010

4 93 Case 2:09-cv-14345-LPZ-MKM Document 55-2 Filed 08/19/10 Page 1 of 5

EXHIBIT 1 Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 1 of 21 94

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN

CARRIE McCLUSKEY, on behalf of herself and a class consisting of all of those similarly situated, and EVELYN REISDORFF, and JAIME YANEZ, Case No. 2:09-cv-14345-MAG-MKM

Plaintiffs, Hon. Mark A. Goldsmith v. Mag. Judge Mona K. Majzoub

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN, and JOHN DOES 1-35,

Defendants.

PLAINTIFFS' MEMORANDUM OPPOSING BIFURCATION OF DISCOVERY Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 2 of 21 95

TABLE OF CONTENTS

STATEMENT OF QUESTION PRESENTED ...... ii

CONTROLLING OR MOST APPROPRIATE AUTHORITY ...... iii

I. INTRODUCTION ...... 1

II. FACTUAL AND PROCEDURAL BACKGROUND ...... 2

A. Plaintiffs Are Seeking Discovery From Belford Following Months Of Delay Precipitated By Belford's Motion Practice And Other Actions Aimed To Prevent Fact-Finding ...... 2

B. Plaintiffs Also Are Seeking Discovery From Belford Relating To Belford's Defaulted Co-Defendants And As Yet Unidentified Co-Conspirators ...... 4

C. Plaintiffs Also Are Seeking Discovery From Non-Parties Such As UPS, Which Last Week Produced 12,000 Documents Demonstrating Belford's Systematic And Extensive Contacts With Michigan ...... 5

III. ARGUMENT ...... 6 THE BIFURCATION REQUEST HAS NO MERIT

IV. CONCLUSION ...... 10

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STATEMENT OF OUESTION PRESENTED

In this case alleging a massive scheme relating to perpetration of a fake high school in which defendants have engaged for more than seven months in various efforts aimed at avoiding discovery as to whether Belford High School is legitimate, accredited or even a school, should this Court disregard the general rule with regard to simultaneous discovery on class certification and merits issues in class actions, and allow defendants to only participate in discovery that they deem to be relevant to class certification?

Plaintiffs answer, "No."

Belford answers, "Yes."

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CONTROLLING OR MOST APPROPRIATE AUTHORITY

3 Newberg on Class Actions §7:8 (4th ed).

Fed. R. Civ. P. l.

Fed. R. Civ. P. 30(d)(l).

Gray v. First Winthrop Corp., 133 F.R.D. 39 (N.D. Calif. 1990)

In re Plastics Additives Antitrust Litigation, 2004 WL 2743591 (E.D. Pa. 11129/2004).

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Plaintiffs Carrie McCluskey and Jaime Yanez, by and through their attorneys, The Googasian

Firm, P.C., respectfully submit this memorandum on a bifurcation issue in accordance with this

Court's minute entry dated February 7,2011, following a telephonic scheduling conference.

I. INTRODUCTION

The amorphous request for a bifurcation of discovery made by Defendants Belford High

School and Belford University (collectively, "Belford") during the Court's February 7, 2011 telephonic scheduling conference should be denied for at least five reasons: (1) it contradicts the prevailing federal rule with regard to simultaneous merits and class certification discovery in class actions as well as with the Federal Rules of Civil Procedure; (2) it is impracticable because merits and class certification issues are intertwined in this action regarding the perpetration of an elaborate scheme relating a fake high school; (3) it interferes with Plaintiffs' opportunity to gather facts and proceed to judgment against defaulted co-defendants; (4) it disrupts Plaintiffs' opportunity to identify and add additional co-conspirators; and (5) it undermines principles ofjudicial economy by virtually assuring this Court will have to resolve multiple discovery disputes.

Frankly, Belford's request for bifurcation appears simply to be part of a strategy to embroil the parties and the Court in time-consuming procedural skirmishes that may delay for another day, month or year exposure of a widespread and ongoing internet scheme involving a fake high school that continues to victimize thousands of persons in the United States.

A stark example of Belford's strategy of resisting discovery as part of an effort to prevent disclosure of the truth with regard to its scheme has arisen just in the last week in the days following the Court's February 7 telephonic scheduling conference. On February 9 and 10, 2011, United

Parcel Service Co. ("UPS") produced more than 12,000 documents relating to Belford's shipments of diplomas and other documents to putative class members; UPS's production came in response

-1- Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 6 of 21 99

to a subpoena served by Plaintiffs in June 2010. See infra 5-6. Belford had delayed production of

UPS's documents for several months through motion practice. fd. at 3-4.

These UPS documents obtained last week dramatically demonstrate Belford's considerable, systematic contacts with the State of Michigan, notwithstanding Belford's representations and arguments to the contrary during the recently concluded motion practice on Belford's motion to dismiss for lack of personal jurisdiction. fd. at 5-6. The UPS documents appear to show that during a one-year period from June 2009 to June 2010, Belford, through what is believed to be a fake entity called "Outsource Rush," shipped documents via UPS to between 500 and

1,000 persons at Michigan addresses in more than 200 different Michigan cities. fd. This key evidence was unavailable to Plaintiffs and this Court during the considerable briefing and argument on Belford's jurisdictional motion that recently concluded.

Belford's bifurcation request essentially is another effort to deploy the same strategy that

Belford attempted to use in its motion to dismiss - namely, preclude discovery, embroil the Court and Plaintiffs in procedural disputes, and then seek rulings on legal issues before key evidence undercutting Belford's contentions comes to light. This cynical strategy is improper, ,and the bifurcation request must be denied.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Plaintiffs Are Seeking Discovery From Belford Following Months Of Delay Precipitated By Belford's Motion Practice And Other Actions Aimed To Prevent Fact­ Finding.

Plaintiffs' ongoing efforts to proceed with discovery from Belford follow numerous attempts

by Belford through motion practice and other actions to block all fact-finding in this action.

Since November 2009, Plaintiffs have alleged that Belford and co-conspirators market and

sell Belford to thousands in the United States as a valid, accredited online high school, when, in fact,

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Belford is not legitimate, not accredited, and not even a school. R.I. But as of this date 15 months later, Belford has not produced any measurable discovery whatsoever - not a single page reflecting any actual accreditation process, any actual school, or any actual school official. R.I08.

The complete dearth of information produced about Belford's accreditation, legitimacy and whereabouts more than a year after the filing of this action is directly attributable to efforts by

Belford to invoke the judicial process and cause delay. After being served on June 24, 2010,1

Belford promptly began to resist discovery in numerous ways. Without the benefit of a court order or other judicial authority, Belford took the highly unusual step ofwriting to subpoenaed non-parties

- including UPS - and "direct[ing]" them "to not produce any documents" until the Court ruled on an "objection" to the subpoenas. R.48, at p. 3 & R.48, Ex. 5. Thereafter, Belford unsuccessfully moved to quash the subpoenas to non-parties, including ups. R.41 & R.66. Belford also unsuccessfully sought to avoid participation in a Rule 26(f) conference. R.48 & R. 71. Belford also unsuccessfully sought to shut down an informational website regarding this action. R. 58 & R. 77.

And, in an effort that enveloped the parties and this Court in extensive briefing and argument

spanning more than four months, Belford unsuccessfully sought to attain dismissal on grounds of lack of personal jurisdiction. R 55, R.64, R.73, R.99, R.I02, R.I03, R.I04, R.I05, R.I06.

With discovery now unquestionably open, Belford now is now suggesting some kind of bifurcation of discovery in what appears to be another delay tactic. Since the Court's denial of

Belford's motion to dismiss six weeks ago, Belford has produced just two e-mails in response to

discovery requests relating to its accreditation and no documents whatsoever regarding its individual

1 Because Belford chooses to have no physical presence anywhere on earth, service of process was delayed, leading to an Order from this Court granting leave to serve by alternate means entered on June 24, 2010, more than seven months after the filing of this action. R.22. Belford was served by alternative means, including e-mail and chat session, the same day. R. 23 & 24.

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co-defendants, each of whom is a purported former Belford official; Belford has also failed to produce a witness for deposition or permit a building inspection. R. 108. Plaintiffs have moved to compel this discovery. Id. (Although Belford generally suggested during the February 7 scheduling conference that Plaintiffs' discovery requests to date have somehow overreached, Belford has not sought protection from the Court with regard to the requested discovery, nor could it credibly do so.)

B. Plaintiffs Also Are Seeking Discovery From Belford Relating To Belford's Defaulted Co-Defendants And As Yet Unidentified Co-Conspirators.

Plaintiffs also are proceeding with discovery from Belford and otherwise with regard to

Belford's alleged co-conspirators, some of whom are in default in this action and others who are yet to be identified and named as defendants. R.8 & R.108 Specifically, Plaintiffs are seeking information relating to seven defaulted co-defendants - purported accrediting bodies International

Accreditation Agency for Online Universities ("IAAOU") and Universal Council for Online

Education Accreditation ("UCOEA") as well as five purported former Belford officials, including its former purported president, Melville P. Crowe. R. 108. Belford has completely failed to supply basic discovery regarding these co-defendants against whom Plaintiffs have defaults. Id. 2 Plaintiffs also are seeking discovery necessary to identify additional co-conspirators, who are identified currently as John Doe defendants in this action. R.9. This Court has already determined that good cause exists to permit discovery to identify John Doe defendants and permit service upon them.

R.22, p. 4.

2 Plaintiffs have contended that these accrediting entities and individuals are fictions, but Belford has asserted otherwise in multiple pleadings in this action. R.108. Discovery should bear out who is correct. Belford's failure to produce any documents evidencing any actual accreditation process with IAAOU and UCOEA or any actual role played by Melville P. Crowe and others suggests an intent to forestall discovery of these entities and officials who are alleged to be co­ conspirators -- or, more probably, their non-existence.

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C. Plaintiffs Also Are Seeking Discovery From Non-Parties Such As UPS, Which Last Week Produced 12,000 Documents Demonstrating Belford's Systematic And Extensive Contacts With Michigan.

Plaintiffs also are proceeding with discovery from non-parties believed to be in possession information relating to both the merits and to class certification.

Plaintiffs are actively seeking to obtain such documents, which may also undermine

Belford's credibility and reveal the particulars and extensiveness of its scheme. Non-party document

subpoenas have been sent to entities including ups. As recounted above, Belford "directed" UPS

in July 2010 not to respond to the June 2010 subpoena and unsuccessfully sought to quash the

subpoena. R. 48, p. 3 & R. 48, Ex. 5. See also Ex. 1, Dec!. ofD. Googasian, ~~ 2-4, 7.

With Belford's jurisdictional and other arguments relating to discovery now rej ected by this

Court, UPS finally produced more than 12,000 documents responsive to Plaintiffs' June 2010

subpoena on February 9 and 10, 2011. Id., ~~ 7-9. The documents span a one-year period from

June 2009 to June 2010 when Belford apparently used UPS, via what is believed to be a fake entity

called "Outsource Rush," to send diplomas and other documents to between 20,000 to 30,000

individuals within the United States. Id., ~~ 3-14. The documents appear to reveal that Belford

used UPS, via Outsource Rush, to send diplomas and other documents to between 500 and

1000 people in the state of Michigan at addresses in more than 200 different cities during a

one-year period from June 2009 to June 2010. [d., ~~ 15-17.3 This newly produced evidence

from UPS relates both to issues of class certification and the merits.

This evidence from UPS of Belford's numerous and systematic contacts with the State of

3 The connection between "Outsource Rush" and Belford in transmitting documents to putative class members was previously described to this Court in an earlier filing. R.43, pp. 6-7.

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Michigan was not available to the Court and to Plaintiffs during the pendency of Belford's motion to dismiss on lack of personal jurisdiction grounds. In Belford's unsuccessful effort to attain dismissal prior to the production of the UPS documents, Belford asserted that its connections to the

State of Michigan were "tenuous at best" and that a "trivial number of its students hail from

Michigan." R.55, p. 4 & R.73, p. 1. The UPS documents now appear to show Belford transmitting literally hundreds of documents to persons in Michigan in literally hundreds of different cities in a

single year.

III. ARGUMENT

THE BIFURCATION REQUEST HAS NO MERIT

Belford's informal request for some kind of bifurcation of discovery in this already long-

delayed litigation has no proper legal or procedural basis. The request should be denied for at least

five independently valid reasons.

First, Belford's request directly contradicts the prevailing rule with regard to the

administration of federal class actions. The general rule in federal class actions is precisely the

opposite of what Belford seeks: Merits discovery is not stayed pending class discovery. "Courts [in

class actions] normally frown on motions to stay discovery and deny them in the absence of

compelling reasons." 3 Newberg on Class Actions § 9:43 (4th ed). As recognized in the leading

class action treatise:

Discovery on the merits should not normally be stayed pending so-called class discovery, because class discovery is frequently not distinguishable from merits discovery, and classwide discovery is often necessary as circumstantial evidence even when the class is denied. Such a discovery bifurcation will often be counterproductive in delaying the progress of the suit for orderly and efficient adjudication.

3 Newberg on Class Actions §7:8 (4th ed)(emphasis added). See also Bodner v. Paribas, 202

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F.R.D. 370 (E.D. N.Y. 2000); Gray v. First Winthrop Corp., l33 F.R.D. 39 (N.D. Calif. 1990); In re Plastics Additives Antitrust Litigation, 2004 WL 2743591 (E.D. Pa. 11129/2004). Moreover, a bifurcation of class certification and merits discovery conflicts with the Federal Rules of Civil

Procedure, which require that rules be administered in a manner that provides for "the just, speedy, and inexpensive determination of every action" and limit depositions to one day. See Fed. R.Civ.

P. 1; Fed. R. Civ. P. 30(d)(1). Belford's vague request for bifurcation apparently would require witnesses to be deposed twice - once prior to class certification, and again after class certification.4

Second, bifurcation of discovery is wholly impracticable because issues relating to class certification and the merits are intertwined in this action alleging a widespread scheme to market an online school that is not legitimate, not accredited, and not even in existence anywhere. R.9. The allegation of a scheme affecting tens of thousands of persons in the United States, coupled with

Plaintiffs' claims for RICO violations, conspiracy, and breach of contract among other causes of action, all implicate discovery of documents and witnesses that relate to class certification issues of numerosity, typicality, and commonality, as well as to the merits of the alleged operation of a fake

school. As another federal district court aptly noted in rejecting a request for bifurcation:

[T]he Federal Rules could easily have provided for a stay pending class certification, but they do not. It is also important to bear in mind the nature of class action discovery. Discovery relating to class certification is closely enmeshed with merits discovery, and in fact cannot be meaningfully developed without inquiry into basic issues of the litigation. See Manual/or Complex Litigation 2d §30.12 (1985). An order staying discovery pending class certification would be unworkable, since plaintiffs must be able to develop facts in support oftheir class certification motion.

4For example, any deposition by Belford of Plaintiff Carrie McCluskey would be strictly limited to class certification, which presumably means she could only be asked who she is and where she lives, but not anything about the merits or particulars of her claim. In addition, it is worth noting that Belford would have no basis to obtain any merits-based discovery from scores ofputative class members who have offered or will offer evidentiary support on numerous issues relating both to the merits and to class certification.

-7- Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 12 of 21 105

An order restricting discovery to class issues would be impracticable because of the closely linked issues, and inefficient because it would be certain to require ongoing supervision of discovery.

Gray, 133 F.R.D. at 40-41. See also In re Rail Freight Surcharge Antitrust Litigation, 258 F.R.D.

167, 173-74 (D. D.C. 2009) (where a conspiracy is alleged, it would be inconsistent to bifurcate merits discovery from class discovery because the issues are necessarily intertwined).

Third, Belford's bifurcation request would improperly interfere with Plaintiffs' opportunity to gather facts and proceed to judgment against defaulted co-defendants, namely its two purported accrediting organizations and five former officials, including its alleged former president, Melville

P. Crowe. Belford is uniquely positioned to provide Plaintiffs with discovery - for example, documents reflecting the school's accreditation process (or lack thereof) and the leadership of this

"learning institution" (or lack thereof) - that may allow Plaintiffs to attain judgments against these defaulted co-defendants. No proper reason exists for this merits-related discovery against defaulted parties not to proceed, though it may well be that Belford desires to delay the revelation that

Belford's accrediting entities and officials are, in truth, an utter sham.

Fourth, Belford's request to bifurcate also would disrupt Plaintiffs' ongoing efforts to identify

and add co-conspirators currently identified in this action as John Does. The Court already has

expressly recognized Plaintiffs' entitlement to undertake discovery aimed at revealing the true

identities of individuals involved in the alleged far-reaching scheme, and no proper basis exists for

a reversal of this Order. R.22, p. 4. To date, in an apparent attempt to delay disclosure of the

persons and entities involved in its enterprise as long as possible, Belford has essentially flouted

obligations to comply with discovery and other rules requiring disclosure of persons and entities. 5

5 As Plaintiffs have previously noted in other filings, Belford never complied with LR 83.4, which required it to file a Statement of Disclosure of Corporate Affiliations and Financial Interest.

-8- Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 13 of 21 106

Belford will use any bifurcation of discovery to delay identification of co-conspirators.

Fifth, Belford's request to bifurcate undermines principles ofjudicial economy, which is a very real concern in this litigation where Belford has filed more motions than its has produced e- mails. See supra 2-4. Denial of a request for bifurcation of discovery in a class action is appropriate precisely because bifurcation precipitates motion practice regarding the type of discovery in which parties are engaged. See In re Plastics Additives Antitrust Litigation, 2004 WL 2753591, *3 (in denying request to bifurcate in a class action, court notes, "Bifurcation would ... belie principles of judicial economy, as the Court may be forced to spend time and resources resolving discovery disputes over what is 'merits' discovery as compared to 'class discovery.'''). Here, a decision to bifurcate discovery most certainly will lead to more unnecessary motion practice and judicial involvement, as evidenced by Belford's litigation activity to date. Though each motion was ultimately denied, Belford nonetheless engaged in motion practice that effectively stymied the commencement of document or deposition discovery in this action for more than seven months.

See supra 2-4. In the most glaring example of the impropriety of this approach in this case,

Belford's strategy delayed production by a non-party - UPS - of documents until just last week. Id at 5-6. Those documents now reveal an astoundingly systematic and regular series of contacts between Belford and the State of Michigan during a one-year period from June 2009 to June 20 10, when shipments from Belford, via the "Outsource Rush" entity, were sent to between 500 and 1,000 persons in Michigan in more than 200 different cities. Id But at the time of briefing and consideration of Belford's motion to dismiss on lack of personal jurisdiction grounds, this evidence

The disregard of this rule is consistent with an effort to keep secret the identity of the persons and organizations involved in Belford's operation.

