I have compiled a condensed version of the 28 pa

I have compiled a condensed version of the 28 page SEC complaint.  I did it for myself.  You may find it useful.

Link to the complete filing:
http://www.sec.gov/litigation/complaints/2012/comp22220.pdf

Summary of SEC Complaint against JBI, Bordynuik and Baldwin

Summary statements:

1. Defendants misrepresented and overstated the actual value of JBI’s assets and, hence, of the company itself by almost 1,000%. The Defendants then used the overvalued financial statements in two private capital raising efforts (Private Investment in Public Equity or PIPES) that raised more than $8.4 million from unwitting investors.

2. Specifically, in its financials JBI listed media credits purchased by the company for $1,000,000 in common stock as having a value of $9,997,134, which made the media credits the single largest asset on JBI’s balance sheet.

3. The almost 1,000 % overvaluation of the media credits substantially misrepresented the actual value of JBI’s assets and, hence, of the company itself. The Defendants then used the overvalued financial statements in two private capital raising efforts (Private Investment in Public Equity or PIPES) geared toward raising the capital necessary to begin commercial operation and production of P2O. JBI raised over $8.4 million for the company in these PIPES relying on misrepresentations to investors about the company’s assets and valuation. Shortly after obtaining the approximately $8.4 million in financing the company issued a public statement indicating its financial statements could no longer be relied upon due, in part, to the erroneous valuation of certain assets on the balance sheet (i.e., the media credits, among other things).

4. Statement of JBI's SEC violations

5. Statement of Bordynuik and Baldwin SEC violations.

6. Based on these violations, the Commission seeks the following relief against the Defendants: (i) entry of permanent injunctions prohibiting all Defendants from engaging in future violations of the sections of the securities laws that they have violated in connection with the conduct described herein; (ii) an order requiring all Defendants to disgorge their ill-gotten gains and pay pre-judgment interest; (iii) an order requiring all Defendants to pay appropriate civil monetary penalties; and, (iv) an order barring Bordynuik and Baldwin, respectively, from serving as officers or directors of a public company.

7-10. Jurisdiction and venue

Defendants

11-13. The defendants are JBI (the company), John Bordynuik (JB) and Ronald Baldwin, Jr. JB functioned as CEO during the relevant period and CFO for part of that period.  Baldwin functioned as CFO from January, 2010 until resigning in March, 2011.

14. Data recovery business

15. 310 Holdings and Plastic2Oil

16. 310 Holdings purchase of Javaco from Domark including:

Pursuant to a separate agreement, Domark’s CEO also assigned media credits (“the media credits”) purportedly representing $9,997,134 worth of prepaid print and radio ads to 310 Holdings to be used for marketing and advertising. As consideration for the assignment of the media credits, 310 Holdings issued 1,000,000 shares of common stock valued at $1,000,000 ($1.00 per share market price) on August 24, 2009.

17. Name change to JBI, Inc. on Oct. 5, 2009, with JB acting as CEO and CFO and certifying the financial statements included with Form 10-K for the year ended 2009 filed March 31, 2010.

Accounting for the Media Credits

18. Reported as an asset valued at the face value of $10 million rather than the cost of $1 million, overstating the value by $9 million.

19. The media credits should have been written off in their entirety as they represented "no probable economic benefit to JBI" because "the ads had limited distribution and would be unlikely to increase sales and profits."

20. Outside consultant with only 6 credit hours in accounting at a community college ( "the accounting consultant" ) hired by 310 Holdings for accounting related work in 2002.

21. JB's statement to the accounting consultant via Skype that she "please get the pro formas as juicy as you can so I can acquire a chemical company for less.” The reference to a chemical company related to Bordynuik’s intent to use JBI and its valuation as a vehicle for acquisitions. The reference to “pro formas” related to financial statements of JBI that would not necessarily conform with GAAP and that the company could use to communicate information about JBI to prospective investors, as opposed to being filed with the SEC. In response to Bordynuik’s instructions the consultant produced pro formas to Bordynuik that contained the media credits valued at nearly $10 million.

