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and that the Company’s restatement would cover the financials from 2003 through

2005. ¶¶100-101. On November 13, 2006, the Company again announced the need to

expand the restatement period to cover the financials from 2001 through 2005. CAC at


The allegations in the CAC most relevant to this claim appear at ¶¶ 70-75 as



In its August 12, 2005 and November 21, 2005 Form 10-Qs, signed by

Defendants Russ Whitney, Maturo, and Simon, among others, and certified by

Defendants Russ Whitney and Simon, the Company reported that “[t]he

Company’s policy has been to recognize revenue at the earlier of the attendance

of the course or one year from the date of registration.”


On or about March 31, 2006, Defendants filed with the SEC the

Company’s 2005 Form 10-K, for the year ended December 31, 2006, signed by

Defendants Russ Whitney, Maturo, Novas, and Simon, and certified by Defendants Russ Whitney and Novas. Regarding the Company’s treatment of deferred revenues, the 10-K represented that:

Due to the timing differences between cash collection and the time at which our students actually take the course (or course expiration, which ever is earlier), we have historically recorded a substantial amount of deferred revenue. Most of the deferred revenue at the end of each year will result in reported revenues in the next year. . . [O]ur deferred revenue as a percentage of total revenue have ranged from the high 30% to mid 40% range since 2002 (in thousands). *** Critical Accounting Policies Deferred revenue We are engaged primarily in the business of providing real estate and financial education to individual investors through courses of study, as well as educational materials. Students pay for the courses in advance and we record the proceeds from the sale of courses as deferred revenue when it is received. Revenue is earned when the student attends the training program or at the expiration of our obligation to provide training, whichever comes first. The fees are generally nonrefundable, and the students are allowed one year to complete their program. A student may receive a refund within three days of their purchase by exercising a right of rescission. In such cases, the corresponding amount of deferred revenue


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