-9- Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 14 of 21 107

was not available to Plaintiffs and to this Court. Id Belford's contentions regarding "tenuous" and "trivial" contacts with the State ofMichigan presumably would not have been made to this Court

- and certainly would not have been seriously entertained by this Court - if Belford had not succeeded in delaying discovery. Id Belford's bifurcation request improperly aims to set the stage for the same time-consuming and improper approach in which it seeks rulings on class certification and other issues while preventing disclosure of facts relevant to their adjudication. This request should be denied.6

IV. CONCLUSION

For the foregoing reasons, Plaintiffs respectfully request that the Court issue a scheduling order that does not bifurcate discovery.

THE GOOGASIAN FIRM, P.C. By /s/ Thomas H. Howlett Thomas H. Howlett (P57346) Dean M. Googasian (P53995) The Googasian Firm, P.C. Attorneys for Plaintiffs 6895 Telegraph Road Bloomfield Hills, MI 48301-3138 248/540-3333 Dated: February 14,2011 E-mail: [email protected]

6 It is anticipated that regardless of the fate of its improper bifurcation request, Belford will produce as little discovery as possible as slowly as possible in an effort - as with its jurisdictional motion - to attain adjudication on issues before Plaintiffs have had access to discovery bearing on them. For this reason, the Court should issue a scheduling order without a deadline for class certification to prevent Belford from using a "run-out-the-clock" strategy. The Court can easily revisit the related issues on the status of discovery and the timing of a motion for class certification by conducting a brief status conference 60 to 90 days after the issuance of a scheduling order.

-10- Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 15 of 21 108

CERTIFICATE OF SERVICE

I hereby certify that on February 14,2011, I electronically filed the foregoing paper with the

Clerk of Court using the ECF system which will send notification of such filing to the following:

Devon P. Allard [email protected]

Marc L. Newman [email protected]

Courtney B. Ciullo [email protected]

/s/ Thomas H. Howlett Thomas H. Howlett (P57346) Attorneys for Plaintiffs 6895 Telegraph Road Bloomfield Hills, MI 48301-3138 248/540-3333 E-mail: [email protected]

-11- Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 16 of 21 109

EXHIBIT 1 Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 17 of 21 110

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN

CARRIE McCLUSKEY, on behalf of herself and a class consisting of all of those similarly situated, and EVELYN REISDORFF, and JAIME YANEZ, Case No. 2:09-cv-14345-LPZ-MKM

Plaintiffs, Hon. Mark A. Goldsmith v.

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN, and JOHN DOES 1-35,

Defendants.

DECLARATION OF DEAN M. GOOGASIAN

Dean M. Googasian, pursuant to 28 U.S.C. § 1746, states as follows:

1. I am a counsel of record for Plaintiffs in this matter.

2. In June 2010, Plaintiffs issued a subpoena to United Parcel Service Co ("UPS") for documents relating to shipments of Belford High School diplomas and paperwork.

3. Plaintiffs supplied UPS tracking slips and other related documents for several class members, including Raffi Kajberouni, Lisa Lawson, Maria Perez, Robert Williams, James R. A.

Walker, and Clayton E. Lemon, Jr., to each of whom Belford High School had shipped a Belford

High School diploma via UPS.

4. Each of these tracking labels showed a return address for "Outsource Rush." Thus, Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 18 of 21 111

evidence shows that class members receive Belford High School diplomas in envelopes sent to them from "Outsource Rush" via UPS.

5. On information and belief based upon the evidence to date, Outsource Rush is a fictitious entity created by one or more Defendants for purposes of shipping diplomas and degrees from Belford High School and Belford University (collectively "Belford") to their victims. The return addresses for Outsource Rush are simply addresses at a "virtual" office location rented from

Regus Corporation. Documents produced by Regus Corporation demonstrate that these "virtual" offices -located at 6802 Paragon Place, Richmond, Virginia, 7300 West 11 Oth Street, Overland Park,

Kansas, and 505 Montgomery Street, San Francisco, California - are simply Regus office centers where Regus receives packages from "Outsource Rush" via shipment from outside the United States, opens the packages for Outsource Rush, and then ships envelopes inside these package via UPS.

See, Dkt. 43-2, p. 3. The re-sent packages bearing the name "Outsource Rush" with a Regus return

address.

6. On information and belief based upon evidence obtained to date, all documents

shipped via UPS bearing the "Outsource Rush" return address contained documents relating to

Belford High School or Belford University, and the overwhelming majority of these shipments

contain diplomas or degrees bearing the names of these "schools."

7. Belford Defendants issued an "objection" to UPS and other entities subject to

Plaintiffs' subpoenas and instructed UPS not to comply with the subpoena. Belford Defendants also

filed a motion to quash the subpoena. That motion was denied.

8. On February 9, 2011, UPS produced to Plaintiffs a disk containing 12,814 documents

in response to the subpoena.

-2- Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 19 of 21 112

9. On February 10, 2011, UPS produced to Plaintiffs an additional two pages of documents consisting of a contract dated June 8, 2009 between UPS and Outsource Rush.

10. I have reviewed the contents ofthe disk produced by UPS. While I have not read each of the 12,814 pages of documents on the disk, I have made myself familiar with the documents contained on the disc sufficiently to make the following statements upon information and belief.

11. The UPS documents span a time period of approximately one year prior to the date of the subpoena, containing documents ranging from June 2009 through June 2010, which appears consistent with the June 8, 2009 contract date as the date upon which Belford Defendants through

"Outsource Rush" began utilizing UPS to ship diplomas within the US.

12. F or each ofthe individuals identified by Plaintiffs in the subpoena as having received

Belford diplomas via UPS, UPS produced documents relating to the shipments.

13. The overwhelming maj ority ofthe 12,814 documents contain the names of recipients of shipments via UPS from the Outsource Rush account. It appears that most of these documents contain the names and addresses of between three and five recipients, while some names appear on more than one document and it appears that, for some relatively small number of shipments, more than one document was generated for the shipment. Some documents also reflect shipments to addresses outside the United States.

14. Based upon these numbers, it appears that the documents reflect shipments through the "Outsource Rush" account to approximately between 20,000 and 30,000 individuals within the

United States during the one-year period June 2009 through June 2010.

15. The UPS production reveals that documents were shipped to the following 217 cities in Michigan during the period June 2009 through June 2010:

-3- Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 20 of 21 113

~ddison Clio Hamtramck Manistee Rose City ~drianfA,drian Columbiaville Harper Woods Manitou Beach Roseville ~Ibionf\lbion Commerce Township Harrison Marshall Saginaw ~lIen Covert Harrison Township Menominee Saint Clair ~lIenAllen Park Croswell Hastings Midland Saline I'\lpena~Ipena Davison Hemlock Mio Saranac ~nn Arbor Dearborn Highland Monroe Sault Ste Marie ~tlanta Dearborn Heights Highland Park Montague Shelby ~u Gres Decatur Hillsdale Montrose Sheridan ~uburn Deckerville Holland Morley Six Lakes ~uburn Hills Deford Holly Morrice South Lyon Battle Creek Detroit Homer Mount Morris Sparta Bay City Dimondale Houghton Lake Mount Pleasant St. Charles Belleville Dorr Howell Muskegon St. Clair Shores Bellevue Dryden Hudson New Baltimore Standish Benton Harbor Durand Huron Newport Stanwood Berkley East China Indian River North Adams Sterling Heights Beulah Eastpointe Inkster Northport Sturgis ~irchBirch Run Eaton Rapids Interlochen Northville Sunfield Blissfield Edwarsburg Ionia Novi Taylor [BloomingdaleBloomingdale Erie Iron River Oak Park Tecumseh Boon Escanaba Jackson Orion Township Three Rivers Bridgeman Evart Jenison Orleans Topinabee Bronson Fair Haven Jerome Otsego Traverse City Brooklyn Farmington Hills Jonesville Owosso Trenton Brown City Fenton Kalamazoo Oxford Troy Brownstown Township Ferndale Kaleva Parma Utica Bruce Township Flat Rock KawKawlin Pigeon Vanderbilt Buchanan Flint Kentwood Pinckney Vassar Burton Fort Gratiot Kinde Pinconning Walled Lake Cadillac Frankenmuth Lake Orion Pittsford Warren Caledonia Fraser Lambertville Plymouth Camden Galesburg Lansing Port Huron Waterford ~antonCanton Garden City Lapeer Portage Wayland ~arletonCarleton Gobles Lennon Pullman West Bloomfield ~aroCaro Grand Blanc Leroy Quincy Westland ~edarCedar Springs Grand Haven Lincoln Park Redford Whittemore ~enterCenter Line Grand Ledge Linden Remus Wixom ~entervilleCenterville Grand Rapids Livonia Richmond Wyoming ~harlotteCharlotte Grandville Lowell River Rouge Ypsilanti ~hesterfieldChesterfield Grayling Macomb Riverview Zeeland ~Iarkstonparkston Greenville Macomb Township Rochester

-4- Case 4:09-cv-14345-MAG-MKM Document 111 Filed 02/14/11 Page 21 of 21 114

layton Grosse lie Madison Heights Rockford linton Townshi Hamilton Mancelona Rockwood

16. The documents reflect multiple shipments to many larger cities. Notably, documents reflecting shipments to at least 160 individuals within the city ofDetroit, 100 individuals in Dearborn or Dearborn Heights, shipments to 25 individuals in Flint, and 10 individuals in Southfield. Multiple shipments are made to smaller cities as well.

17. It appears that the UPS documents received reflect shipments by Outsource Rush on behalf of

Belford to between 500 and 1000 people in Michigan, with addresses in 217 different during the period June

2009 through June 2010.

18. Based on my review of the documents to date, it appears that the UPS documents reflect delivery from Outsource Rush, which I believe to be related to Belford, to tens of thousands of persons in the United

States over the course of one year relevant to both class certification and the merits in this action.

19. I declare that the statements above are true to the best of my information, knowledge, and belief.

lsi Dean M. Googasian Dean M. Googasian

-5- 115 Case 4:09-cv-14345-MAG-MKM Document 137 Filed 06/28/11 Page 1 of 5

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

CARRlE McCLUSKEY, on behalf of herself and a class consisting of all of those similarly situated, and EVELYN REISDORFF, and JAIME YANEZ, Case No. 2:09-cv-14345-MAG-MKM Plaintiffs, Hon. Mark A. Goldsmith v. Magistrate Judge Mona K. Majzoub BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CAL VERT, WILLIAM 1. McTIERNEN and JOHN DOES 1-35,

Defendants.

------~/ DECLARATION OF SALEM A. KURESHI

1. My name is Salem A. Kureshi. I am a resident of Pakistan over the age of twenty-one. I have personal knowledge of the following facts, and if called as a witness I would be competent to testify as to the matters contained herein.

2. I am the Managing Coordinator for Belford High School and Belford University.

3. I am the founder and sole owner of The Organization for Global Learning

Education ("OGLE"). OGLE is the parent company of Belford High School and Belford

University. 116 Case 4:09-cv-14345-MAG-MKM Document 137 Filed 06/28/11 Page 2 of 5

4. OGLE was incorporated in Panama, as demonstrated by the Panama Registration

Certificate, attached as Exhibit A to this Declaration. It also maintains a registered office in

Panama. Accordingly, Belford is Panama-based.

5. Plaintiffs requested to inspect documents that were produced in this litigation and

numbered BOOOOOI - B000034.

6. The documents that were numbered BOOOOOI - B000007 were received by

Belford via email in 2003 and 2004. The documents numbered BOOOOOI - B000007 were printed and placed in Belford's records, as was Belford's standard practice. Belford did not

retain electronic versions of emails dating back to 2003-2004. Therefore, the electronic versions

of the documents numbered BOOOOOI - B000007 were not retained.

7. Belford never possessed documents numbered B000008 - BOOOO 16 in an electronic form. Rather, Belford only possessed paper copies of these documents and those are

located in Pakistan. Belford scanned the paper copies to Adobe pdf form and provided the pdf files to Belford's counsel for production to counsel for Plaintiffs.

8. The documents numbered BOOOO 17 - BOOOO 19 were created by Belford back in

2003 and existed electronically within Belford's possession at one time. It is my understanding that there is no official document retention policy or law in Pakistan, and the electronic versions

were not retained by Belford. Belford located an additional paper document that appears to be

identical to the document numbered B000017 - B000019, except that it was partially damaged.

It is attached as Exhibit B.

9. Belford never possessed documents numbered B000020 - B000034 in an

electronic form. Belford received paper copies of these documents form from its consultant,

International Resource Consultants ("IRC"), and these are located in Pakistan. Belford never

2 117 Case 4:09-cv-14345-MAG-MKM Document 137 Filed 06/28/11 Page 3 of 5

received electronic copies of these documents from IRC or any other source. Belford scanned the paper copies to Adobe pdf form and provided the pdf files to Belford's counsel for production.

10. Plaintiffs' counsel requested Melville Crowe's last known address. Melville

Crowe's address was located on a document provided by IRC (attached as Exhibit C) back in

2003. As this was the only address that Belford ever had for Melville Crowe, Belford provided it to Plaintiffs. To the best of Belford's knowledge, this information is accurate.

11. During this lawsuit, I spoke to IRC several times seeking additional information that was requested by Plaintiffs counsel but IRC was reluctant to assist Belford in this litigation.

Finally, on May 24, 2011, I sent a formal written letter to IRC requesting that it make Galvin

Felix, Ronald Lloyd and Wyman Richard available to participate in a deposition by Plaintiffs counsel. (Exhibit D). I did this because Belford has no other way to contact these individuals and Belford does not control them.

12. IRC responded with a letter, dated June 2, 2011, rejecting my request for to make these individuals available, and it terminated its entire relationship with OGLE and Belford.

(Exhibit E). Since that time, OGLE and Belford have been unable to obtain any additional information from IRC, despite attempts to do so, including contact information for Galvin Felix,

Ronald Lloyd or Wyman Richard.

13. Plaintiffs attached an exhibit to their Motion to Compel Discovery that purports to be a printout of a website page containing a message from Melville Crowe. This page is a non­ final "draft" website page that was not intended to be accessible to the pUblic. The page was a draft template that was, like the rest of the web pages on Belford's sites, uploaded to the Internet but could only be accessed through a back door by hackers and webcrawlers which read and

3 118 Case 4:09-cv-14345-MAG-MKM Document 137 Filed 06/28/11 Page 4 of 5

index web pages and hidden links. Because the page was apparently <1ccessed through the back

dON by a webcrav·ilcr. ilmay han: app~'aI'i:d OJ] a search engillt: \\,ithllut Belford's kn\l\vlcdgc.

l.i I was not aware that 1l11~ page 'WdS acces~iblc to Internet USCI'S until rhis was

omught to my attention during the course (.11' rhi5 litigation. [\ i~ also not a page thnt students

could access througlJ Belford's wehsite in their n0ll11al course of hrowsing the wehsite.

Although Belford obtained consent from IRe that Melville Crowe authori!.ec1 Bclfim\ to lise his

"name. designation, signature and other details on [Belford's] offlcial documents and othcr

c()rnmUniCalion mediums," (see Exhibit C} Belfcl!'(\ was awaiting further specific amhorization

from Dr. Cr()\\'c to approve this web page. Since thi S

page \vas therefore abandoned.

I" I only' speak limited English. Therefore. this De\:laratio[1 has been traI1Slalcd [0

me.

I declare under penalty of perjury under the laws of the L nited States of America. and pursuant

Lll 28 L.S.c. § 174o, that the fi.1rcgoing i:; true and concel.

By: Salem;\. Kurcshi

D,lle: June 2i\. :20 11

4 119 Case 4:09-cv-14345-MAG-MKM Document 137 Filed 06/28/11 Page 5 of 5

CERTIFICATE OF SERVICE

I hereby certify that on June 28, 2011, I electronically filed the foregoing document with the Clerk of the Court using the ECF system, which will automatically send notification of such filing to all attorneys of record registered for electronic filing.

Respectfully submitted,

THE MILLER LAW FIRM, P.e. Attorneys for the Belford Defendants

By: /s/ Devon P. Allard Marc L. Newman (P51393) Devon P. Allard (P71712) 950 West University Drive, Suite 300 Rochester, Michigan 48307-1887 (248) 841-2200 [email protected] 120 Case 4:09-cv-14345-MAG-MKM Document 137-1 Filed 06/28/11 Page 1 of 1

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

CARRIE McCLUSKEY, on behalf of herself and a class consisting of all of those similarly situated, and EVELYN REISDORFF, and JAIME YANEZ, Case No. 2:09-cv-14345-MAG-MKM Plaintiffs, Hon. Mark A. Goldsmith v. Magistrate Judge Mona K. Majzoub BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITA TION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN and JOHN DOES 1-35,

Defendants.

INDEX OF EXHmITS

Exhibit A- Panama Registration Certificate

Exhibit B- Document entitled "Belford University's Degree and High School Diploma Programs"

Exhibit C Document from International Resource Consultants regarding Melville Crowe

Exhibit D Letter from OGLE, dated May 24, 2011

Exhibit E Letter from International Resource Consultants, dated June 2, 2011 121 Case 4:09-cv-14345-MAG-MKM Document 137-2 Filed 06/28/11 Page 1 of 2

EXHIBIT A 122

REPUBLICA DE PANAMA REGiSTRO PUBLICO DE PANAM,A- No. 677g1i '"r~~~·r~~~IU~~*·~--~~~~=~:;~~t~~~·,

·CE RT I F IOi"; '" CON VIEn'A'A, LA SOLICITIID'O'1 3.5001:1.

----:----.. ------".;~---"-~~ ... aUE"- LA=-~,'Bo'CI-EDAD

·i~~G:~~:~: '~~~~~~-~"m:Al'-D~~~~~:!~C~NC. 1249177 DEeP! EL " iVEINTITR&S l?E, Nov~fuimE~EiDoI:l~)II.L B;rE'r~:;; 1- QUE LA SOCIEDAJ),~tE~CUEYTRA VIGEKTE . i-QUE sus DIRECTOR'ES'SON,; N 1.) JUAN" MONTE'S" ...., .. 1I 'Z l LUZQUiN'tANAli· .

