Johnik: I don't know how you can read sections 23-26 of the complaint and come to the conclusion that it "does not mean that problems were known at the time they were originally filed."
From my abbreviated synopsis of the complaint:
http://investorshangout.com/post/view?id=1933...post_name=
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.
Plastic2Oil, Inc. (PTOI) Stock Research Links