22. Late 2009 meeting in Florida with the incapacitated (drinking problem) independent auditor for , a principal at Gately and Associated. The accounting consultant, also in Florida, advised JB to hire a different auditor due to the drinking problem, but JB continued to use Gately.

23. Accounting consultant told Bordynuik that she thought GAAP required that the media credits be recorded at their cost to JBI of $1 million, not at their face value of $9.997 million. During the same period, and also before the filing of the third quarter 10-Q, another consultant ( “the business consultant” ) affiliated with JBI raised questions about JBI’s pro formas containing the $9.997 million value of the media credits. The business consultant was the Assistant Secretary for JBI and a business consultant working on Plastic2Oil initiatives. He also was a CPA and a former staff auditor at Deloitte & Touche, one of the Big Four accounting firms.

24. The business consultant expressed concerns to Bordynuik that the media credits should be booked at cost prior to the third quarter Form 10-Q filing. The business consultant had specific discussions with Bordynuik about his concerns with JBI booking the media credits at a nearly $10 million value. The business consultant told Bordynuik that the $10 million valuation was odd and inconsistent with his experience as an auditor because he believed that such an asset should be booked at the lesser of cost or market value. The business consultant further explained his concern regarding the $10 million valuation of the media credits on JBI’s balance sheet by pointing out that the company one day prior to the transaction had no assets yet, on the very next day, appeared to have assets of nearly $10 million. The business consultant raised these concerns with Bordynuik after the media credits were first acquired. Bordynuik responded to the business consultant’s concerns by stating that the media credits were “audit proof.” The business consultant also cautioned Bordynuik that he needed to be careful about how he valued the media  credits and advised that, in his view, to obtain good accounting and auditing advice, Bordynuik should hire a Big 4 accounting firm.

25. Bordynuik did not follow the advice of the business consultant about either the valuation of the media credits or the hiring of a new accountant and/or auditor. Instead, Bordynuik continued to use the consultant for accounting services, including the preparation of pro formas and financial statements and kept the auditor at the Gately firm as his independent auditor. In fact, notwithstanding the concerns raised both by the consultant and the business consultant, in Skype messaging to the consultant on September 2, 2009, Bordynuik stated to her:

[The business consultant’s] group is ultra conservative and are very very good at what they do. They were concerned about our pro forma because they said the [m]edia should have been booked at cost and the big 4 accounting firms would probably penalize us. I advised that the media credits could stand on their own and the auditor said so (this was from [Domark’s CEO]). I hope so…. We need a chemc company bad…jezz (sic).

26. By mid-September 2009, and prior to the filing of the third quarter Form 10-Q, additional information came to Bordynuik that raised questions about the valuation, and even the validity at all, of the media credits. Bordynuik learned that misleading statements had been made by Domark’s CEO to induce JBI’s acquisition of Javaco, including whether Javaco even maintained operations in Mexico as previously claimed by the CEO. In addition, Bordynuik learned that the CEO of NewsUSA, the parent company of Media4Equity (the original source of the media credits in a purported arms length transaction with Domark), was previously on the Board of Directors of Domark. On September 21, 2009, the consultant informed Bordynuik of the suspect relationship via Skype message, “BTW, I just discovered that the CEO of NewsUSA is a prior director of Domark.” Bordynuik responded, also via Skype, “I saw that. Yuck.” Despite having renewed doubts about the source of the media credits, the credibility of Domark’s CEO, and being warned about the proper GAAP treatment of the media credits by JBI’s own consultant and business consultant, Bordynuik directed that the media credits on JBI’s financial statements contained in its Form 10-Q, filed on November 16, 2009, for the quarter ended September 30, 2009, be listed at the purported face value of $9.997 million.