. \ c. <'- . ~~. au: ~U:~:;:N:::::,::~ANO r~' ,:,., ___ " I ,~ ! ~ ,r 1 - IpRESIDENTE "", . JUAN ,oolitES f'~ ,!I-'-; ,-,r-.q'~'L1':i~~' I;·.t'l-~'_ TESORERO···· "; •LUZ'Qu:[»:ril.iirM SECRETARib " :' RtJl~iiif·:·BAR!lfEri ;:) :~;: ,~!;~~ ;}~!:;~:~~_>-~b- ,- E!~~~,~;t;E~,~~~~:~:;:~:t , .i~t ... -", -<' r~r~ "',," I '~'·{.V~I~ j., - - Gut LAREPRESENT~b:Ou LEGAI;;LA EJERCERA;, :J ,7'" .-., •• '.' .EL··~R~~}bEN.:r~.:~~~.~.,(q~~~~rA ELj:~_~~.E~\~' . '- OOEs"i.JAGEbrTERESIDENTE ~ES:';::SS:IRLE'i,',ASS6CiATES " -_ --- -:: : «' __ :~ ~~~ -"'~_ c ,: t~';~"~'":~.~., ~~;~.-:, --.-' -- ,------;;i~'::S,: ~~,,~-T: ~7'i; Ff ~" ,:;''\',', Ii~ QUE SU CAPITAL ,¢~;~D~' *"~;~~~~61'OOO'()9:~~~~,ES I- . - =r~"1 • - ---"~_''''>~'''~·rJ.-'':'';:' 1~li,"~:~r~I<"'"~ RMj~DO E!.if~t:A~:pRijV:lt~C::tA ~t~r~~~~~~~~;~]~i~f~~h~;

I' ' If '". : ' ,., .. 123 Case 4:09-cv-14345-MAG-MKM Document 137-3 Filed 06/28/11 Page 1 of 4

EXHIBITB 124 Case 4:09-cv-14345-MAG-MKM Document 137-3 Filed 06/28/11 Page 2 of 4

Belford University's Degree and High School Diploma Programs

Bf'iford University offers Life Experience degrees at the Associate, Bachelor's, Master's and Doctorate levels plus high school diplomas. Belford University allows individuals from different backgrounds to convert their past experiences and learning into a recognized deeree/diploma.

The Evaluation Methodology for our life experience and prior learning degree programs is given below;

Evaluation Methodology for Belford's Ufe Experience Programs

Upon receipt of an application we evaluate the candidate on the basis of the life experience and prior learning, Firs the application is aSSigned to an academic advisor. Th(~ academic advisor analyze the applicant's background through his online profile, past accomplishments, and professionai and educational background by Llsing our proprietary internet research methodology that invol'ves global libraries and dutabases and forwards the details to EvaluClLion team. After that a decision is reached about approval or disapproval,

The Eligibility Criteria for our life experience degree programs is given below;

Eligibility Criteria for Belford's Life Experience Programs:

Based on the prior learning, work and life experience of individuals. Belford University has different eligibility criteria for each program listed below.

Bachelor's Degree Program

Students seeking admission in the bachelor's degree program are required to have at least 4 years of work or life experience relevant to their desired major. The eligibility requirements for a Bachelor's degree based on life experience may be satisfied in any of the following w

• Prior job experience in any fieid • Previous educational achievements • Employer-sponsored training and attendance of workshops • Participation in organizations, both professional and non-professional • Persona! goals, lifestYle, hobbies, and travel • PiJrlicip,ltion in volunteer activities and community service • Independent reading, viewing, listening, or writing 125 Case 4:09-cv-14345-MAG-MKM Doc~u-ment 137-3 ~ilea 06/28Tf1 Page 3'0[4

Master's Degree Program

Students seeking admission in the Master's degree program are required to have at least 6 years of work or life experience relevant to their desired major. The eligibility requirements for a Master's degree based on life experience may be satisfied in any of the folloWing ways;

• Prior job experience in any field • Previous educational achievements • Employer· sponsored training and attendance or workshops • Participation in organizations, both professioncll and non-professional .. Personal goals, lifestyle, hobbies, and travel • Participation in volunteer activities and community service .. Independent reading, viewing, listening, or writing

Doctorate Degree Program

Students fulfilling the eligibility requirements given below qualify for the Doctoral degree program at Belford Universitv.

• Prior job experience in any field .. /\t least 8 years of work or life experience • Previous educational achievements • Emplover-sponsored training and attendance of workshops • PartiCipation in organizations, both professional and non-professional • Personal goals, lifestyle, hobbies, and travel • Participation in volunteer activities and community service olndependent reading, viewing, listening or writing

Those individuals who do not have

Associate Degree Program

Students seeking admission in the /\ssociate degree program are required to have at feast 2 years of work or life experience relevant to their desired major. The e!igibility requirements for an Associate degree based on life experience may be satisfied in any of the following ways:

• Prior job experience ill any field • Previous educational achievements • Employer--sponsol'ed training and attendance of workshops • Participation in organizations, both professional and non professional 126 Case 4:09-cv-14345-MAG-MKM Document 137-3 Filed 06/28/11 Page 4 of 4

• Personal goals, lifestyle, hobbies, and travel • Participation in volunteer activities and community service • Independent reading, viewing, listening, or writing

High School Diploma Program

Students seeking admission in the high school diploma program are required to have at least 2. years of work or life experience. Alternatively they can also appear for an online test. The eligibility requirements for a high school diploma based on life experience may be satisfied in any of the following ways:

.. Prior job experience in any field • Previous educational achievements • Employer··sponsored training and attendance of workshops • Participation in organizations, both professional and non-professional • Personal goals, lifestyle, hobbies, and travel • Participation in volunteer activiUes and community service • Independent reading, viewing, listening, or writing

Further details could be obtained from our website www.belforduniversity.org 127 Case 4:09-cv-14345-MAG-MKM Document 137-4 Filed 06/28/11 Page 1 of 2

EXHIBITC 128 Case 4:09-cv-1434S-MAG-MKM Document 137-4 Filed 06/28/11 Page 2 of 2 InternatIonalT • ,

. '; hereby confirm that I am joining Belford University & High School as an

honorary memberiOfficer and my designation is .. Ji"? ~;~ --.: Effective from AUJl'..15 2003 ,

i ::lSJrce ihat Belford University & High School can use my name, designation, signature and

ornqr details on its official documents and other communication mediums, as required by the

Uili~ersity & High School. Moreover, I can also mention my designation and association with the

University & High School at different forums or any other communication mediums.

; aij~o agree that Belford University & High School reserves complete rights to terminate my

f;'Y;(lrary tel-ms oi contract at any time with or without any prior notice.

Iftikhar Salman

International Resource Consultant

F' ~ ""~< ~;-t;~._¥'} Sigr)oture. Suitp 221, 802 Pacific Highway Gordon NSW 2072 Sydney Australia. 129 Case 4:09-cv-14345-MAG-MKM Document 137-5 Filed 06/28/11 Page 1 of 2

EXHIBITD 130

PO Box No, 0816-0155? Republic of Panama Phone. 1·866"2:32-7

\ )!~(;AN'WNrJl,t"j '·(~.lJ h!V I LEARNING AND EDL1C:NrION

May 24. 2011

Mr. Dilawar Haq International Resource Consultants Karachi.

Dear Mr. Haq,

I am writing to infonn you that in a lawsuit in which my company is a defendant, (case No. 4:09- cv-14345-MAG-MK.l.V1: -filed in the United States District C,ourt Eastern District of Michigan) we are requested by the Plaintiffs attorney to produce Galvin Felix, Ronald Lloyd and Wyman Richard to depose through video conferencing. These are the honorary faculty members recrUited through International Resource Consultants.

[tis very important for us that these individuals are produced for the deposition. We request you to kindly coordinate with usto set-I:lp a time for deposition at their convenience. We also request you to provide us with their last known addresses so that we can also coordinate with them . directly.

Thank you

Salem Kureshi 131 Case 4:09-cv-14345-MAG-MKM Document 137-6 Filed 06/28/11 Page 1 of 2

EXHIBITE

131 132 "Qf§@i!Ld9-CO- I 434S,.iViAG!JViKIVI -TInCOII/81JLt5J-e jB1IedOef~etJ I fi'age ~ of 1 International RES LiReE CtJNS

Date: June 02, 2011

Mr. Salem Kureshi

OGLE Inc.

Karachi.

Dear Mr. Salem

This is with reference to your letter dated May 24, 2011 seeking the deposition of the honorary faculty members appointed by us. We would like to clarify that in accordance with our understanding with you, we provided you with the consent letters of the honorary faculty. When we were commissioned for this job itwas decided that their coordination will be through us and you will not coordinate directly with them.

They would only be a part of honorary faculty and they won't be required to perform specific jobs for the organization. It was obvious that with such a role they cannot be made part of a lawsuit.

IRe has now decided that it cannot continue its relationship with OGLE Inc. as it is not feasible for us to seek international legal advice on your requests received from time to time.

Through this letter we serve you a notice for termination of all honorary faculty members hired through us.

Though we value our relationship with you, however, under these circumstances it is not viable for us to continue with this relationship.

Sincerely, ~Haq~ Consultant 4:09-cv-14345-MAG-MKM Doc # 142 Filed 07/08/11 Pg 1 of 6 Pg ID 3448 133

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

CARRIE MCCLUSKEY, et al.,

Plaintiffs, Civil Action No. 09-CV-14345 vs. HON. MARK A. GOLDSMITH BELFORD HIGH SCHOOL, et al.,

Defendants. ______/

OPINION AND ORDER (1) DENYING MOTION FOR ENTRY OF DEFAULT, (2) GRANTING IN PART MOTION TO COMPEL, and (3) GRANTING MOTION FOR LEAVE TO AMEND COMPLAINT

I. INTRODUCTION

This is a purported class action involving claims for breach of contract, fraud,

misrepresentation, promissory estoppel, unjust enrichment, RICO, and civil conspiracy. The

named Plaintiffs are Carrie McCluskey and Jaime Yanez. Plaintiffs sue numerous entities and

individuals; however, only two have appeared in this action thus far: Defendants Belford High

School and Belford University (collectively, “Belford”).

Plaintiffs allege that Belford operates a fraudulent scheme involving the sale of sham high

school diplomas and university degrees. Specifically, Plaintiffs allege that Belford operates

Internet websites on which it falsely represents that it is an accredited and legitimate high school

and university, whose diplomas and degrees will be widely accepted by employers, professional

associations, and universities. Plaintiffs are adults who obtained allegedly illegitimate and

unusable high school diplomas or degrees through Belford’s websites.

Now before the Court are the following three motions, all filed by Plaintiffs:

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(1) Motion for entry of default as a discovery sanction; (2) Motion to compel discovery; (3) Motion for leave to amend complaint.

On June 30, 2011, the Court heard oral argument on these matters. For the reasons that follow,

the motion for entry of default will be denied, the motion to compel discovery will be granted in

part, and the motion for leave to amend the complaint will be granted. The Court considers each

motion, in turn.

II. PLAINTIFF’S MOTION FOR ENTRY OF DEFAULT

Plaintiffs ask the Court to enter default against Belford as a sanction pursuant to Federal

Rule of Civil Procedure 37. In its written motion, Plaintiffs argue that they are entitled to this

relief based, in part, on Belford’s representation throughout this litigation that it has a “campus”

and offers job and internship opportunities to its students when, in fact, a recent physical

inspection of Belford’s purported location revealed no campus, but only a small office suite devoid

of any mention of Belford. During oral argument, however, Plaintiffs asserted an entirely

different argument for the relief they seek. Specifically, during oral argument, Plaintiffs’ counsel

argued that Plaintiffs are entitled to entry of default based on Belford’s purported failure to

respond to a discovery request, i.e., a request to inspect premises.1

Regardless of the theory on which Plaintiffs proceed, they are not entitled to the relief

sought. Default under Rule 37 should be imposed only after consideration of the following

factors: (1) whether the party’s failure to cooperate is due to willfulness, bad faith, or fault; (2)

whether the adversary was prejudiced by the dilatory conduct of the party; (3) whether the dismissed party was warned that failure to cooperate could lead to dismissal; and (4) whether less

1 Surprisingly, both counsel claim that the written motion is premised on this theory; however, a review of the motion confirms that Belford’s alleged failure to permit inspection was not the basis for the motion.

2 4:09-cv-14345-MAG-MKM Doc # 142 Filed 07/08/11 Pg 3 of 6 Pg ID 3450 135

drastic sanctions were imposed or considered before dismissal was ordered. Bass v. Jostens, Inc.,

71 F.3d 237, 241 (6th Cir. 1995). On the facts here, Plaintiffs cannot satisfy the third and fourth

elements of the Bass framework, as the Court has not previously warned Belford that its failure to

cooperate could lead to entry of a default, nor has the Court previously imposed or considered less

drastic sanctions. Accordingly, Plaintiffs’ motion will be denied.2

III. MOTION TO COMPEL DISCOVERY

In their motion to compel discovery, Plaintiffs seek to compel the following:

(1) Depositions of three purported Belford officials, Galvin Felix, Ronald Lloyd, and Wyman Richard (“proposed deponents”). Belford has stated in its discovery responses that these individuals hold the positions of principal, school board president, and registrar, respectively. See Belford’s Answers to Plaintiffs’ First Set of Interrogatories at 6 (attached as Exhibit 2 to Plaintiffs’ motion).

(2) Inspection of the originals of approximately 30 pages of documents, copies of which have already been produced by Belford. Plaintiffs wish to inspect the originals because Belford has a history of disseminating false information.

(3) Production of current and last known addresses for 14 purported individuals identified by Belford in discovery as currently holding positions or performing roles at Belford (“affiliated individuals”).3

As to the first and third requests, Belford asserts that the proposed deponents and affiliated

individuals are “honorary faculty members” who “do not provide any services to Belford with

exception of allowing Belford to use their names as faculty members.” According to Belford,

2 Plaintiffs have also failed to substantiate any predicate for imposing Rule 37 sanctions. There has been no showing of a (i) violation of a court order, (ii) serving of an incomplete or evasive discovery response, or (iii) failure to respond to discovery. Fed. R. Civ. P. 37 (a)(4), (b) and (d). Nonetheless, Plaintiffs have revealed other potential misconduct by Belford and its counsel, which has prompted the Court to issue a show cause order why Belford and its counsel should not be sanctioned under Rule 11.

3 The affiliated individuals are: Rashid Mehmood, Bilal Tahir, Ahmer Butt, Lester Jason, Zachary Gale, George Marvin, Raashid Hussain, Galvin Felix, Zayd Tapas, Ronald Lloyd, Russell Smith, Albert Sande, Wyman Richard, and Chaitain Jacob.

3 4:09-cv-14345-MAG-MKM Doc # 142 Filed 07/08/11 Pg 4 of 6 Pg ID 3451 136

these persons are associated with International Resource Consultants” (“IRC”), an entity that is

refusing Belford’s requests to produce or provide further information with regard to these

individuals.4 Belford argues that it has done all it can to respond to the first and third requests, but

that it simply has no control over the referenced individuals, and that its request for assistance from

IRC in arranging depositions has been rebuffed.5 The Court, of course, cannot order Belford to

provide information that it does not have and cannot obtain after exhausting all reasonable efforts.

However, the Court is not presently satisfied that that Belford has established that it has

exerted every reasonable effort to locate and produce the proposed deponents or supply

information regarding the affiliated individuals. Whether reasonable efforts have been exerted

will turn, in part, on the degree to which there is true independence between IRC and Belford.

The Court, therefore, concludes that information must be produced regarding that relationship.

Within 10 days of this Order, Belford shall serve on Plaintiffs’ counsel and submit to Chambers

copies of: (i) all communications or documents of whatever kind sent between IRC (or Dilawar

Haq or counsel for IRC or Mr. Haq) and Belford (or Salem Kureshi or counsel for IRC or Mr.

Kureshi), and (ii) all communications or documents referencing or referring to IRC or Dilawar

Haq. The terms “communication” and “document” include content in any form, whether

electronic or paper, and include any such items, whenever created, that are in the custody, control

or possession of Belford, Salem Kureshi or their counsel. Within 10 days of the date of this Order,

4 Belford states that IRC has severed ties with Belford, and refuses to cooperate or deal with Belford as a result of this lawsuit.

5 Salem Kureshi, Belford’s “Managing Coordinator,” testified that he has never corresponded with any members of Belford’s honorary faculty and that they do “nothing” for Belford. Kureshi Dep. at 49, 52-53 (attached as Exhibit E to Belford’s response brief). He further testified that he would need to contact IRC to communicate with them. Id. Defendants have submitted a letter Mr. Kureshi sent to IRC requesting that the proposed deponents agree to a deposition and the letter back from IRC declining to arrange the depositions. See Exhibits G and H.

4 4:09-cv-14345-MAG-MKM Doc # 142 Filed 07/08/11 Pg 5 of 6 Pg ID 3452 137

Belford’s counsel shall serve and file an affidavit reciting what efforts were made to obtain the

information required under this Order.

As to the second request – the production of original documents and emails – Belford shall

produce within 10 days of the date of this Order any originals that are in its care, custody, or

control, or that can be obtained through reasonable efforts. This includes the originals of all

emails. Within 10 days of the date of this Order, Belford’s counsel shall serve and file an affidavit

detailing the efforts made to locate the originals. If the original emails are located on counsel’s

computers, the affidavit shall so recite.

Plaintiffs shall have until July 28, 2011 to serve and file a supplemental memorandum

addressing whether any additional relief should be granted based on the submissions Belford will

have made by then. Belford will have until August 4, 2011 to serve and file a supplemental

memorandum in response. Each memorandum may not exceed seven pages. Should the Court

determine that a further hearing is required, that hearing will be conducted on August 10, 2011 at

1:30 p.m.

IV. MOTION FOR LEAVE TO AMEND COMPLAINT

Plaintiffs have filed a motion seeking leave to file a third amended complaint. Plaintiffs

propose three amendments. First, Plaintiffs ask that an individual by the name of Elizabeth

Lauber be substituted as the class representative. Lauber would replace Plaintiff McCluskey, the

current class representative, because McCluskey no longer wishes to serve in that capacity.

Second, Plaintiffs seek permission to name Jaime Yanez, who is currently a named plaintiff in this

matter, as a class representative. Finally, Plaintiffs request that it be permitted to add Salem

Kureshi as a party defendant, as discovery has revealed that he is the sole owner of Belford.

