Go count the number of times "defendents deny" and

Go count the number of times "defendents deny" and "deny the allegations" are used throughout the defense. There is even a General Denial listed at the end. I did not misstate the character of the defense.

The important paragraph relative to the accounting of the media credits according to GAAP rules is paragraph 19.

The complaint:

19. In fact, the media credits should not have had any valuation as of the close of the reporting periods on September 30, 2009 and December 31, 2009. The 1,000,000 shares of 310 Holdings common stock (valued at $1.00 per share; $1,000,000 total) constituted an equity based payment. The consideration received in exchange for these equity instruments were the media credits. Because of the unreliability of the probable future economic benefit attributable to the media credits, GAAP required that the media credits initially be recorded in JBI’s books at the $1,000,000 consideration paid by 310 Holdings on August 24, 2009 and subsequently remeasured at September 30 and December 31, 2009. Because there was no probable economic benefit to JBI from the media credits as the ads had limited distribution and would be unlikely to increase sales and profits, GAAP required that the media credits should be written off in their entirety as of September 30, 2009. Therefore, the media credits, listed by JBI on its financial statements with a $9,997,134 valuation, in fact should have been valued initially at the $1,000,000 purchase price, but then written off entirely. For the reporting periods that ended on September 30, 2009 and December 31, 2009, JBI did neither.

The defense:

19. Defendants admit that JBI purchased media credits from Domark in exchange for 1,000,000 shares of 310 Holdings common stock. Defendants deny the remaining allegations in paragraph 19 of the Complaint.

As far as being advised to not use the $10 million as the value of the media credits, paragraphs 23 and 24 are most important:

The complaint:

23. During this trip by Bordynuik to Florida, and prior to the filing of the Form 10-Q for the quarter ended September 30, 2009, the consultant expressed concerns to Bordynuik about what appropriate value, according to GAAP, to record the media credits on JBI’s balance sheet. The 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.

The defense:

23. Defendants deny the allegations contained in the first two sentences of paragraph 23. Defendants admit that the referenced business consultant assisted JBI in the preparation of its September 30, 2009 quarterly financial statements, but otherwise deny the allegations contained in the third sentence of paragraph 23. Defendants admit that the business consultant was an independent contractor who held the title of Assistant Secretary for JBI, and that the services performed by this individual related to, among other things, the planned development of JBI's Plastic2Oil process, but otherwise deny the allegations contained in the fourth sentence. Defendants admit the allegations contained in the last sentence of  paragraph 23. After review of the media credits valuation through October 2009 and forward, the business consultant ultimately agreed with the recording of the face value of the media credits at $9.997 million.

24. Defendant deny all of the allegations contained in paragraph 24.

Look above.  Paragraph 24 is a long paragraph.  The defense is to deny all of it.

It is a "we said - they said" defense. Anyone who can glean the truth from reading either side is fooling themselves. It would require a jury trial with cross examination of all involved.

I understand all the calls for a jury trial to get to the truth. But I don't know how anyone could predict the outcome based on what has been presented in the complaint and the defense.