Continuing Problems with JBI's Independent Auditor

27. Auditor arrested on November 28, 2009, for Violation of Probation, Felony DUI and Possession of Marijuana.  Jailed until February 18, 2010. JB informed by the consultant of the incarceration, but JB insisted on continuing to use Gately, helped auditor with legal expenses, offered him a job as auditor of JBI's Canadian operations.

28. Despite lack of independence shown by these actions, JB continued to use Gately. JB claimed that a colleague at Gately was used.  But there are no indications that anyone else at Gately reviewed JBI financial statements.  But a colleate of the Gately auditor "ultimately cut and pasted the electronic signature of Gately & Associates on an audit opinion letter attached to JBI’s Form 10-K filing representing that an independent audit had been conducted when one had not"

29. Bordynuik, as CEO, then approved and certified JBI’s financial statements contained in its year end Form 10-K filed on March 31, 2010 that included the erroneous and inflated value of the media credits. Bordynuik also falsely asserted, in management representation letters to its outside auditors, that JBI’s financial statements were prepared in conformity with GAAP. In addition, Gately & Associates issued an unqualified opinion on JBI’s December 31, 2009 financial statements which, in effect, represented that the financial statements were free of material misstatements and were represented fairly in accordance with GAAP.

Baldwin’s Knowledge of the Improper Accounting for the Media Credits

30. January 1, 2010, Baldwin appointed as CFO of JBI. Discussed valuation of media credits with the business consultant.  Both expressed concerns that the media credits should be valued at cost.

31. Baldwin also communicated with the business consultant by email about the valuation of the media credits. On March 29, 2010, in the context of discussing gains associated with acquisitions, Baldwin wrote down in an email to the business consultant: “let’s write down the media credits if [JBI’s consultant] is going to recognize a gain [on acquisitions]. Better to get them off the balance sheet while we can.” The business consultant responded shortly thereafter: “I would agree that we should write down the media credits, although we probably need some basis to do it.”

32. Baldwin knew before the 10-K was filed in March 2010 that the media credits were purchased in the third quarter of 2009 with one million shares of JBI stock that were valued at $1.00 per share at the time of purchase. Baldwin also knew that the media credits were the single largest asset on JBI’s balance sheet yet took no steps to review any documents associated with them nor did he consult anyone other than Bordynuik, someone he knew had no accounting background, about whether the media credits were real and useable. Prior to the filing of the Form 10-K in March 2010 Baldwin failed to research GAAP or otherwise take steps to educate himself about valuation issues relating to the media credits. In advance of certifying the financial statements included with the 10-K filing Baldwin did not consult with any outside accountant, auditor or others about the appropriateness of reporting the media credits on the balance sheet at $9.997 million. Despite being aware of the issues regarding the valuation of the media credits, and of the significance of the value of the media credits for JBI’s balance sheets and other financials, Baldwin failed to conduct any reasonable due diligence on the appropriate accounting for the media credits when he certified the financial statements contained in JBI’s Form 10-K for the year ended 2009.

JBI’s Private Investment in Public Equity (PIPE) Offerings

33. During the relevant period, JBI engaged in two significant private capital raising efforts to raise the capital necessary to begin commercial operation and production of P2O. Beginning in the fall of 2009 through May 2010, JBI raised approximately $8.4 million in capital through two Private Investment in Public Equity (“PIPE”) offerings. In addition to using private placement memoranda to market these offerings to investors, Bordynuik and others on behalf of JBI utilized presentation materials that represented the company’s financial position that included the media credits at a value of $9.997 million. The inclusion of the media credits on these sales materials and in the company’s public filings served to present a misleadingly strong financial picture of the company’s assets to potential PIPE investors. Both Bordynuik and Baldwin knew or should have known that financials and presentation materials for JBI that listed the media credits at a value of $9.997 million was a false statement of the value of the media credits, and a valuation inconsistent with GAAP.