Having reviewed Plaintiffs’ motion and Belford’s response thereto, and pursuant to Federal Rule

5 4:09-cv-14345-MAG-MKM Doc # 142 Filed 07/08/11 Pg 6 of 6 Pg ID 3453 138

of Civil Procedure 15(a)(2), the Court grants Plaintiffs’ motion for leave to file an amended complaint. The absence of any prejudice to Belford supports the propriety of granting leave to amend. Inge v. Rock Fin. Corp., 388 F.3d 930, 938 (6th Cir. 2004). Any amended complaint shall be filed within three business days of today’s date.

VI. CONCLUSION

For the reasons discussed above, it is ORDERED as follows:

(1) Plaintiffs’ motion for entry of default [docket entry 119] is denied;

(2) Plaintiffs’ motion to compel discovery [docket entry 127] is granted in part;

(3) Plaintiffs’ motion for leave to amend complaint [docket entry 132] is granted.

Dated: July 8, 2011 s/Mark A. Goldsmith Flint, Michigan MARK A. GOLDSMITH United States District Judge

CERTIFICATE OF SERVICE

The undersigned certifies that the foregoing document was served upon counsel of record and any unrepresented parties via the Court's ECF System to their respective email or First Class U.S. mail addresses disclosed on the Notice of Electronic Filing on July 8, 2011.

s/Deborah J. Goltz DEBORAH J. GOLTZ Case Manager

6 4:09-cv-14345-MAG-MKM Doc # 143 Filed 07/08/11 Pg 1 of 2 Pg ID 3454 139

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

CARRIE MCCLUSKEY, et al.,

Plaintiffs, Civil Action No. 09-CV-14345 vs. HON. MARK A. GOLDSMITH BELFORD HIGH SCHOOL, et al.,

Defendants. ______/

ORDER TO SHOW CAUSE PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 11(c)(3)

The Amended Complaint in this case contains the following allegations:

86. Belford’s website . . . depicts a building with the name “Belford High School” on the side, representing that an actual building exists housing Belford and its campus. On information and belief, this representation is false because no such school building or campus exists.

87. Defendants falsely represent that Belford High School has an actual campus and offers jobs. “Belford offers exciting and prestigious job prospects to its students. The university has a variety of on campus and off campus jobs and internship opportunities that students can explore.”

88. On information and belief, neither Belford High School nor Belford University has a campus, and neither offers internships or jobs.

Am. Compl. ¶¶ 86-88. Other than noting that its website speaks for itself, Belford specifically

denied all three of these purely factual allegations in its Amended Answer, thereby representing to

this Court and to the world that it has a “school building” and an “actual campus.” Am. Answer

¶¶ 86-88.

The evidence that has come to light in discovery and in connection with Plaintiffs’ motion for entry of default has revealed that Belford has no “campus” or “building.” See Resp. at Ex. 8

1 4:09-cv-14345-MAG-MKM Doc # 143 Filed 07/08/11 Pg 2 of 2 Pg ID 3455 140

(letter dated 3/23/11 wherein Belford admits that there is no campus or classrooms at Belford’s

purported Panama location).

Federal Rule of Civil Procedure 11(b)(3) requires that all factual contentions contained in

pleadings submitted to the Court “have evidentiary support or, if specifically so identified, will

likely have evidentiary support after a reasonable opportunity for further investigation or

discovery.” That rule authorizes a court to issue an order to show cause why sanctions should not be imposed “on the Court’s initiative.” Fed. R. Civ. P. 11(c)(3). The Court has decided to exercise its authority to issue a show cause order because of the significant possibility that Belford and its counsel have willfully filed a pleading containing intentional misstatements.

Within 10 days of today’s date, Belford and its counsel shall show cause in writing why they did not violate Rule 11(b)(3) by denying the factual allegations contained at paragraphs 86-88 of the Amended Complaint and why sanctions should not be imposed on Belford and its counsel.

Plaintiffs may file a responsive memorandum not later than seven days from service of Belford’s response to this Order. The submissions of Belford and Plaintiffs may not exceed 10 pages each.

SO ORDERED.

Dated: July 8, 2011 s/Mark A. Goldsmith Flint, Michigan MARK A. GOLDSMITH United States District Judge

CERTIFICATE OF SERVICE

The undersigned certifies that the foregoing document was served upon counsel of record and any unrepresented parties via the Court's ECF System to their respective email or First Class U.S. mail addresses disclosed on the Notice of Electronic Filing on July 8, 2011.

s/Deborah J. Goltz DEBORAH J. GOLTZ Case Manager

2 141 4:09-cv-14345-MAG-MKM Doc # 149 Filed 07/18/11 Pg 1 of 12 Pg 103506

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

ELIZABETH LAUBER and JAIME YANEZ on behalf of themselves and a class consisting of all of those similarly situated, and CARRIE McCLUSKEY, Case No. 2:09-cv-14345-MAG-MKM Plaintiffs, Hon. Mark A. Goldsmith v.

BELFORD lllGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CAL VERT, WILLIAM J. McTIERNEN, SALEM KURESIll and JOHN DOES 1-35,

Defendants.

------,/

RESPONSE TO ORDER TO SHOW CAUSE PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 11(c)(3) 142 4:09-cv-14345-MAG-MKM Doc # 149 Filed 07/18/11 Pg 2 of 12 Pg I D 3507

RESPONSE TO ORDER TO SHOW CAUSE PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 11(c)(3)

Belford High School and Belford University ("Belford") and its counsel take their responsibility to this Court with the utmost seriousness. Neither Belford nor its counsel would intentionally misstate facts or knowingly perpetuate any prior statement later discovered to be incorrect. Indeed, Belford and its counsel have been careful to accurately explain what Belford is and is not. Counsel also takes seriously its ethical duty to be a zealous advocate for Belford, and, yet, not to overreach or overstate Belford's position. Given the gravity of the allegations against

Belford, counsel has gone to great lengths to interrogate their client to ensure that Belford's contentions are supported by a proper factual basis. 1 (See Ex. A, Declaration of Marc L. Newman).

Belford [lIst contacted The Miller Law Firm on July 14, 2010 - just one day before Belford's answer to the Second Amended Complaint was due. Belford's counsel sought, but was denied, a short extension from Plaintiffs to answer the lengthy complaint, leaving counsel with less than 24 hours to complete a retainer agreement, confer with its potential client to assimilate the facts, and respond to each of the 206 allegations in the Second Amended Complaint. To avoid an otherwise certain default, counsel worked exceptionally hard over that 24-hour period to prepare a tailored answer - not a mere blanket denial- responding to the specific allegations.

The denials of paragraphs 86-88 of the Second Amended Complaint were made in good faith and were, to the best of Belford's and its counsel's knowledge at the time, accurate. Counsel has been unable to re-create its state of mind as to Belford's answer to each of the 206 paragraphs one

1 While counsel must take reasonable measures to ensure a proper factual basis, they are also required to zealously advocate for their clients. Michigan Rules of Professional Conduct Rule 1.0. Thus, counsel submits that it should not be the role of counsel to make normative judgments about the relative strength or weakness of their clients proofs - at least outside the context of the confidential attorney-client communications. This is the job of an effective representative of the opposing party - something that Plaintiffs' counsel are well qualified to do here - through the adversary process, including appropriate Rule 56 motions and trial. 143 4:09-cv-14345-MAG-MKM Doc # 149 Filed 07/18/11 Pg 3 of 12 Pg 10 3508

year later, but it did not, and would not, knowingly file a false answer or representation. Given the circumstances surrounding the short time it had to fIle Belford's Answer to Plaintiffs Second

Amended Complaint ("the Answer"), counsel viewed paragraphs 86-88 as being primarily conclusory in nature - not purely factual allegations. For that reason, and others set forth below, each of these allegations could properly be denied. In hindsight, with over a year of factual development, it is now apparent that certain answers could benefit from some elaboration or clarification. However, based on information available to counsel before filing the Answer, counsel believed in good faith that these allegations should be denied. Belford continues to believe that the allegations are properly deniable as set forth in the Declaration of Belford's Managing Coordinator,

Mr. Salem Kureshi, attached hereto, as Ex. B.

After the Answer was filed, Belford and its counsel began preparing a motion to dismiss for lack of jurisdiction2 and thereafter attempted to focus on the issues that they believed were important to advance the case in good faith toward ultimate resolution - specifically, whether the putative class was capable of certification because, assuming the truth of Plaintiffs' allegations, a substantial number of class members (including purported class representative Jaime Yanez himself) would be complicit in any alleged wrongdoing. Belford and its counsel have been very careful in their representations to the Court and were candid with opposing counsel and the Court about what

Belford is and what it is not. For example, Belford and its counsel readily concede that Belford offers diplomas based on life experience (something that is very clearly disclosed throughout

Belford's web site); it offers no courses; and, it has no physical classrooms or school buildings.

Indeed, Belford submits that its students select Belford over the myriad of options available online

2 Defendants Belford High School and Belford University's First Amended Answer to Plaintiffs' Second Amended Complaint and Jury Demand was fIled shortly after the Answer, simply to add two affirmative defenses. None of the factual assertions in the Complaint or in the Answer to the Complaint were revisited.

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for these reasons -- they do not want to take classes or be obligated to go to a physical building.

Belford's belief that life experiences are an appropriate basis to award degrees is no doubt novel and controversial. At fIrst blush, many may believe that degrees should only be based upon classroom training. But many new ideas are controversial and are met with skepticism. Indeed, federal courts often qualify expert witnesses based upon their life experiences pursuant to Fed. R.

Evid. 702. Belford believes that prospective employers should do the same thing and recognize life experiences as appropriate bases to award degrees. What Belford has done mayor may not survive the test of the adversary process, but its novel ways of doing business should not be summarily rejected or adjudicated in a Rule 11 proceeding.

It bears emphasis that Belford and its counsel were forthright about Belford's connection with Panama, the location of its operations and its vendors and honorary faculty. Indeed, for many months Belford offered to make Mr. Kureshi available for deposition to address these issues, which would have clarified any misconceptions. It was only after a hearing on one of Plaintiffs' motions to compel that Plaintiffs [mally capitulated and agreed to take his deposition. At his deposition, Mr.

Kureshi readily offered (without any attempt to evade answering) that Belford's parent, OGLE, is incorporated in Panama but that Belford has its operations in Pakistan.3 He further readily acknowledged the very limited role of Belford's honorary faculty. His deposition testimony was a far cry from a party attempting to obfuscate the truth or mislead counselor the Court. His candid testimony provides important evidence of Belford's good faith and respect for this tribunal.4

3 Belford and its counsel submit that since Belford's parent, OGLE, is incorporated in Panama, there is a factual basis for Belford's statements on its website and to this Court that it is Panama based. However, Belford and its counsel were open and forthright in describing the nature of the Panama offIces that counsel for Plaintiffs were so insistent on inspecting - well before any such inspection had taken place.

4 Plaintiffs even admitted that Mr. Kureshi's testimony was "straightforward". (plaintiffs' Motion for Sanctions, served July 11,2011, p. 8).

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Counsel requests that the Court consider their efforts not to perpetuate any potentially inaccurate denial in the answer during further proceedings in this case. Additionally, since the filing of the Court's Order to Show Cause, Belford has received a demand under Rule 11(c)(2) from

Plaintiffs' counsel asking that Belford correct or withdraw certain disputed statements. The parties have stipulated to grant leave to Belford to fIle an Errata correcting or clarifying these disputed statements. (Ex. C). While Rule 11 (c )(3) does not afford a similar safe harbor, Belford nonetheless requests that the Court consider its efforts in clarifying any prior characterizations as further evidence of its intention to be forthright with the Court.

Belford submits that its assertion that it is "Panama-based" has been characterized as somehow suggesting that it has a physical schoolhouse or other operations in Panama. Belford has not made this representation, and such a characterization is unfair to Belford. Neither Belford norits counsel ever, in the course of this litigation, stated in their pleadings or anywhere else that Belford ever had any type of building that contained classrooms.

Importantly, Belford has no motive to represent that it has classrooms, because it is only online -- a fundamental fact which Belford's pleadings and website repeatedly emphasize. Belford expressly awards degrees based on one's prior life experiences, which negates the need to take classes - in a classroom or online. Indeed, approximately one month after filing its answer in this case, on August 19,2010, Belford stated, in a Motion before this Court, that it offers "life experience degrees based on prior learning recognition" and explained how this process was all completed online:

The website by which one may obtain their degree expressly discloses these de grees as distinguishable from traditional high school or colle ge degrees offered by high schools, colleges, and universities accredited by United States accreditation institutes. Students' eligibility is evaluated on the basis oflife or work experience or on the basis of Belford's online equivalency test. (Motion to Stay Discovery,

4 146 4:09-cv-14345-MAG-MKM Doc#149 Filed 07/18/11 Pg6of12 PglD3511

Docket No. 56, (emphasis added)).

Belford made similar statements in its Reply to Response to Motion to Stay Discovery and Postpone the Rule 26(F) Conference on September 17, 2010 (Docket No. 69). Rather than seeking to promote any confusion or misunderstanding, Belford's counsel actually encouraged Plaintiffs to depose Mr.

Kureshi in order to clarify any misunderstandings Plaintiffs had about Belford.

While Belford maintains it is Panama-based, it never represented that the Panama location had a schoolhouse, school building, classroom or campus. Rather, Belford maintained that the location in Panama was an office. In response to a request for an inspection, it readily provided the address to Plaintiffs, and stipulated in open court to an interior inspection. When Plaintiffs continued to insist on inspecting the interior of the premises, counsel for Belford wrote:

Please be advised this office is Belford's registered office .. .it is not a campus and there are no classrooms there. Additionally, it is our understanding that this address may be utilized by other entities as a registered office. We believe an inspection would be a waste of resources. Should you still wish to inspect this location, please let us know. (Letter from Belford's counsel to Plaintiffs' counsel, March 23, 2011) (Email from Belford's counsel to Plaintiffs' counsel, March 24, 2011): (emphasis added).

Even after being notified that the location was merely a registered office, Plaintiffs conducted the inspection and confirmed what Belford advised Plaintiffs they would find. There was no attempt to conceal or misstate the nature of the Panama location.

Because Rule 11 sanctions represent an extraordinary remedy, courts seldom issue them and then only as a "(very) last resort." Louis Vuitton Malletier v. Dooney & Bourke, Inc., No. 04-CV-

5316 (RMB), 2006 WL 2807213 at *6 (S.D.N.Y. Sept. 28, 2006). Sanctions should not be meted out liberally but should apply only in especially egregious cases. See Mapother & Mapother, P.s. C. v. Cooper, 103 F.3d 472, 478 (6th Cir. 1996). Here, Belford and its counsel submit that their conduct was far from egregious -- on the contrary, its conduct was appropriate, because Belford is able to legally and factually support its answers to Paragraphs 86-88.

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"[I]n this circuit, the test for the imposition of Rule 11 sanctions is whether the individual attorney's conduct was reasonable under the circumstances." Mann v. G & G Mfg., Inc., 900 F.2d

953,958 (6th Cir. 1990) (emphasis added); Century Prods., Inc. v. Sutter, 837 F.2d 247, 253 (6th

Cir. 1988). Further, other circuits have held that a Rule 11 motion should not be granted "unless a particular allegation is utterly lacking in support." O'Brien v. Alexander, 101 F.3d 1479, 1489 (2d

Cir. 1996). Belford and its counsel strenuously deny that they "willfully filed a pleading containing intentional misstatements." However, subsequent to the initial 24-hour period during which counsel prepared the Answer, additional information has beeillearned that call for clarification of certain responses. To determine whether sanctions are appropriate, the attorney's conduct is evaluated at the time the pleading, motion or other paper is signed, and all doubt must be resolved in favor of the signer. Thomas v. Capital Security Services, 836 F.2d 866, 873 (5th Cir. 1988).

A. Belford and its counsel have a proper basis for the answers to Paragraphs 86-88, but will provide greater specificity in their answers to the 'Third Amended Complaint

Belford's denials in Paragraphs 86-88 have factual support and were answered to the best of counsel's ability given the truncated time period for the filing of this pleading.

1. Belford had a proper basis for its answer to Paragraph 86

Paragraph 86 of the Second Amended Complaint alle ged:

Belford's website, www.belfordhighschool.com. depicts a building with the name "Belford High School" on the side, representing that an actual building exists housing Belford and its campus. On information and belief, this representation is false because no such school building or campus exists.

The existence of an image on a website was not intended as a representation that Belford offered class at a physical school. As noted in Belford's Response to Plaintiffs' Motion for Entry ofDefault

(Docket No. 125), the image on the website is not meant to represent that Belford has a campus -- indeed the website repeatedly boasts that students will not have to attend classes as it is an online program. Rather, the image of the building is a stock photo used in a manner typical of many

6 148 4:09-cv-14345-MAG-MKM Doc # 149 Filed 07/18/11 Pg 8 of 12 Pg ID 3513

business websites.5 In this specific instance, the website does not intend to represent "that an actual building exists." In fact, that site states that an applicant can receive a high school degree in fifteen days "[w]ithout any hassle of attending classes." As set forth in the declaration of Mr. Kureshi,

Belford likewise believed the allegation was properly deniable because, in addition to confmning that the image was not meant to represent that an actual schoolhouse exists, Belford noted that it characterizes its website as an" e-campus," which is commonly used among schools offering online programs.6 (Ex. D, e-campus examples). Accordingly, counsel believed this allegation waspropedy deniable at the time it was made. Whether reasonable minds could differ on the representation intended by this photo is properly an issue for trial, or possibly a Rule 56 motion, but Belford's denial of this conclusory allegation had a legitimate basis when made. Rule 11 should not be used to raise issues as to the legal sufficiency of a claim or defense that more appropriately can be disposed of by a motion to dismiss, a motion for judgment on the pleadings, a motion for summary judgment, or a trial on the merits. Federal Pleading and Practice § 1336.37

5 For example, law firms routinely have buildings depicted on web sites that are not their actual place of business. (See e.g. www.sheehanlawyers.com; http://www.resnicklaw.ne!i).

