Washington, D.C., July 22, 2008 (LAWFUEL) – The Securities and Exchange Commission today charged an Ann Arbor, Mich.-based company and a former executive in an accounting fraud scheme that ultimately cost the company more than $437 million in market capitalization and caused its stock price to drop by more than half its value during a two-month period in early 2006.

The SEC alleges that Scott Hirth of Carleton, Mich., the former Vice President of Finance and CFO for ProQuest Company’s Information and Learning Division, made fraudulent manual journal entries at the end of monthly and quarterly reporting periods in order to favorably alter ProQuest’s financial results over a five-year period. ProQuest, which produces electronic databases of archived information, is now known as Voyager Learning Company. The company has agreed to settle the SEC’s charges, and Hirth will pay more than $400,000 to settle the charges against him.

“This case demonstrates the Commission’s willingness to take strong action against those who commit financial fraud and the public companies that fail to prevent fraud through effective internal controls,” said Linda Chatman Thomsen, Director of the SEC’s Division of Enforcement.

Merri Jo Gillette, Director of the SEC’s Chicago Regional Office, said, “As alleged in our complaint, Hirth engaged in an egregious and extensive accounting fraud by single-handedly making hundreds of false manual journal entries on the company’s books and then going to great lengths to conceal his deceptive techniques. Our tenacious investigative work and enforcement action in this case should serve as a stark lesson to those seeking to commit fraud and harm investors.”

According to the SEC’s complaint, filed in federal court in Detroit, Hirth made false accounting entries that materially inflated ProQuest’s reported “Earnings Before Interest and Taxes” for 2001 through 2004 and the first three quarters of 2005. The SEC alleges that Hirth created false documentation to purportedly support the balances in the manipulated accounts and used “hidden rows” and “white font” functions in spreadsheets to conceal his false accounting entries. According to the SEC’s complaint, after ProQuest disclosed the accounting scheme in its public filings, it lost more than $437 million in market capitalization and its stock price dropped from $29.41 to $12.31 per share between February and April 2006.

The SEC also alleged that ProQuest failed to devise and maintain a system of internal accounting controls that could have prevented Hirth’s scheme and failed to properly apply other basic accounting principles.

ProQuest and Hirth settled the charges without admitting or denying the allegations of the SEC’s complaint. Under the settlement, Hirth is permanently enjoined from committing future violations of the federal securities laws, and will pay $233,676 in disgorgement, $54,474.25 in prejudgment interest, and a penalty of $130,000. Hirth also consented to be permanently barred from serving as an officer and director of a public company and from practicing as an accountant before the Commission. ProQuest is permanently enjoined from future violations of the internal controls, books and records, and reporting provisions of the federal securities laws.

Philadelphia, Pa. (LAWFUEL) – July 22, 2008 – Pepper Hamilton LLP announced that John M. Ford, a securities lawyer focusing on investment company and investment adviser regulatory matters, has joined the firm’s Investment Management Practice Group as a partner in the Philadelphia office.

“John has 12 years of experience assisting financial institutions with their investment management activities and is a perfect fit for our financial services practice in general, and our growing investment management practice in particular,” said Joseph V. Del Raso, chair of Pepper Hamilton’s investment management practice. “He is well regarded by his clients and colleagues in the mutual fund and investment advisory industry, and we’re delighted to welcome him to Pepper.”

Mr. Ford focuses his practice on investment company and investment adviser regulatory issues, and related issues affecting the investment management activities of financial institutions. He assists clients with the formation and registration of investment companies and investment advisers, and provides advice about regulatory compliance and securities law issues.

He also has significant experience counseling clients in connection with reorganizations, mergers, acquisitions and other business combinations of investment companies and other pooled investment funds. In addition, he is experienced in private funds and status issues related to the Investment Company Act.

Mr. Ford is listed in Chambers USA: America’s Leading Lawyers for Business, in recognition of the strength of his practice in registered investment funds.

“Pepper’s sophisticated practice in the regulated and non-regulated fund industry and the opportunities to expand my practice are exciting,” said Mr. Ford. “I have known members of Pepper’s investment management group for many years, and I look forward to working with them and helping the practice continue to grow.”

Mr. Ford joined Pepper Hamilton from Morgan, Lewis & Bockius LLP, where he was a partner in its investment management and securities industry practice group. Before that, he was an attorney at Rodney Square Management Corporation, a mutual fund service company.

He is a graduate of Saint Joseph’s University (B.S. 1991) and Rutgers University School of Law (J.D. 1994).

About Pepper Hamilton

Pepper Hamilton LLP (www.pepperlaw.com) is a multi-practice law firm with more than 500 lawyers in seven states and the District of Columbia. The firm provides corporate, litigation and regulatory legal services to leading businesses, governmental entities, nonprofit organizations and individuals throughout the nation and the world. The firm was founded in 1890.

Pepper Hamilton’s Financial Services Practice Group includes more than 50 lawyers and other professionals who focus their practices on issues affecting the financial services industry, including a wide range of businesses in the investment management community.

The firm’s investment management lawyers represent registered investment companies, registered investment advisers, alternative investment funds and investors in alternative products. They also counsel clients regarding securities regulation, enforcement and litigation. They are experienced in all matters arising under the Investment Company Act of 1940 and the Investment Advisers Act of 1940.