SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF …

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK

HIGHER EDUCATION MANAGEMENT GROUP, INC. and PATRICK SPADA individually, and in the right of ASPEN GROUP, INC.,

Plaintiffs,

- against -

ASPEN UNIVERSITY INC., ASPEN GROUP, INC., MICHAEL MATHEWS, JOHN SCHEIBELHOFFER, MICHAEL D'ANTON, C. JAMES JENSEN, DAVID E. PASI, SANFORD RICH, PAUL SCHNEIER, and DAVID GARRITY,

Defendants.

Index No. 650457/2013

VERIFIED AMENDED COMPLAINT JURY TRIAL DEMANDED

Plaintiffs Higher Education Management Group, Inc. ("HEMG") and Patrick Spada ("Spada") (collectively, "Plaintiffs"), by and through their attorneys, as and for their Verified Amended Complaint, allege upon knowledge as to their own acts and upon information and belief as to all other matters as follows:

PRELIMINARY STATEMENT 1. Plaintiffs bring this action as both a derivative and direct action. Plaintiffs assert Causes of Action I-IV derivatively on behalf of and for the benefit of Aspen Group, Inc. ("Aspen Group") against Aspen Group's directors named herein (the "Director Defendants") for breaching their fiduciary duties, wasting Aspen Group's corporate assets, and diluting Aspen Group's shareholder equity. Plaintiffs' claims on behalf of and for the benefit of Aspen Group arise out of the Director Defendants' practices and course of conduct in: (1) engaging in a deliberate scheme to defraud the Securities and Exchange Commission ("SEC"), the United

States Department of Education ("DOE"), and the Accrediting Commission of the Distance Education and Training Council ("DETC") by issuing false and misleading statements regarding a fictitious $2,209,960 loan that the Director Defendants (a) knew was fabricated and uncollectible and (b) improperly recorded as a secured asset on Aspen Group's balance sheet in order to artificially inflate Aspen Group's financial results and clear regulatory hurdles; (2) wasting and mismanaging Aspen Group's assets in bad faith thereby causing Aspen Group to accumulate a deficit of over $11 million; and (3) diluting Aspen Group's shareholder equity by, inter alia, giving 9,760,000 shares of Aspen Group stock to a shell company that had total assets of only $1,489 and did not engage in any business operations.

2. Plaintiffs also assert Causes of Action V-XII individually in their own names against Aspen Group and Aspen University Inc. ("Aspen University") (sometimes referred to collectively as "Aspen"), the Director Defendants, and David Garrity, Aspen Group's Chief Financial Officer, for their practices and course of conduct in: (1) disseminating public statements and communications to the SEC, DOE, and DETC which were defamatory to Plaintiffs; (2) breaching a letter agreement entered into by Spada, HEMG, and Aspen Group on April 4, 2012 to purchase certain shares of Aspen Group stock from Plaintiffs (the "April Agreement"); (3) breaching a consulting agreement entered into by HEMG and Aspen University on September 16, 2011 (the "Consulting Agreement."); and (4) breaching a Lockup/Leak-Out Agreement entered into by Spada, HEMG, and Aspen University (the "Lock-Up Agreement").

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PARTIES 3. Plaintiff Spada is a citizen who resides in the State of New Jersey. He is the founder of Aspen University and served as its Chief Executive Officer ("CEO") until May 2011 and as chairman of its board of directors until September 2011. He created and directed one of the first series of video courses to be approved by the DOE for Title IV funding. These courses were delivered via cable television as one of the first distance education degree video curriculum in higher education. Spada is also the founder, president, and majority shareholder of HEMG. According to the Registration Statement and Prospectus filed on Form S-1 by Aspen with the SEC on April 8, 2013, as of April 8, 2013, Plaintiffs owned 5,177,315 shares (9.2%) of Aspen common stock, constituting the largest individual shareholder of Aspen Group. 4. Plaintiff HEMG is a Nevada corporation owned and controlled by Spada with its principal place of business located at 144 Vista Drive, Cedar Knolls, New Jersey 07927. 5. Defendant Aspen University is a Delaware corporation with its principal place of business located at 224 West 30th Street, Suite 604, New York, New York 10001. Aspen University also maintains education administrative offices located at 720 South Colorado Boulevard, Suite 1150N, Denver, Colorado 80246. 6. Defendant Aspen University is an online post-secondary education university licensed and accredited in the State of Colorado. Aspen University was the one of first 100% online degree granting institutions to become accredited and one of the first accredited institutions to offer an online Master of Business Administration to students. Aspen University offers students 65 programs, specializations, completion programs and certificates in a broad

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range of areas including business and organization management, education, nursing, information technology, general studies and more. As of December 31, 2012, Aspen's student body consisted of 2,553 total students with 87% of its degree-seeking students being enrolled in a master or doctoral graduate degree program. Aspen University is accredited by the DETC, which is a nationally recognized accrediting agency and a recognized member of the Council for Higher Education Accreditation.

7. Defendant Aspen Group is a Delaware corporation with its principal place of business located at 224 West 30th Street, Suite 604, New York, New York 10001 and education administrative offices located at 720 South Colorado Boulevard, Suite 1150N, Denver, Colorado 80246. In Aspen Group's filings with the SEC, including its Registration Statements and Prospectuses, Aspen Group instructs shareholders who wish to communicate with the Board to "communicate with the Board by writing to us at Aspen Group, Inc., 224 West 30th Street, Suite 604, New York, New York 10001." Aspen's Registration Statements and Prospectuses filed with the SEC on October 1, 2012, and November 21, 2012, also state that they were signed in the City of New York, State of New York. In addition, the April Agreement and Consulting Agreement both list 224 West 30th Street, Suite 604, New York, New York 10001 as the addresses for both Aspen Group and Aspen University.

8. Aspen Group acquired Aspen University and became its corporate parent pursuant to a reverse merger transaction completed on March 13, 2012. Aspen Group operates its whollyowned subsidiary, Aspen University, as Aspen Group's sole line of business, providing a range of online education services in the United States with students enrolled in 50 states, as well as the

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District of Columbia and Puerto Rico. Aspen Group offers certificates in Information Technology with specializations in Information Systems Management, Java Development, Object Oriented Application Development, Smart Home Integration, and Web Development, as well as certificate in Project Management. Since March 31, 2011, Aspen Group's common stock has traded on the Over-the-Counter Bulletin Board under the symbol "ASPU." As of April 5, 2013, Aspen had 56,168,005 shares of common stock outstanding and 237 record holders of its common stock.

9. Defendant Michael Mathews ("Mathews") resides in the State of New York. Mathews has served as Aspen Group's CEO and as a director on Aspen Group's Board of Directors (the "Board") since May 2011. In May 2011, Aspen University entered into an agreement and plan of merger and merged with Education Growth Corporation, a start-up company controlled by Mathews. Aspen University survived the merger, pursuant to which, Mathews became Aspen University's CEO. Since March 23, 2011, Mathews has also served as the Chairman and a consultant for Wizard World, Inc. ("Wizard World), a producer of events throughout the United States, such as Comic Cons and pop culture conventions. These events feature celebrities from movies and television, artists, writers and events such as premieres, gaming tournaments, exhibitors, retailers, panels, and costume contests. As of April 8, 2013, Mathews was the second largest individual shareholder of Aspen Group, owning 4,497,837 shares (7.7%) of Aspen Group common stock. As detailed below, Mathews participated in and was responsible for the contents and dissemination of documents and communications with the

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