6 Belford never perpetuated the idea that it had a physical campus. While it did state in some pleadings that Belford was "located in Panama" and "Panama-based" because it is incorporated under the laws of Panama, these arguments were not put forth as factual assertions, but merely argument of counsel. It is not unlike the Plaintiffs continually representing to this Court that Belford "has no physical location" (Plaintiffs' First Set of Requests for Admissions to Defendants Belford High School and Belford University), and "does not actually exist anywhere on the face of the Earth." (Docket No. 104, Plaintiffs' Supplemental Brief in Response to Belford's Motion to Dismiss for Lack of Personal Jurisdiction, at 5, n. 3). This is not sanctionable conduct. Belford's counsel understands that by making these statements Plaintiffs intend to convey that Belford does not operate a schoolhouse or classroom. Indeed, Plaintiffs candidly recognize that "Belford is actually located in a Karachi, Pakistan apartment." (plaintiffs' Motion for Sanctions, p. 3). Plaintiffs' later recognition that Belford is operated in Pakistan does not mean the prior argument of counsel was in any way sanctionable.

7 See also Safe-Strap Co. v. Koala Corp., D.C.N.Y.2003, 270 F.Supp.2d 407 (defendant'S Rule 11 motion was de facto a summary judgment motion), quoting Wright & Miller; Rule 11 should not be used to raise issues of legal sufficiency. Smith & Green Corp. v. Trustees of Constr.

7 149 4:09-cv-14345-MAG-MKM Doc # 149 Filed 07/18/11 Pg 9 of 12 Pg ID 3514

2. Belford had a proper basis for its answer to Paragraph 87

Paragraph 87 of the Second Amended Complaint alleged:

Defendants falsely represent that Belford High School has an actual campus and offers jobs. "Belford offers exciting and prestigious job prospects to its students. The university has a variety of on campus and off campus jobs and internship opportunities that students can explore," according to www.belfordhighschool.cmnlschoollinsideBelford.html.

Belford maintains that its website constitutes an "e-campus", and that, at one time, it offered jobs to

Belford students and alumni as recruiters. (See Ex. B). Further, Belford believes that one of the primary advantages that its diplomas offer is the ability to obtain jobs (or even internships) because they have obtained the life experience diplomas. Indeed, there are hundreds of examples of Belford students who are employed and proudly boast their Belford diplomas. (See Ex. E, Sample of Online

Printouts). Moreover, like Paragraph 86, counsel interpreted this sentence not to be a purely factual allegation but to be conclusory. As to the second sentence, Belford properly answered that its website speaks for itself.

3. Belford had a proper basis for its answer to Paragraph 88

Paragraph 88 of the Second Amended Complaint states:

On information and belief, neither Belford High School nor Belford University has a campus, and neither offers internships or jobs.

This allegation was also properly denied, for reasons similar to those set forth in Section A2., above.

Belford maintains that its website constitutes an "e-campus", and that, at one time, it offered jobs to

Belford students and alumni as recruiters. (See Ex. B).

Whether reasonable minds could differ on this issue is more properly an issue for trial or

Indus. & Laborers Health & Welfare Trust, D.C.Nev.2003, 244 F.Supp.2d 1098, citing Wright & Miller; Dome Patent L.P. v. Permeable Technologies, Inc., D.C.N.Y.1999, 190 F.R.D. 88, quoting Wright & Miller; Truong v. Smith, D.C.Colo.1998, 28 F.Supp.2d 626 (motion for sanctions denied as arguing merits of plaintiffs claim, more properly brought as motion for summary judgment).

8 150 4:09-cv-14345-MAG-MKM Doc # 149 Filed 07/18/11 Pg 10 of 12 Pg 103515

possibly a Rule 56 Motion. Under the circumstances in which the complaint was required to be answered, the answer to Paragraph 88 was reasonable and was in no way a knowing attempt to mislead. To determine whether a reasonable inquiry has been made, the Court should consider the time available to the attorney to prepare the document, whether it contained a plausible view of the law, and the complexity of the legal issues involved. See Brown v. Federation of State Med. Bds.,

830 F.2d 1429, 1435 (7th Cir. 1987)( overruled on other grounds). Upon closer scrutiny of Paragraph

88, and with the benefit of more than 24 hours to review the complaint, counsel acknowledges that the allegation could reasonably be read together with the two prior allegations (although counsel is not aware of a Rule or case law requiring an answer to be construed in such a manner) and answered with these paragraphs in mind. Accordingly, in response to Plaintiffs' demand under Rule II(c)(2),

Belford intends to provide a more detailed response setting forth its position. For instance, Belford will admit there is no physical campus, but that there is an e-campus.

Courts and commentators have recommended against imposing sanctions against an answering defendant because of the important qualitative difference between a plaintiff who has many months to investigate a complaint and a defendant who has only 20 days to respond:

While a plaintiffs attorney may have had months to investigate research, prepare, and fIle a complaint, a defendant's attorney who responds to the complaint with an answer has only twenty days from the date of service to do so. As a matter of common practice, therefore, many answers filed in federal court contain averments or affIrmative defenses based on facts which defendant's counsel has not affmned through objectively reasonable inquiry and which are therefore sanctionable pursuant to Rule 11. This practice is dangerous and should be discouraged, particularly in light of the relative ease with which answers can be amended later in the litigation. 47 AMJUR TRIALS 521.

This applies with even greater force here as counsel only had 24 hours to respond.

The primary purpose of Rule 11 sanctions is to deter future conduct of a like nature. Kaye v.

Acme Investments, Inc., 2008 WL 4482304, *1 (E.D.Mich. 2008). "Because deterrence, not compensation, is the principal goal of Rule 11, courts should impose the least restrictive sanction

9 151 4:09-cv-14345-MAG-MKM Doc#149 Filed 07/18/11 Pg11of12 PgID3516

that is likely to deter." Holling v. U.S., 1996 WL 200731, at *6 (B.D. Mich. 1995) citing Jackson v.

Law Firm of O'Hara, Ruberg, Osborne and Taylor, 875 F. 2d 1224, 1229 (6 th Cir. 1989). The

Miller Law Firm has more than 200 years of collective legal work among its 20 attorneys. No attorney in the ftrm has ever been sanctioned pursuant to Rule 11.8 That this Honorable Court is even contemplating sanctions against counsel is startling and, candidly, terrifying. We askthe Court to take into account The Miller Law Firm's long history of respect for the Court, its rules and the ftrm's ethical obligations in hundreds of cases and to weigh the harm any sanction would cause to the fIrm's reputation. Further, Belford is in the process of clarifying its statements by submitting

Errata and will answer the Third Amended Complaint with greater speciftcity to explain its reasons for denying certain allegations. Belford and its counsel respectfully request that the Court vacate the

Show Cause Order and decline to impose Rule 11 sanctions.

TIlE MILLER LAW FIRM, P.C. FINK + ASSOCIATES LAW Attorneys for the Belford Defendants Attorneys for The Miller Law Firm, only

By: /s/ Marc L. Newman By: /s/ David H. Fink Marc L. Newman (P51393) David H. Fink Devon P. Allard (P71712) 100 West Long Lake Road; Suite111 950 West University Drive, Suite 300 Bloomfield Hills, Michigan 48304 Rochester, MI 48307 (248) 971-2500 (248) 841-2200 [email protected] [email protected]

8 While it is possible that very minor discovery sanctions have been imposed over that very broad experience in thousands of cases, none comes to mind and any that occurred would be an extraordinarily rare event.

10 152 4:09-cv-14345-MAG-MKM Doc#149 Filed 07/18/11 Pg12of12 PgID3517

CERTIFICATE OF SERVICE

I hereby certify that on July 18, 2011, I electronically fued the foregoing document with the

Clerk of the Court using the ECF system, which will automatically send notification of such fIlingto all attorneys of record registered for electronic fUing.

Respectfully submitted,

TIlE MILLER LAW FIRM, P.C. Attorneys for the Belford Defendants

By: /s/ Marc L. Newman Marc L. Newman (P51393) Devon P. Allard (P71712) 950 West University Drive, Suite 300 Rochester, Michigan 48307 -1887 (248) 841-2200 [email protected] 153 4:09-cv-14345-MAG-MKM Doc # 149-1 Filed 07/18/11 Pg 1 of 1 Pg ID 3518

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

INDEX OF EXHmITS

Exhibit A Declaration of Marc L. Newman

Exhibit B Declaration of Belford's Managing Coordinator, Mr. Salem Kureshi

Exhibit C Stipulated Order Regarding Plantiffs' Motion for Sanctions Pursuant to Rule 11, Served July 11,2011

Exhibit D e-campus Examples

Exhibit E Sample of Online Printouts 154 4:09-cv-14345-MAG-MKM Doc # 149-2 Filed 07/18/11 Pg 1 of 6 Pg 10 3519 EXHIBIT A 155 4:09-cv-14345-MAG-MKM Ooc # 149-2 Filed 07/18/11 Pg 2 of 6 Pg 103520

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

ELIZABETH LAUBER and JAIME YANEZ on behalf of themselves and a class consisting of all of those similarly situated, and CARRIE McCLUSKEY, Case No. 2:09-cv-14345-MAG-MKM Plaintiffs, Hon. Mark A. Goldsmith v.

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, WNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLEP. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN, SALEM KURESHI and JOHN DOES 1-35,

Defendants.

GOOGASIAN FIRM, P.C. THE MILLER LAW FIRM, P.C. By: Thomas H. Howlett, Esq. By: Marc L. Newman (P5l393) Attorney for Plaintiffs Devon P. Allard (P7l712) 6895 Telegraph Rd Attorneys for Defendants Belford High School Bloomfield Hills, MI 48301 and Belford University (248) 540-3333 950 West University Drive, Suite 300 Rochester, MI48307 (248) 841-2200

DECLARATION OF MARC L. NEWMAN

Marc L. Newman, declares and states as follows:

1. I have personal knowledge of the following facts and if called as a witness I would competently testify as to these facts.

2. I am an attorney, duly licensed to practice in the State of Michigan, and am a partner in the The Miller Law Firm, P.C. (the "Firm"). 156 4:09-cv-14345-MAG-MKM Doc # 149-2 Filed 07/18/11 Pg 3 of 6 Pg 103521

3. I received my law degree in 1994 from the University of Michigan Law School and was admitted to practice in Michigan in the same year. I was admitted to practice before this

Court in 1994.

4. The Firm takes its obligations to the Court very seriously and would never make a knowing misrepresentation to any Court. Indeed, until now, no one in the Firm has been show caused under Rule 11 by any court, and to my knowledge, none of the attorneys in my office have re~eived Rule 11 sanctions of any kind. I am deeply concerned about the prospect of being sanctioned pursuant to Rule 11, and even being the subject of an order to show cause under Rule

11.

5. I am authorized to make this declaration on behalf of the Firm.

6. The Firm has an excellent reputation among the Bar. Both the Firm and I are A V rated by Martindale Hubbel. I have been selected by Michigan Superlawyers Magazine in the

Top 100 in Michigan in 2008, 2009, 2010 and 2011.

7. On July 14, 2010, the Firm received a phone call from a representative of Belford

High School and Belford University ("Belford") requesting representation in regard to the above­ captioned lawsuit.

8. The Firm made an initial determination that there were significant issues as to personal jurisdiction over Belford, and that Belford may want to consider filing a motion to dismiss for its first responsive pleading.

9. It was quickly determined that the answer to the Complaint was due one day later, on July 15, 2010.

10. As a result, my partner, Powell Miller, telephoned Plaintiffs' counsel, Dean

Googasian of The Googasian Firm, P.C., to request an extension on behalf of Belford to file its

2 157 4:09-cv-14345-MAG-MKM Doc # 149-2 Filed 07/18/11 Pg 4 of 6 Pg 103522

answer to the then-pending complaint because the Firm was still finalizing its representation agreement with Belford and also would be significantly disadvantaged to prepare an answer to plaintiffs' 206-paragraph complaint in approximately 24 hours. The Firm was also considering filing a motion to dismiss for lack of personal jurisdiction in lieu of an Answer.

11. Mr. Googasian refused the Firm's request and did not grant Belford an extension.

12. Mr. Googasian's refusal placed great stress on Belford and the Firm to ensure that an answer to the 206-paragraph complaint was filed within the approximately 24 hours remaining to respond.

13. I feared that Belford would be defaulted if it did not file an answer to the Second

Amended Complaint by the next day. There was no time to draft a motion to dismiss in lieu of an answer, which would have been my preferred course of action.

14. As a result, the Firm immediately began preparing an answer to the Second

Amended Complaint.

15. Over the course of the next day, I had numerous telephone calls with Belford to discuss each of the allegations in the Second Amended Complaint and to interrogate Belford to ensure there was a proper basis for Belford's proposed responses. Without disclosing the content of communications with our client, Belford and my firm were very careful not to make any misstatements within the Answer and to ensure a proper basis existed to support each contention.

16. Since we did not have sufficient time to prepare a motion to dismiss before answering due to the short time limit we were faced with, we had to file the answer. I viewed the answer at the time to be secondary to the motion to dismiss. Three associates from the Firm assisted me in preparing, fmalizing and filing Belford's Answer to the Second Amended

Complaint. We succeeded in filing the Answer on time, saving Belford from finding itself in

3 158 4:09-cv-14345-MAG-MKM Doc # 149-2 Filed 07/18/11 Pg 5 of 6 Pg 10 3523

default. I also routinely discuss this matter with other partners at the Firm to strategize about the case, to bring them up to speed on significant developments, and to ensure that The Firm is properly fulfilling our duties to our client and to the Court.

17. Because of the limited time to answer, our investigation of the underlying allegations was primarily focused on our discussions with and interrogation of Belford and our review of Belford's website and other internet websites.

18. We next turned our attention toward drafting a motion to dismiss on the grounds that Plaintiffs lacked personal jurisdiction over Belford.

19. As we continued to work on the case, it became clear that, assuming the truth of

Plaintiffs' allegations, members in this purported class action had likely themselves committed wrongful conduct or were complicit in any allegedly wrongful conduct. Thus, we amended the

Answer to the Second Amended Complaint to include the AffIrmative Defenses of unclean hands and the voluntary pay doctrine. We did not revisit any of the other allegations in the complaint or responses in the answer at that time.

20. At the time of filing the Amended Answer we believed that the responses to each of the allegations in the Amended Complaint were accurate. The Firm viewed certain of the allegations as argumentative and conclusory, and, as a result, decided to error on the side of denying allegations of that nature, and then Plaintiffs' counsel would have the ability to explore our denials in discovery, should an expected motion to dismiss not succeed.

2l. Initially, we understood that Belford was operated out of Panama, and referred to

Belford as being "located in Panama." Since the time we wrote that, we learned, as in any other case, more information about the factual details. For example, we learned that Belford was actually operated out of Pakistan, not Panama, but the Firm had no reason to believe Belford was

4 159 4:09-cv-14345-MAG-MKM Doc # 149-2 Filed 07/18/11 Pg 6 of 6 Pg 10 3524

not operating at least to some degree in Panama. We later learned that Belford had a registered office in Panama. Therefore in subsequent filings before the Court, we refined this statement and referred to Belford as "Panama-based." We never intended to represent that Belford had physical classrooms or that Belford operates a school building anywhere, including in Panama.

22. We never once, in the course of this litigation, stated in pleadings or anywhere else that Belford ever had a campus (or any type of building where students could go to take classes).

23. During the course of the litigation, I have had a number of very candid discussions about Belford and the case with Thomas Howlett at the Googasian firm. It is my impression from these discussions that Mr. Howlett never was under the impression that Belford had physical classrooms or a physical school building in Panama or elsewhere.

/s/ Marc L. Newman Marc L. Newman

5 160 4:09-cv-14345-MAG-MKM Doc # 149-3 Filed 07/18/11 Pg 1 of 5 Pg ID 3525

EXHIBITB 161 4:09-cv-14345-MAG-MKM Doc # 149-3 Filed 07/18/11 Pg 2 of 5 Pg 103526

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

ELIZABETH LAUBER and JAIME YANEZ on behalf of themselves and a class consisting of all of those similarly situated, and CARRIE McCLUSKEY, Case No. 2:09-cv-14345-MAG-MKM Plaintiffs, Hon. Mark A. Goldsmith v.

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MEL VILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN, SALEM KURESHI and JOHN DOES 1-35,

Defendants.

GOOGASIAN FIRM, P.C. THE MILLER LAW FIRM, P.C. By: Thomas H. Howlett, Esq. By: Marc L. Newman (P51393) Attorney for Plaintiffs Devon P. Allard (P71712) 6895 Telegraph Rd Attorneys for Defendants Belford High School Bloomfield Hills, MI 48301 and Belford University (248) 540-3333 950 West University Drive, Suite 300 Rochester, MI 48307 (248) 841-2200

DECLARATION OF SALEM A. KURESHI REGARDING SHOW CAUSE ORDER

1. My name is Salem A. Kureshi. I am a resident of Pakistan over the age of twenty-one. I have personal knowledge of the following facts, and if called as a witness I would be competent to testify as to the matters contained herein.

2. I am the Managing Coordinator for Belford High School and Belford University. 162 4:09-cv-14345-MAG-MKM Doc # 149-3 Filed 07/18/11 Pg 3 of 5 Pg ID 3527

3. I am the founder and owner of The Organization for Global Learning Education

("OGLE"). OGLE is the parent company of Belford High School and Belford University.

4. I, on behalf of Belford and myself, take my responsibilities in this lawsuit very

seriously.

5. As I indicated in my deposition, I have legal counsel and a legal assistant here in

Pakistan who are assisting me in this case. Although I only speak limited English, they have translated all of the court filings and other documents; including this Declaration, to me. I have reviewed every pleading and court document filed by Belford to confirm that the statements in those documents are truthful. To the best of my knowledge, every court filing in this case made

by Belford is true and accurate.

6. Additionally, it is the habit of my counsel to send me drafts of pleadings in order for me to review prior to filing with the Court or serving on Plaintiffs. I routinely offer my input and make clarifications which are then incorporated into the final versions of the documents.

7. I have reviewed the Court's Order to Show Cause Pursuant to Federal Rule of

Civil Procedure 11(c)(3) which called into question Belford's answers to the allegations in

Paragraphs 86-88 of the Second Amended Complaint.

8. Paragraph 86 of the Second Amended Complaint stated:

Belford's website, www.belfordhighschool.com. depicts a building with the name "Belford High School" on the side, representing that an actual building exists housing Belford and its campus. On information and belief, this representation is false because no such school building or campus exists.

9. Belford answered as follows: "The Belford Defendants' websites speak for themselves, the remaining allegations are denied."