Baldwin Made Willful Misrepresentations about JBI’s Financial Position at JBI’s Annual General Meeting on April 24, 2010

34. Almost immediately following the filing of JBI’s Form 10-K on March 31, 2010, Baldwin, Bordynuik, the business consultant, outside counsel, and newly hired accounting and audit firms consulted about perceived problems associated with the 10-K filing. Baldwin himself acknowledged that by at least this time he became aware that GAAP required the media credits to be booked at cost, rather than the valuation used, and approved by him, for the Form 10-K filing. By this time Baldwin also reviewed information relating to press articles and other media obtained by JBI that were charged against the media credits and knew that the media credits had little to no real value. As a result, Baldwin knew, prior to JBI’s Annual General Meeting (“AGM”) on April 24, 2010, that listing the media credits at $9.997 million was, at the very least, a substantial overvaluation and would have to be restated.

35. Despite this understanding Baldwin made a presentation at JBI’s Annual General Meeting, attended by JBI shareholders, that misrepresented JBI’s financial position. Baldwin failed to inform the shareholders that the media credits were erroneously booked and would have to be written down significantly and potentially in their entirety. Instead, Baldwin made misrepresentations about the media credits being a current asset at a nearly $10 million valuation that would not be on the balance sheet at the same time the next year because they would need to be expensed. In making these misrepresentations Baldwin failed to inform the shareholders that he then believed the media credits to be, at a minimum, overvalued by nearly $9 million, and at worst, completely worthless and needing to be written off entirely. Baldwin also failed to inform the shareholders that he believed the company most likely would need to restate its financial statements as a result of the overvaluation of the media credits.

36. Bordynuik was present at JBI’s Annual General Meeting and was aware, both before and after, of the representations Baldwin made about the value of the media credits. At the time Bordynuik also was aware that the media credits were significantly overvalued in JBI’s financials and that the company likely would have to restate as a result. At the time of JBI’s Annual General Meeting, Baldwin and Bordynuik both were aware that JBI was still soliciting investors for one of the PIPES that ultimately raised approximately $8.4 million during the period of overstatement.

JBI's Restatements

37. On May 21, 2010, JBI filed a Form 8-K stating that its previously issued financial statements for the year ended December 31, 2009, filed on Form 10-K with the SEC on March 31, 2010, and the interim financial statements for the period ended September 30, 2009, filed on Form 10-Q with the SEC on November 16, 2009, should no longer be relied upon due, in part, to questions regarding the valuation of media credits acquired by the company during 2009. On July 9, 2010 and November 17, 2010, the company issued two restatements. In these restatements. In them, JBI wrote down the media credits to zero and disclosed that the credits had been improperly

38 -  92 Fourteen separate claims against JBI, JB and Baldwin.

Prayer for Relief

WHEREFORE, the Commission requests that this Court enter an order:

A. Permanently enjoining JBI (the company) from violating SEC rules.

B. Permanently enjoining Bordynuik from violating SEC rules.

C. Permanently enjoining Baldwin from violating SEC rules.

D. Requiring all Defendants to disgorge their ill-gotten gains and losses avoided, plus pre-judgement interest.  The court will determine how to distribute collected monies.

E. Requiring all Defendants to pay appropriate civil monetary penalties.

F. Prohibiting Bordynuid and Baldwin from acting as officers or directors of any issuer that has a class of securities registered with the SEC.

G. Retaining jurisdiction over this action to implement and carry out the terms of all orders and decrees that may be entered.

H. Granting suc other and further relief as the Court deems just and proper.

JURY DEMAND

The Commission hereby demands a trial by jury on all claims so triable.

Respectfully submitted,

SECURITIES AND EXCHANGE COMMISSION

By its attorneys,

/s/ Martin F. Healey

Martin F. Healey (BBO No. 227550)

Michelle Giard Draeger (ME Bar No. 8906) 33 Arch Street, 23rd Floor

Boston, Massachusetts 02110

Telephone: (617) 573-8952 (Healey direct)

Facsimile: (617) 573-4590

E-mail: healeym@sec.gov

Dated: January 4, 2012

techisbest