10. With respect to Paragraph 86, I believe that this allegation was properly answered because, while the website does have an image of a building, the image does not, and is not

2 163 4:09-cv-14345-MAG-MKM Doc # 149-3 Filed 07/18/11 Pg 4 of 5 Pg 10 3528

intended to, represent that an actual school building with a campus exists. Such a representation runs directly contrary to Belford's fundamental model of offering online diplomas. Belford would never intend to imply that a school building exists because we only offer online programs, and Belford's students do not want to go to classrooms.

11. Belford wishes to point out that, while it does not have a physical campus,

Belford believes that its website qualifies as what is known as an "e-campus". E-campuses are very commonly utilized by organizations offering online programs.

12. If further clarification of this explanation is required, I am happy to clarify by submitting to another deposition.

13. Paragraph 87 states:

Defendants falsely represent that Belford High School has an actual campus and offers jobs. "Belford offers exciting and prestigious job prospects to its students. The university has a variety of on campus and off campus jobs and internship opportunities that students can explore," according to www.belfordhighschool.comlschool/insideBelford .html.

14. Belford answered as follows: "The Belford Defendants' websites speak for themselves, the remaining allegations are denied."

15. With respect to Paragraph 87, this allegation was properly answered because 1)

Belford never represented that it had an actual physical campus even though it has an e-campus, and 2) at the time the language was on the website, Belford had offered what it considers job or internship opportunities to its students. The job or internship opportunities relate to Belford's student recruiter program, where Belford sought to pay Belford students and alumni to recruit and counsel potential students. As an example, it is my understanding that Phoenix University has over 2000 such recruiters that carry out the student emollment functions. Today, Belford pays referral fees to students and alumni who recruit new students.

3 164 4:o!:f-6v=r4345=MAG:MRM Doc # 149-3 Filed 07/18/11 Pg 5 of 5 Pg I D 3529

16. (f further clarification of (his explanation is required, I am happy to clarify by

submitting to another dcpo::11tion.

17. Paragraph R8 of the Second Amended Complaint states:

Onink'rmatHll1 and belief, neither BeU{1rd High School nor BeiJ()rd Univcr:-;ity ha~ a campus, and ncitht~r offers intemships or jobs.

18. Belford answered as f()]Jows: "The Bdflmi Defendants deny this allcgat!(ln."

19. With regard to Paragraph 88. thi$ allegation is properly answered hecause Belford

did, at the time the language was on the website, otter job and internship opportulliti(s as student

recruiters through its e-campus.

20. 11' further claril1cation of tJlis explanation is required, I am happy t() darifY by I sUbmitting to another deposition. I - I 21. I am

mtend tU'Nork \vilhmy counsci to ensure that the Third Alnended Complaint is iU1swcraJ wit],

b1feater specificity than the Ans"ver to th(; Second Amended Complain!

I declare under penalty of perjury under the laws cf rhe United States of America. and pmsu

By: .., ... '" ...... - ...... -.~ .. --.--"-... " .... ~. Salem A. Kureshi

Date: July 18,20 II 165 4:09-cv-14345-MAG-MKM Doc # 149-4 Filed 07/18/11 Pg 1 of 3 Pg ID 3530 EXHIBITC 166 4:09-cv-14345-MAG-MKM Ooc # 149-4 Filed 07/18/11 Pg 2 of 3 Pg 103531 4:09-cv-14345-MAG-MKM Doc # 146 Filed 07/14/11 Pg 1 of 2 Pg ID 3491

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICmGAN

ELIZABETH LAUBER and JAIME YANEZ on behalf of themselves and a class consisting of all of those similarly situated, and CARRIE McCLUSKEY, Case No. 2:09-cv-14345-MAG-MKM Plaintiffs, Hon. Mark A. Goldsmith v.

BELFORD mGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN, SALEM KURESHI and JOHN DOES 1-35,

Defendants.

STIPULATED ORDER REGARDING PLAINTIFFS' MOTION FOR SANCTIONS PURSUANT TO RULE 11 SERVED JULY 11, 2011

Plaintiffs having served a Rule 11(c)(2) letter and proposed Motion for Sanctions on

Defendants Belford High School and Belford University ("Belford") on July 11, 2011; and

Belford having requested an opportunity to correct, withdraw and/or clarify statements challenged by Plaintiffs; and the parties having stipulated to the relief herein;

IT IS HEREBY ORDERED that:

1. Defendants Belford High School and Belford University are granted leave to file an Errata correcting, withdrawing, or clarifying the challenged contentions and denials set forth in Plaintiffs' Motion for Sanctions on or before August 1,2011. 167 4:09-cv-14345-MAG-MKM Doc # 149-4 Filed 07/18/11 Pg 3 of 3 Pg 103532 4:09-cv-14345-MAG-MKM Doc # 146 Filed 07/14/11 Pg 2 of 2 Pg 103492

Dated: July 14, 2011 slMark A. Goldsmith Flint, Michigan MARK A. GOLDSMITH United States District Judge

CERTIFICATE OF SERVICE

The undersigned certifies that the foregoing document was served upon counsel of record and any unrepresented parties via the Court's ECF System to their respective email or First Class U.S. mail addresses disclosed on the Notice of Electronic Filing on July 14,2011.

sIDeborah J. Goltz DEBORAH J. GOLTZ Case Manager Stipulated By: lsI Thomas H. Howlett (with consent) lsI Marc L. Newman Dean M. Googasian (P57346) Marc L. Newman (P51393) Thomas H. Howlett (P53995) Devon P. Allard (P71712) The Googasian Firm, P.C. The Miller Law Firm, P.e. Attorneys for Plaintiffs Attorneys for Defendants Belford 6895 Telegraph Road High School and Belford University Bloomfield Hills, MI 48301-3138 950 W. University Drive, Suite 300 248-540-3333 Rochester, Michigan 48307-1887 (248) 841-2200

2 168 4:09-cv-14345-MAG-MKM Doc # 149-5 Filed 07/18/11 Pg 1 of 10 Pg 103533

EXHIBIT'D 169 4:09-cv-14345-MAG-MKM Doc # 149-5 Filed 07/18/11 Pg 2 of 10 Pg ID 3534 '.'

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EXHIBITE 179 Mohamed Pemb4:09-cv-14345-MAG-MKM Doc # 149-6 Filed 07/18/11 ~1¢fv4'w.fIil<{J1:Ilih1ali4i/pemba.mohame(

Mohamed Pemba 1 Add as Friend I Worked at Kinetics (machine worker) Studied Criminal Justice at Concordia University, Uves in Portland, Oregon In a relationship with Sahra Adan From Portland, Oregon

Education and Work

Employers KineticS machine worker· Feb 2010 to Sep 2010 . Wilsonville, Oregon Wall ManufactUring Medical Parts in a Room Tempreture Warehouse! Info Friends Volt Information Sciences Productions . Oct 2009 to Apr 2010 . Lake Oswego, Oregon Bake and Transfer In a relationship with

sahra Adan Epson aeanroom Associattes . Aug 2008 to Oct 2009 . Hillsboro, Oregon s~ Loading and Unloading parts thru the Assembly-Une. Friends (89) College Concordia University, Oregon Halento Musa Class of 2009 . Criminal Justice

Jay Nice High School Belford High School Class of 2008 Mohamed Dalmar

Palo Duro High School Hibo Abdi aass of 2007

Abhinesh Gounder Arts and Entertainment

Music BarwakoAj

Aminah Maalim Soul R&B Rap Hip hop music

Ashreet Padarath Books

Michael Owen

Chelsea Glovis

6/2/2011 ~:OS PM 180 Debora Collins4:09-cv-14345-MAG-MKM Doc # 149-6 Filed 07/18/11 Pg 3Iilip4-/ /~.thl:~R.com/debora.colli

I Search.

Debora COllinsl.. Add as Friend I Worked at Self Employed OlIJdcare Provider (Child Care) Studying Business Management at Grand Rapids Community College Lives in Dorr, Michigan Married From Grand Rapids, Michigan

Wall

Info Education and Work Friends Employers Self Employed Childcare Provider Friends (220) Child Care • Jan 1988 to Sep 2007 • Grand Rapids, Michigan Care for children Chnell Guydon Blaylock Gentiva Health SelVices Home Health Provider' Apr 2001 to Aug 2007 . Grand Rapids,

I DinaWilks Michigan Home care

bus Driver Ahmed Majeed Bus driver (hope network) . 2002 to 2004 . Grand Rapids, Michigan drove bus Jasmine Jah'Nay School Bus Driver Bus Driver' 1986 to 1996 • Grand Rapids, Michigan Drove for Catholic Central Marque/ Cunningham More

Yvette R Booker College Grow Grand Rapids Opportunties for Women Class of 2004 . Marketing' MYOB / Minding your own Business

Lakendra Jeffries

Grand Rapids Community College Oass of 2013 • Business Management • Business Administlation . Gail Morley Associates Degree • Entrepreneurship

Martray Col/ins High School Belford High School Class of 2010 Sherry Hodges­ Beckford Ottawa Hills Class of 1975 Family

_ Janice Campbell Chelsea Glovis I Alyssa Wood Chat (Offline)

10ft 181 Bruce DeCarlo I41a.Sile61h14345-MAG-MKM Doc # 149-6

Bruce DeCarlo Sales Consultant al Satas N. W Group

GreatorlosAngeles Ar8a ~~B

current • salas Conoullanl at _n.w Group

Past • Regional Salas Manager at TIll INC Sales Manager at _ DlMllnc Sales ~ at Linzer ProcaJcts Corp

10 cannocIions

Bruce DeCarlo's Summary

GI"", my a track record CJf success in _ .....agement. actia\ingaggressile budgeted sales for 20+ years. I am confident you ",I find me the idaal canddalo II> ful'il your a.rrent regianaildAicl -. management _. A C

• Achi .... ng company budgeli.:fsales 110%!g plan in 2007 and g..... ng business 33% frIrn 2007!g 2008 fo< TIll Inc. • Setting new sales standards at _ OWl Inc., re"""1'in9the i_at dilision's imago and ",_ine, and penetrating a newmarlalt. • Producing -'ds;t grUWI1 and dai...nng $1 Min new business II> the West Coast terrilDly fo< Linzer Products Corp.

~ yaur _ CJf my resume, ..nch further details tho _ and other caree, hig/16ghls, please contactme 00 v.e mat dscuso how my strongIIIs in saIesI1amtcry dNoIopment and account roIBnIion COUd ba appBad 10 the banollt oIyaur COI1l'Of1)'. I look fcrWard III your response and thank you fo< your time and considor.llion.

Bruce DeCarlo's Experience Sale. Cenlultant SaIeIN,WGroup Bulding Mata~b industry Jamwy 200e - P.... nt (3 ye ... 7 months)

Regional Sal.1 Manager TSlINC PrIwoIeIy Held; 5D1~11'JOO efl1lltlyeea; Meehaniclll or Indusb1lll Engln.arlng Industry' JLlly2005 - Fobruooy2oo8 (2 yea .. 8 months) West Coast Regional Sales Manager, Bry acti.... ng sales CJf 3 Mlion T.

Regional Sale. Manager Rod DavIlInt: Prt.rately He~ 2D1~.e~ra.~ ~ .... mer GoDds industry J..,. 2000 - July 2005 j5 years 2 months) RBgionai SaIos Manager I WestCoast RegIon, 1_31 Sates and Ccnsumar Goods. Do\oeIope and grew tsrrltory w MIg Reps and Iw:l slap dstribution channel partners.

Regional S.I.. Manage r Unzer ProduclsCorp pnv.tBty Held;. 201-500 I!IfI1Iloy.n; Consumer Good. Indultry May 1985- May 2000 (14 ye ... t month) Accounl Rep II> Sales Manager West Coast Region. Build tarotory, 'MJrI< ",III Ml'g Reps and train, mo.i.te empoyee CJf 111180 COf11I8I1Y employees in field~ Grow business and_OO • presenca in _ place willi Ina of goods.

Bruce DeCarlo's Education

Bruce DeCarlo's Additional Information

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lof2 7h8/20111:':lQ PM 182 Cheryl Hansen

From: [email protected] Sent: Monday, July 18, 2011 9:05 PM To: [email protected] Subject: Activity in Case 4:09-cv-14345-MAG-MKM McCluskey et al v. Belford High School et al Response (Free)

This is an automatic e-mail message generated by the CM/ECF system. Please DO NOT RESPOND to this e-mail becausethemail box is unattended. ***NOTE TO PUBLIC ACCESS USERS*** Judicial Conference of the United States policy permits attorneys of record and parties in a case (including pro se litigants) to receive one free electronic copy of all documents filed electronically, if receipt is required by law or directed by the filer. PACER access fees apply to all other users. To avoid later charges, download a copy of each document during this first viewing. However, if the referenced document is a transcript, the free copy and 30 page limit do not apply.

U.S. District Court

Eastern District of Michigan

Notice of Electronic Filing

The following transaction was entered by Newman, Marc on 7/18/2011 at 9:05 PM EDT and filed on 711812011 Case Name: McCluskey et a1 v. Belford High School et al Case Number: 4:09-cv-14345-MAG-MKM Filer: Belford High School Belford University Document Number: 149

Docket Text: RESPONSE to [143] Order to Show Cause, RESPONSE TO ORDER TO SHOW CAUSE by Belford High School, Belford University. (Attachments: # (1) Index of Exhibits, # (2) Exhibit A - Declaration of Marc L. Newman, # (3) Exhibit B - Declaration of Belford's Managing Coordinator, Mr. Salem Kureshi, # (4) Exhibit C - Stipulated Order, # (5) Exhibit D - e-campus Examples, # (6) Exhibit E - Sample of Online Printouts) (Newman, Marc)

4:09-cv-1434S-MAG-MKM Notice has been electronically mailed to:

Courtney B. Ciullo [email protected], [email protected]

David H. Fink [email protected], [email protected], [email protected]

Dean M. Googasian [email protected], [email protected], [email protected]

Devon P. Allard [email protected], [email protected]

Marc L. Newman [email protected], [email protected], [email protected] 1 183

Thomas H. Howlett [email protected], [email protected]

4:09-cv-14345-MAG-MKM Notice will not be electronically mailed to:

The following document(s) are associated with this transaction:

Document description:Main Document Original filename:nla Electronic document Stamp: [STAMP dcecfStamp_ID=1047317467 [Date=7/18/2011] [FileNumber=4393894-0 ] [61619124ba898a29b5a9054235ef9f75bfd78eb7eal067873ca73d748f7378f9d85 40fD805025dcbd5c7ceaaOI bffddOOcfae29fl7c008203aa75ca5b81 05a60]] Document description:lndex of Exhibits Original filename:nla Electronic document Stamp: [STAMP dcecfStamp_ID=1047317467 [Date=7/18/2011] [FileNumber=4393894-1 ] [1842234c32alb07a4ded53a937412de922d66a58088dOe5d863c2dedda527b49a36 c2ba7df39a7300c4515f678c9a423bdcb4528c020280311cca6c8a74710c2]] Document description:Exhibit A - Declaration of Marc L. Newman Original filename:nla Electronic document Stamp: [STAMP dcecfStamp_ID=1047317467 [Date=7118/2011] [FileNumber=4393894-2 ] [976749f3a52415egege7f71b8701890f717400b3df8b6a4b75be78f51cf4874f349 3ea98220896210cfge721f7c540eb3ba602el054a46f5a9cI78823739c318]] Document description:Exhibit B - Declaration of Belford's Managing Coordinator, Mr. Salem Kureshi Original filename:nla Electronic document Stamp: [STAMP dcecfStamp_ID=1047317467 [Date=7/18/2011] [FileNumber=4393894-3 ] [65c98e8bad02745e59af3da68daa6bbI3a624fdb3fc7842c776e7daa86d1120da42 45ad9bedOb6826f72f9dI4a3736212f405c388de6874486f9aI67999962dl]] Document description:Exhibit C - Stipulated Order Original filename:nla Electronic document Stamp: [STAMP dcecfStamp_ ID= 1047317467 [Date=7118/20 11] [FileNumber=43 93894-4 ] [41 b0ge981e 13a8a52504daea8e35edd9d4915e54390066f6e7165fa8195acbfl590 5e02282edc341 f9af97834261 b5a48e73e9c2c189bf58ed7954e6fDi acfl3]] Document description:Exhibit D - e-campus Examples Original filename:nla Electronic document Stamp: [STAMP dcecfStamp_ID=1047317467 [Date=7118/2011] [FileNumber=4393894-5 ] [54d514330cOc9d44dab2cle915ffd3907c58f6d319bee87623ffb667b9952225511 4abla34dlcc7b3flI4f3aaed83bI7253flecfe96c31d947cd07623bc29Oc3]] Document description:Exhibit E - Sample of Online Printouts Original filename:nla Electronic document Stamp: [STAMP dcecfStamp_ID=1047317467 [Date=7/18/2011] [FileNumber=4393894-6 ] [6a9d44d5cae2acf809f445ec5721f37f97f431053c492352826f8ac2c20d65c98bc c885d9fce817926435febbal b 173f7cbOd4 7e2eI5f3acea3cgeb7537ba2a7]]

2 4:09-cv-14345-MAG-MKM Doc # 160 Filed 08/09/11 Pg 1 of 3 Pg ID 3759 184

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

ELIZABETH LAUBER and JAIME YANEZ on behalf of themselves and a class consisting of all of those similarly situated, and CARRIE McCLUSKEY, Case No. 2:09-cv-14345-MAG-MKM Plaintiffs, Hon. Mark A. Goldsmith v.

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN, SALEM KURESHI and JOHN DOES 1-35,

Defendants.

CORRECTED STIPULATION RESOLVING MOTION TO COMPEL [# 127]

Plaintiffs and Defendants Belford High School and Belford University, by their counsel, stipulate as follows:

(1) Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International

Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called

"honorary faculty" are fictitious people.

(2) Accordingly, for purposes of this litigation, Belford admits that (a) Belford cannot deny that it has never had any principal, school board president, registrar, or other administrative 4:09-cv-14345-MAG-MKM Doc # 160 Filed 08/09/11 Pg 2 of 3 Pg ID 3760 185

official or faculty, "honorary" or otherwise; and (b) Belford will not contend that it has ever had

any principal, school board president, registrar, or other administrative official, faculty, or school board, "honorary" or otherwise.

(3) Belford will amend pleadings and discovery responses as soon as practicable to be consistent with this stipulation.

(4) As a result of this stipulation, Plaintiffs' motion to compel discovery (# 127) with regard to three depositions and 14 addresses is moot.

(5) Further, as of this date, Belford has removed the names of the so-called “honorary faculty” from its web site and from diplomas and other documentation issued by Belford.

Stipulated By:

__/s/ Thomas Howlett_w/ consent____ /s/ Marc L. Newman___ __ Dean M. Googasian (P57346) Marc L. Newman (P51393) Thomas H. Howlett (P53995) Devon P. Allard (P71712) The Googasian Firm, P.C. The Miller Law Firm, P.C. Attorneys for Plaintiffs Attorneys for Defendants Belford High School 6895 Telegraph Road and Belford University Bloomfield Hills, MI 48301-3138 950 West University Drive, Suite 300 (248) 540-3333 Rochester, Michigan 48307-1887 (248) 841-2200

2 4:09-cv-14345-MAG-MKM Doc # 160 Filed 08/09/11 Pg 3 of 3 Pg ID 3761 186

CERTIFICATE OF SERVICE

I hereby certify that on August 9, 2011, I electronically filed the foregoing document with the Clerk of the Court using the ECF system, which will automatically send notification of such filing to all attorneys of record registered for electronic filing.

Respectfully submitted,

THE MILLER LAW FIRM, P.C. Attorneys for the Belford Defendants

By: /s/ Marc. L. Newman______Marc L. Newman (P51393) Devon P. Allard (P71712) 950 West University Drive, Suite 300 Rochester, Michigan 48307-1887 (248) 841-2200 [email protected]

4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 1 of 49 Pg ID 4195 187

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN

ELIZABETH LAUBER and JAIME YANEZ on behalf of themselves and a class consisting of all of those similarly situated, and CARRIE McCLUSKEY, Case No. 2:09-cv-14345-MAG-MKM Plaintiffs, Hon. Mark A. Goldsmith v.

BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, EDUCATION SERVICES PROVIDER, INC., INTERNATIONAL ACCREDITATION AGENCY FOR ONLINE UNIVERSITIES, UNIVERSAL COUNCIL FOR ONLINE EDUCATION ACCREDITATION, ZUNCH WORLDWIDE, INC., ZUNCH CHINA, INC., MELVILLE P. CROWE, DAN ROBERTSON, SYDNEY GOLDSTEIN, KEN CALVERT, WILLIAM J. McTIERNEN, SALEM KURESHI and JOHN DOES 1-35,

Defendants.

______/

DEFENDANTS BELFORD HIGH SCHOOL, BELFORD UNIVERSITY, AND SALEM KURESHI’S AMENDED ANSWER TO PLAINTIFFS’ THIRD AMENDED COMPLAINT AND AFFIRMATIVE DEFENSES

Defendants Belford High School, Belford University, and Salem Kureshi (the “Belford

Defendants”), by and through their attorneys, The Miller Law Firm, P.C., and for their Amended

Answer and Affirmative Defenses to Plaintiffs’ Third Amended Complaint (the “Complaint”)

state as follows:

NATURE OF ACTION

1. The Belford Defendants admit that Plaintiffs’ Complaint seeks injunctive relief, damages, and other remedies. The Belford Defendants deny the remainder. In further answer, the Belford Defendants deny that this case is appropriate for class certification. 4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 2 of 49 Pg ID 4196 188

2. The Belford Defendants object to this allegation because it is compound. No response is required as this allegation calls for a legal conclusion. The Belford Defendants admit that Plaintiffs’ Complaint seeks recovery. The Belford Defendants deny the remainder of this allegation. In further answer, the Belford Defendants state that there are thousands of satisfied

Belford students who rely on their Belford diplomas for employment and educational purposes.

Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary.

3. The Belford Defendants admit that Belford High School holds itself out to be a legitimate high school offering legitimate equivalency tests and previously held itself out to offer accredited high school diplomas via the Internet. Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by

"International Resource Consultants" and purportedly issued by "International Accrediting

Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education”

(“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

4. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants admit that Elizabeth Lauber, Jaime Yanez, and Carrie McCluskey enrolled with Belford High School to obtain their diplomas. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23. Belford has never held itself out as being accredited by any United States accreditation institutes. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a

2 4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 3 of 49 Pg ID 4197 189

reasonable basis to rely on accreditation certificates purportedly received as a result of work

performed by "International Resource Consultants" and purportedly issued by "International

Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online

Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny

Plaintiffs' allegations that Belford is not accredited.

PARTIES, JURISDICTION AND VENUE

5. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

6. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

7. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

8. The Belford Defendants deny this allegation to the extent it is vague and ambiguous. The Belford Defendants admit that Belford High School does business via its websites. The Belford Defendants deny the remainder. In further answer, Belford contends that it is Panama-based because the entity that owns Belford, the Organization for Global Learning

Education (“OGLE”), is incorporated in Panama and maintains a registered office in Panama.

However, Belford operates out of Pakistan, not Panama. In further answer, the Belford

Defendants maintained a Humble, Texas forwarding address for four months, between

November 2005 and March 2006, and did not conduct any business through this address.

9. The Belford Defendants deny this allegation to the extent it is vague and ambiguous. The Belford Defendants admit that Belford High School does business via its websites. The Belford Defendants deny the remainder. In further answer, Belford contends that

3 4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 4 of 49 Pg ID 4198 190

it is Panama-based because the entity that owns Belford, the Organization for Global Learning

Education (“OGLE”), is incorporated in Panama and maintains a registered office in Panama.

However, Belford operates out of Pakistan, not Panama. In further answer, the Belford

Defendants maintained a Humble, Texas forwarding address for four months, between

November 2005 and March 2006, and did not conduct any business through this address.

10. This allegation is not directed at the Belford Defendants, and therefore no answer is required. Further, the Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

11. This allegation is not directed at the Belford Defendants, and therefore no answer is required. Further, the Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. In further answer, based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by

"International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

12. This allegation is not directed at the Belford Defendants, and therefore no answer is required. Further, the Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by

"International Resource Consultants" and purportedly issued by "International Accrediting

4 4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 5 of 49 Pg ID 4199 191

Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education”

(“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

13. This allegation is not directed at the Belford Defendants, and therefore no answer is required. Further, the Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

14. This allegation is not directed at the Belford Defendants, and therefore no answer is required. Further, the Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

15. The Belford Defendants admit that Melville P. Crowe was, but no longer is, identified as the President of Belford High School and Belford University. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people..

16. The Belford Defendants admit that Dan Robertson was, but no longer is, identified as the Superintendent of Belford High School. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so- called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny

Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

17. The Belford Defendants admit that Sydney Goldstein was, but no longer is, identified as the Administration Head of Belford High School. Based on the ongoing

5 191 4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 6 of 49 Pg ID 4200 192

investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people..

18. The Belford Defendants admit that William J. McTiernan was, but no longer is, identified as the Registrar of Belford High School. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so- called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny

Plaintiffs' allegations that so-called "honorary faculty" are fictitious people...

19. The Belford Defendants admit that Ken Calvert was, but no longer is, identified as the Secretary of the School Board of Belford High School. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary school board" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary school board" are fictitious people..

20. The Belford Defendants admit that Salem Kureshi operates and controls OGLE, which in turn owns, operates, and controls Belford. The Belford Defendants admit that Salem

Kureshi operates Belford from his home in Pakistan. In further answer, the Belford Defendants state that Belford utilizes vendors who provide services from locations other than Mr. Kureshi’s home.

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21. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

22. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

23. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. In further answer, the Belford

Defendants state that they are not part of an association in fact under the Racketeer Influenced and Corrupt Organizations (RICO) statutes, and that no such association exists. The Belford

Defendants state that to the extent an association exists, members of the putative class, such as proposed class representative Jaime Yanez, are part of the alleged association.

24. The Belford Defendants admit that they maintain www.belforduniversity.org, www.belfordhighschool.org, and www.belfordhighschool.com, which are hosted through internet service providers. In further answer, the Belford Defendants lack sufficient knowledge with regard to John Does 3-10 or www.iaaou.com, www.ucoea.com. In further answer, the

Belford Defendants do not have any knowledge as to who publishes or maintains www.belfordhighschoolscam.com.

25. No response is required as this allegation calls for a legal conclusion. In further answer, this allegation is not directed at the Belford Defendants, and therefore no answer is required.

26. This allegation is not directed at the Belford Defendants, and therefore no answer is required.

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27. This allegation is not directed at the Belford Defendants, and therefore no answer is required.

28 This allegation is not directed at the Belford Defendants, and therefore no answer is required.

29. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

No response is required as this allegation calls for a legal conclusion. The Belford Defendants admit that they have represented that Belford High School offers accredited diplomas. The

Belford Defendants deny the remaining allegations. Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary.

30. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

No response is required as this allegation calls for a legal conclusion. The Belford Defendants admit that Belford High School issues diplomas to its students, many of whom reside in the

United States. The Belford Defendants deny the remainder of this allegation. In further answer, the Belford Defendants state that this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23. The Belford Defendants state that there are thousands of satisfied Belford students who rely on their Belford diplomas for employment and educational purposes.

31. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants admit that Belford High School was created in approximately 2003. The

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remainder of the allegation is denied. Based on the ongoing investigation by counsel for

Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by "International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited. Further,

Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary. In further answer, the Belford Defendants state that there are thousands of satisfied Belford students that rely on their Belford diplomas for employment and educational purposes.

32. The Belford Defendants deny this allegation because this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23.

33. No response is required as this allegation calls for a legal conclusion.

34. No response is required as this allegation calls for a legal conclusion.

35. The Belford Defendants deny this allegation.

Class Action Allegations

36. The Belford Defendants hereby incorporate by reference the preceding responses

37. The Belford Defendants admit that Elizabeth Lauber enrolled with Belford High

School to obtain her diploma. The remaining allegations call for a legal conclusion to which no response is required. The Belford Defendants lack information as to Ms. Lauber’s state of mind.

In further answer, Belford has never held itself out as being accredited by any United States accreditation institutes. Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary.

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38. The Belford Defendants admit that Ms. Lauber paid money as part of the process to obtain her Belford diploma. The Belford Defendants lack information as to Ms. Lauber’s state of mind.

39. The Belford Defendants admit that Jaime Yanez enrolled with Belford High

School to obtain his diploma. The remaining allegations call for a legal conclusion to which no response is required. The Belford Defendants lack information as to Mr. Yanez’s state of mind.

In further answer, Belford has never held itself out as being accredited by any United States accreditation institutes. Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary.

40. The Belford Defendants admit that Mr. Yanez paid money as part of the process to obtain his Belford diploma. The Belford Defendants lack information as to Mr. Yanez’s state of mind.

41. No response is required as this allegation calls for a legal conclusion. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23.

42. No response is required as this allegation calls for a legal conclusion. In further answer, the Belford Defendants state that there are thousands of satisfied Belford students who rely on their Belford diplomas for employment and educational purposes.

43. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants do not contest this allegation.

44. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23.

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45. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23.

46. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23.

47. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23.

General Allegations regarding Zunch

48. The Belford Defendants hereby incorporate by reference the preceding responses.

49. This allegation is not directed at the Belford Defendants, and therefore no answer is required. In further answer, the Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

50. This allegation is not directed at the Belford Defendants, and therefore no answer is required. In further answer, the Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

51. This allegation is not directed at the Belford Defendants, and therefore no answer is required. In further answer, the Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

52. This allegation is not directed at the Belford Defendants, and therefore no answer is required. In further answer, the Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

11 4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 12 of 49 Pg ID 4206 198

53. This allegation is not directed at the Belford Defendants, and therefore no answer is required. No response is required as this allegation calls for a legal conclusion. The Belford

Defendants deny the remainder of this allegation. In further answer, Belford advertises on the

Internet to people interested in obtaining online diplomas. Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary.

54. This allegation is not directed at the Belford Defendants, and therefore no answer is required. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

55. This allegation is not directed at the Belford Defendants, and therefore no answer is required. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. In further answer, the Belford Defendants lack information as to any press release issued by Zunch.

56. This allegation is not directed at the Belford Defendants, and therefore no answer is required. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. In further answer, the Belford Defendants lack information as to any press release issued by Zunch.

57. This allegation is not directed at the Belford Defendants, and therefore no answer is required. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. In further answer, the Belford Defendants lack information as to any press release issued by Zunch.

58. This allegation is not directed at the Belford Defendants, and therefore no answer is required. The Belford Defendants lack sufficient information necessary to respond to this

12 4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 13 of 49 Pg ID 4207 199

allegation, and for this reason, the Belford Defendants deny this allegation. In further answer, the Belford Defendants lack information as to any press release issued by Zunch.

59. This allegation is not directed at the Belford Defendants, and therefore no answer is required. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. In further answer, the Belford Defendants lack information as to any press release issued by Zunch. In further answer,Belford has never held itself out as being accredited by any United States accreditation institutes. Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary. The Belford Defendants state that there are thousands of satisfied Belford students that rely on their Belford diplomas for employment and educational purposes.

60. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

This allegation is not directed at the Belford Defendants, and therefore no answer is required.

The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. In further answer, Belford advertises on the Internet to people interested in obtaining online diplomas.

61. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

This allegation is not directed at the Belford Defendants, and therefore no answer is required.

The Belford Defendants lack sufficient information necessary to respond to this allegation, and

13 4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 14 of 49 Pg ID 4208 200

for this reason, the Belford Defendants deny this allegation. In further answer, Belford advertises on the Internet to people interested in obtaining online diplomas. In further answer,

Belford has never held itself out as being accredited by any United States accreditation institutes.

Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary.

62. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

This allegation is not directed at the Belford Defendants, and therefore no answer is required.

The Belford Defendants deny this allegation. In further answer, Belford advertises on the

Internet to people interested in obtaining online diplomas.

General Allegations regarding Belford’s Scheme

63. The Belford Defendants hereby incorporate by reference the preceding responses.

64. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

65. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

No response is required as this allegation calls for a legal conclusion. The Belford Defendants deny the remainder of this allegation. In further answer, the Belford Defendants state that

Belford is operated out of Pakistan.

14 4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 15 of 49 Pg ID 4209 201

66. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants admit that they operate a website at www.belfordhighschool.com.

Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by "International

Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online

Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny

Plaintiffs' allegations that Belford is not accredited.

67. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants admit that Belford advertises on the Internet to people interested in obtaining online diplomas. The Belford Defendants state that, to their knowledge, it is not possible to simply purchase the “top” position on Google based on the use of generic keywords.

68. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants admit that Belford advertises on the Internet to people interested in obtaining online diplomas.

69. The Belford Defendants do not contest this allegation.

70. The Belford Defendants do not contest this allegation.

15 4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 16 of 49 Pg ID 4210 202

71. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants admit that they represent to prospective students that Belford High

School is accredited.

72. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants admit that they represent to prospective students that Belford High

School holds accreditation from online accreditation agencies.

73. This allegation is not directed at the Belford Defendants, and therefore no answer is required. Further, the Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

74. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by

"International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

75. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants state that the website speaks for itself. The Belford Defendants admit

16 4:09-cv-14345-MAG-MKM Doc # 163 Filed 08/15/11 Pg 17 of 49 Pg ID 4211 203

that Belford High School is operated by the Organization for Global Learning (“OGLE”) which is owned and operated by Salem Kureshi. Based on the ongoing investigation by counsel for

Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by "International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

76. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants state that the website speaks for itself. The Belford Defendants state that this content may have appeared at one point on Belford’s website, but presently have insufficient information as to whether the alleged statements are presently accessible, and therefore leave Plaintiffs to their proofs.

77. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants admit the remainder of this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International

Resource Consultants" and purportedly issued by "International Accrediting Agency for Online

Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and

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therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that

Belford is not accredited.

78. The Belford Defendants deny this allegation to the extent it is vague and ambiguous. In further answer, the certificates are not identical but appear similar.

79. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants state that the website speaks for itself. The Belford Defendants state that this content may have appeared at one point on Belford’s website, but presently have insufficient information as to whether the alleged statements are presently accessible, and therefore leave Plaintiffs to their proofs. As to the remainder of the allegation, based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by

"International Resource Consultants" and purportedly issued by "International Accrediting

Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education”

(“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

80. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by

"International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

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81. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by

"International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

82. The Belford Defendants admit this allegation.

83. The Belford Defendants admit this allegation.

84. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants state that the website speaks for itself. The Belford Defendants state that this content may have appeared at one point on Belford’s website, but presently have insufficient information as to whether the alleged statements are presently accessible, and therefore leave Plaintiffs to their proofs. Based on the ongoing investigation by counsel for

Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by "International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

85. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

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The Belford Defendants state that the website speaks for itself. The Belford Defendants state that this content may have appeared at one point on Belford’s website, but presently have insufficient information as to whether the alleged statements are presently accessible, and therefore leave Plaintiffs to their proofs. Based on the ongoing investigation by counsel for

Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by "International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

86. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants state that the website speaks for itself. The Belford Defendants state that this content may have appeared at one point on Belford’s website, but presently have insufficient information as to whether the alleged statements are presently accessible, and therefore leave Plaintiffs to their proofs. Based on the ongoing investigation by counsel for

Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by "International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

87. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants,

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suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants state that the website speaks for itself. The Belford Defendants state that the website speaks for itself. The Belford Defendants state that this content may have appeared at one point on Belford’s website, but presently have insufficient information as to whether the alleged statements are presently accessible, and therefore leave Plaintiffs to their proofs. In further answer, based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by

"International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

88. The Belford Defendants admit this allegation.

89. The Belford Defendants admit that no such building exists housing Belford or a physical campus and further admit that the building depicted on its web site does not exist. In further answer, Belford contends that it maintains an electronic campus, or e-campus. Further, the Belford Defendants state that the website speaks for itself and that the image on the website was and is not intended as a representation that Belford has a physical classroom or physical campus. The image is a stock photo that is used to bolster the look of the website, and is mere puffery. 90. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants state that the website speaks for itself. The Belford Defendants admit that they do not have a physical campus but contend that they maintain an electronic campus, or

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e-campus, through their web site and the website does not represent that it has a physical campus or classrooms. The Belford Defendants state that, at one time, Belford offered to pay students and alumni to act as recruiters, but Belford did not offer directly offer any employment or internships. Further, Belford maintains that one of the primary advantages that its diplomas offer to students is the ability to obtain jobs or internships based on receiving a life experience diploma. The Belford Defendants state that there are thousands of satisfied Belford students who rely on their Belford diplomas for employment and educational purposes.

91. The Belford Defendants admit that they do not have a physical campus but the allegation is denied for the following reasons: the Belford Defendants contend that Belford maintains an electronic campus, or e-campus, and the website does not represent that it has a physical campus or has classrooms. The Belford Defendants admit that the building depicted on its website does not exist. Belford offered to pay students and alumni to act as recruiters, but

Belford did not offer directly offer any employment or internships. Further, Belford maintains that one of the primary advantages that its diplomas offer to students is the ability to obtain jobs or internships based on receiving a life experience diploma. The Belford Defendants state that there are thousands of satisfied Belford students who rely on their Belford diplomas for employment and educational purposes.

92. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants state that the website speaks for itself. The Belford Defendants admit that at one time the website contained a page with this letter, but that page was not actually linked to the website. In further answer, based on the ongoing investigation by counsel for

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Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called

"honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny

Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

93. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants state that the website speaks for itself. The Belford Defendants state that this content may have appeared at one point on Belford’s website, but presently have insufficient information as to whether the alleged statements are presently accessible, and therefore leave Plaintiffs to their proofs. Based on the ongoing investigation by counsel for

Belford, Belford believes it no longer has a reasonable basis to deny this allegation.

94. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants state that the website speaks for itself. The Belford Defendants state that this content may have appeared at one point on Belford’s website, but presently have insufficient information as to whether the alleged statements are presently accessible, and therefore leave Plaintiffs to their proofs. Based on the ongoing investigation by counsel for

Belford, Belford believes it no longer has a reasonable basis to deny this allegation.

95. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

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The Belford Defendants deny this allegation. The Belford Defendants do not publish or maintain www.belfordhighschoolscam.com. In further answer, the Belford Defendants do not have any knowledge as to who publishes or maintains www.belfordhighschoolscam.com.

96. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants deny this allegation. The Belford Defendants do not publish or maintain www.belfordhighschoolscam.com. In further answer, the Belford Defendants do not have any knowledge as to who publishes or maintains www.belfordhighschoolscam.com.

97. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The website speaks for itself. The Belford Defendants deny that the language quoted in

Paragraph 97 of the Third Amended Complaint states that Belford’s online test is “the equivalent of a GED.” The Belford Defendants state that this content may have appeared at one point on

Belford’s website, but presently have insufficient information as to whether the alleged statements are presently accessible, and therefore leave Plaintiffs to their proofs. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by

"International Resource Consultants" and purportedly issued by "International Accrediting

Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education”

(“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

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98. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants deny this allegation. The Belford Defendants state that they did not authorize or control any of these websites.

99. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants deny this allegation. The Belford Defendants state that they did not authorize or control any of these websites.

100. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants state that one of their vendors, Help Team Call Centre, respond to inquiries. The Belford Defendants do not contact every student. There is no uniform script or process. The Terms and Conditions note that the student must check with the jurisdiction in which the student intends to use the diploma to make sure that the diploma conforms with local legislation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by

"International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

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101. The Belford Defendants deny this allegation. In further answer, Belford has a refund policy, and before providing a refund, they or their vendor, Help Team Call Centre, engage in discussions with students to emphasize the benefits of a Belford diploma to encourage them to remain students of Belford.

102. The Belford Defendants deny this allegation. Belford has at all times acted consistently with the refund policy set forth on Belford’s website, and has never refused to provide a refund to a student who has complied with Belford’s refund policy.

103. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. One of Belford’s vendors processed payments on behalf of Belford. Belford is not aware of the subcontractor that its vendor uses to transact credit card charges.

104. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

No response is required as this allegation calls for a legal conclusion. The Belford Defendants lack information as to the state of mind of Plaintiffs, but deny that any alleged reliance was reasonable.

105. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

106. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

107. The Belford Defendants admit this allegation.

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108. The Belford Defendants lack sufficient information to answer this allegation, and therefore it is denied, but state that an email may have been sent.

109. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

110. The Belford Defendants admit this allegation.

111. The Belford Defendants state that Belford High School does send packages containing certifications, diplomas, and other documents to students. The Belford Defendants lack information as to the date the package was received. In further answer, based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

112. The Belford Defendants admit this allegation.

113. The Belford Defendants admit that the diploma shows signatures. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

114. The Belford Defendants admit this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly

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signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people..

115. The Belford Defendants admit this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary school board" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary school board" are fictitious people.

116. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

117. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

118. The Belford Defendants admit this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

119. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

120. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

121. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

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122. The Belford Defendants admit that Ms. McCluskey took the online equivalency test. The Belford Defendants lack information as to whether Ms. McCluskey was contacted, but state that she may have been contacted by Belford’s vendor, Help Team Call Centre.

123. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. However, Belford’s records show Ms. McCluskey paid for her diploma. The Belford Defendants subsequently tendered a refund to her.

124. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. However, Belford’s records show Ms. McCluskey paid for her diploma. The Belford Defendants subsequently tendered a refund to her.

125. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants lack sufficient information as to what Ms. McCluskey understood. The

Belford Defendants admit that Belford mailed a package to Ms. McCluskey through their vendor. The Belford Defendants state that Belford offers an online equivalency test.

126. The Belford Defendants admit this allegation.

127. The Belford Defendants admit this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

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128. The Belford Defendants admit this allegation.

129. The Belford Defendants admit that the documents show signatures. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

130. The Belford Defendants admit this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people..

131. The Belford Defendants admit this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary school board" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary school board" are fictitious people.

132. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

133. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

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134. The Belford Defendants admit this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

135. The Belford Defendants admit that Belford High School’s website states that it is accredited and offers legitimate diplomas and that it has an online equivalency test. The Belford

Defendants lack sufficient information necessary to respond to the remainder of this allegation, and for this reason, the Belford Defendants deny the remainder of this allegation.

136. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

137. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation. The Belford Defendants further state that Belford does charge tuition and that Mr. Yanez agreed to and did pay for his diploma.

138. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants,

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suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants admit this allegation.

139. The Belford Defendants admit that the documents contain signatures. .Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

140. The Belford Defendants admit this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

141. The Belford Defendants admit this allegation.

142. The Belford Defendants admit that the diploma shows signatures. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

143. The Belford Defendants admit this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly

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signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people.

144. The Belford Defendants admit this allegation. Based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary school board" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary school board" are fictitious people.

145. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

146. The Belford Defendants lack sufficient information necessary to respond to this allegation, and for this reason, the Belford Defendants deny this allegation.

147. The Belford Defendants admit this allegation. In further answer, based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on authorization forms purportedly from "International Resource Consultants" and purportedly signed by the so-called "honorary faculty" and, therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that so-called "honorary faculty" are fictitious people..

148. The Belford Defendants deny this allegation since Belford has no record of any request for a refund. Mr. Yanez was tendered a full refund which he refused.

Count I

Breach of Contract

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149. The Belford Defendants reassert and incorporate by reference the answers to all

preceding paragraphs and the responses contained therein.

150. No response is required as this allegation calls for a legal conclusion.

151. No response is required as this allegation calls for a legal conclusion. In further

answer, based on the ongoing investigation by counsel for Belford, Belford believes it no longer

has a reasonable basis to rely on accreditation certificates purportedly received as a result of

work performed by "International Resource Consultants" and purportedly issued by

"International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council

for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue

to deny Plaintiffs' allegations that Belford is not accredited.

152. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants state that one of Plaintiffs’ class representatives admitted that he was not

seeking money damages. The Belford Defendants state that there are thousands of satisfied

Belford students who rely on their Belford diplomas for employment and educational purposes.

Belford expressly and conspicuously discloses that its diplomas are based on life experience and

that no classes are necessary.

WHEREFORE, the Belford Defendants request that the Third Amended Complaint and

all allegations be dismissed with prejudice, and/or that a Judgment of no-cause of action be

entered and that the Court award costs and attorneys’ fees to Defendants.

Count II

Fraud

153. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

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154. No response is required as this allegation calls for a legal conclusion. In further answer, Belford has never held itself out as being accredited by any United States accreditation institutes. Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary. The Belford Defendants state that there are thousands of satisfied Belford students that rely on their Belford diplomas for employment and educational purposes. The Belford Defendants deny the remainder of this allegation because the term “representations” is ambiguous. The Belford Defendants incorporate all prior paragraphs which address specific representations. Based on the ongoing investigation by counsel for

Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by "International Resource Consultants" and purportedly issued by "International Accrediting Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education” (“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited.

155. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

No response is required as this allegation calls for a legal conclusion.

156. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

No response is required as this allegation calls for a legal conclusion.

157. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants,

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suggesting a concert of action or an enterprise among the defendants, both of which are denied.

No response is required as this allegation calls for a legal conclusion. In further answer, Belford

expressly and conspicuously discloses that its diplomas are based on life experience and that no

classes are necessary. The Belford Defendants state that one of Plaintiffs’ class representatives

admitted that he was not seeking money damages.

WHEREFORE, the Belford Defendants request that the Third Amended Complaint and

all allegations be dismissed with prejudice, and/or that a Judgment of no-cause of action be

entered and that the Court award costs and attorneys’ fees to Defendants.

Count III

Negligent or Innocent Misrepresentation

158. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

159. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. In further answer,

Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary.

160. No response is required as this allegation calls for a legal conclusion.

161. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

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WHEREFORE, the Belford Defendants request that the Third Amended Complaint and

all allegations be dismissed with prejudice, and/or that a Judgment of no-cause of action be

entered and that the Court award costs and attorneys’ fees to Defendants.

Count IV

Promissory Estoppel

162. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

163. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. In further answer,

Belford has never held itself out as being accredited by any United States accreditation institutes.

Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary. The Belford Defendants state that there are thousands of satisfied

Belford students that rely on their Belford diplomas for employment and educational purposes.

164. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

165. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

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166. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

167. The Belford Defendants deny this allegation.

WHEREFORE, the Belford Defendants request that the Third Amended Complaint and all allegations be dismissed with prejudice, and/or that a Judgment of no-cause of action be entered and that the Court award costs and attorneys’ fees to Defendants.

Count V

Unjust Enrichment/Breach of Quasi-contract

168. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

169. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. The Belford Defendants admit that Belford does charge its students tuition.

170. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. In further answer, the

Belford Defendants state that there are thousands of satisfied Belford students who rely on their

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Belford diplomas for employment and educational purposes. The Belford Defendants state that

one of Plaintiffs’ class representatives admitted that he was not seeking money damages.

WHEREFORE, the Belford Defendants request that the Third Amended Complaint and

all allegations be dismissed with prejudice, and/or that a Judgment of no-cause of action be

entered and that the Court award costs and attorneys’ fees to Defendants.

Count VI

Equitable Estoppel

171. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

172. No response is required as this allegation calls for a legal conclusion. The Belford

Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. In further answer, based on the ongoing investigation by counsel for Belford, Belford believes it no longer has a reasonable basis to rely on accreditation certificates purportedly received as a result of work performed by

"International Resource Consultants" and purportedly issued by "International Accrediting

Agency for Online Universities” (“IAAOU”) and “Universal Council for Online Education”

(“UCOEA”) and therefore, it no longer has a reasonable basis to continue to deny Plaintiffs' allegations that Belford is not accredited. Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary. The Belford Defendants state that there are thousands of satisfied Belford students who rely on their Belford diplomas for employment and educational purposes.

173. No response is required as this allegation calls for a legal conclusion.

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174. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because

among other reasons, it improperly combines the various defendants, suggesting a concert of

action or an enterprise among the defendants, both of which are denied.

WHEREFORE, the Belford Defendants request that the Third Amended Complaint and

all allegations be dismissed with prejudice, and/or that a Judgment of no-cause of action be

entered and that the Court award costs and attorneys’ fees to Defendants.

Count VII

Concert of Action

175. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

176. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

WHEREFORE, the Belford Defendants request that the Third Amended Complaint and all allegations be dismissed with prejudice, and/or that a Judgment of no-cause of action be entered and that the Court award costs and attorneys’ fees to Defendants.

Count VIII

Racketeer Influenced and Corrupt Organization Act (RICO)

177. Belford Defendants reassert and incorporate by reference the answers to all

preceding paragraphs and the responses contained therein.

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178. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. In further answer, to the extent an enterprise is found to exist, Plaintiffs and numerous members of the purported class would be participants in the enterprise.

179. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. In further answer,

Belford has never held itself out as being accredited by any United States accreditation institutes.

Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary. Belford utilizes a call center vendor to field phone calls. Belford advertises on the Internet to people interested in obtaining online diplomas.

180. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

181. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

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182. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

183. No response is required as this allegation calls for a legal conclusion.

184. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

185. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23.

186. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

187. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. In further answer, this

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case is not capable of being certified as a class action because it does not meet the requirements of Rule 23.

188. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it is vague and ambiguous. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23. The Belford Defendants state that one of Plaintiffs’ class representatives admitted that he was not seeking money damages.

189. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23. The Belford Defendants state that one of Plaintiffs’ class representatives admitted that he was not seeking money damages.

190. No response is required as this allegation calls for a legal conclusion.

191. No response is required as this allegation calls for a legal conclusion.

192. No response is required as this allegation calls for a legal conclusion. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23.

193. No response is required as this allegation calls for a legal conclusion.

194. No response is required as this allegation calls for a legal conclusion.

195. No response is required as this allegation calls for a legal conclusion.

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196. No response is required as this allegation calls for a legal conclusion. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23.

197. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

198. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23. Belford has never held itself out as being accredited by any United States accreditation institutes. Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary.

199. No response is required as this allegation calls for a legal conclusion. The Belford

Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied. In further answer, this case is not capable of being certified as a class action because it does not meet the requirements of Rule 23.

Belford has never held itself out as being accredited by any United States accreditation institutes.

Belford expressly and conspicuously discloses that its diplomas are based on life experience and that no classes are necessary.

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200. The Belford Defendants admit this allegation.

201. The Belford Defendants admit this allegation.

202. The Belford Defendants deny this allegation to the extent it uses the term

“Defendants” because among other reasons, it improperly combines the various defendants,

suggesting a concert of action or an enterprise among the defendants, both of which are denied.

The Belford Defendants lack sufficient information necessary to respond to this allegation, and

for this reason, the Belford Defendants deny this allegation.

203. This allegation contains conclusory information and requires no response. In the

event an answer is required, denied that Plaintiffs are entitled to the relief the Complaint seeks.

WHEREFORE, the Belford Defendants request that the Third Amended Complaint and

all allegations be dismissed with prejudice, and/or that a Judgment of no-cause of action be

entered and that the Court award costs and attorneys’ fees to Defendants.

Count IX

Civil Conspiracy

204. The Belford Defendants reassert and incorporate by reference the answers to all preceding paragraphs and the responses contained therein.

205. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

206. No response is required as this allegation calls for a legal conclusion. The

Belford Defendants deny this allegation to the extent it uses the term “Defendants” because

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among other reasons, it improperly combines the various defendants, suggesting a concert of action or an enterprise among the defendants, both of which are denied.

WHEREFORE, the Belford Defendants request that the Third Amended Complaint and all allegations be dismissed with prejudice, and/or that a Judgment of no-cause of action be entered and that the Court award costs and attorneys’ fees to Defendants.

AFFIRMATIVE AND OTHER DEFENSES

The Belford Defendants may rely on the following affirmative defenses at or before trial:

1. Plaintiffs have failed to state claims upon which relief can be granted.

2. Plaintiffs’ claims are barred, in whole or in part, due to lack of personal jurisdiction over Belford Defendants.

3. Plaintiffs’ claims are barred, in whole or in part, due to lack of subject matter jurisdiction.

4. Venue is improper in this District.

5. Plaintiffs’ claims are barred, in whole or in part, by Plaintiffs’ failure to mitigate purported damages.

6. Plaintiffs’ claims may be barred, in whole or in part, under the doctrine of estoppel.

7. Plaintiffs’ claims are barred, in whole or in part, because of Plaintiffs’ failure to plead fraud with particularity.

8. Plaintiffs’ claims may be barred, in whole or in part, because Plaintiffs lack compensable injuries.

9. Plaintiffs’ claims may be barred, in whole or in part, under the doctrine of waiver.

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10. Plaintiffs’ claims are barred, in whole or in part, by any applicable statute of limitations.

11. Plaintiffs’ claims may be barred, in whole or in part, under the doctrine of laches.

12. Plaintiffs’ claims may be barred, in whole or in part, by the statute of frauds.

13. Plaintiffs’ claims may be barred, in whole or in part, due to the fault of one or more parties not named in this action.

14. Plaintiffs’ claims may be barred, in whole or in part, by Plaintiffs’ failure to name one or more necessary or indispensable parties.

15. Plaintiffs’ claims may be barred, in whole or in part, by insufficiency of process or service of process.

16. Plaintiffs’ claims may be barred, in whole or in part, by the doctrines of ratification, consent, and acquiescence.

17. Plaintiffs’ claims are barred by Defendants’ Terms of Use.

18. Plaintiffs failed to meet the requirements for class certification under Fed. R. Civ.

P. 23. In addition, Plaintiffs’ class definition is inadequate.

19. Plaintiffs’ claims are barred, in whole or in part, because of the doctrine of unclean hands.

20. Plaintiffs’ claims are barred, in whole or in part, because of the voluntary pay doctrine.

21. Plaintiffs’ claims are barred, in whole or in part, because to the extent an enterprise is found to exist, Plaintiffs and putative class members may be a part of the enterprise.

22. Plaintiffs’ claims are barred to the extent they received a refund.

23. Plaintiffs’ claims are barred because they received the benefit of their bargain.

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24. Plaintiffs’ claims are barred to the extent they profited from receiving benefits from using their Belford diplomas.

25. Defendants reserve the right to add further and other Affirmative and other defenses as they become known.

Respectfully submitted,

THE MILLER LAW FIRM, P.C. Attorneys for the Belford Defendants

By: ___/s/ Marc L. Newman______Marc L. Newman (P51393) Devon P. Allard (P71712) 950 West University Drive, Suite 300 Rochester, Michigan 48307-1887 Dated: August 15, 2011 (248) 841-2200

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CERTIFICATE OF SERVICE

I hereby certify that on August 15, 2011, I electronically filed the foregoing document with the Clerk of the Court using the ECF system, which will automatically send notification of such filing to all attorneys of record registered for electronic filing.

Respectfully submitted,

THE MILLER LAW FIRM, P.C. Attorneys for the Belford Defendants

By: /s/ Marc L. Newman______Marc L. Newman (P51393) Devon P. Allard (P71712) 950 West University Drive, Suite 300 Rochester, Michigan 48307-1887 (248) 841-2200