I will state my basis for my position, and as well

I will state my basis for my position, and as well I have read the Defense and can comment on that, although i took maybe 15 minutes and skimmed it. Definitely a long read, so there will be things I have missed. I think that as Tech has said, there is quite a bit of "he-said, she-said" in this, and all I can do is talk about what leaps out at me. It is normal for lawyers to use antagonistic language and deny everything. The truth will come out at a Pre-Trial meeting between the lawyers themselves, or maybe on the courthouse steps, or perhaps in a courtroom. The courtroom option is very expensive and time-consuming for all, so seeing as things are not settling, I suspect the courtroom steps option will transpire.

My basis is that in contract law on the subject of misrepresentation, which is what this is, the Defendant is held to a higher standard than just whether or not he/ she knew the information. The standard he is held to is he "ought to have known". Whether we are talking about the CEO of a company or a designated accountant (he is a member of a professional organization btw and is held to certain standards as part of his profession), they are expected to know these things. Posters here are acting like the SEC case is a balloon and that all that is necessary is to prick the balloon, and the whole case goes away. Far from it. I think that if the evidence has any merit at all, it will simply be a matter of how much the damages are.

According to my above assumption, JBI's own actions are damning. They chose to restate almost immediately after the financing was completed, and directly cited the Media Credits as an issue. This is an admission of guilt. Put to the two together (the financing and restatement) and you have a de facto proof of guilt.

I would calculate the damages this way: the share price was up over 4.00 when the PIPE was negotiated. The offering price was 4.00. The shares crashed immediately upon the restatement which occurred a couple of months later. Let's say it fell to .50 (I can't remember). The damages to Pipeholders is the difference. For 100% damages to be awarded, it has to be 100% clearcut. I know that written evidence is most important (internal office memos, etc). Saying that someone else said something is hearsay and inadmissible in court. Now it seems to me that Skype logs may be equivalent to written documentation. The SEC obviously went to some trouble to get those logs. I would think that if the case has merit, we will see a 7-figure settlement for jBI, which will be a serious problem for them.

Here are my obvservations from scanning the Defence document:

1. The original transaction where Domark acquired the Media Credits is not relevant to the JBI (310 Holdings) transaction to acquire the credits. Two separate transactions. Therefore the argument made that the value can be taken to be the same as the Domark valuation will not fly IMO. This would be contrary to the expectation of the CFO with the accreditation that he holds. Frankly, it is passing the buck. If everybody did that, such problems would never be corrected. Two wrongs do not make a right.

Also, this is not consistent with Restating on the basis of the Media Credits being incorrectly valued. No one with a professional accounting designation can say that one time they honestly thought the Credits were worth 10M and then 2 months later (or whatever..) Restate them because they were worth less. If you are going to use the above argument, the restatement should not be necessary.

2. Next there is an assertion that they did not rely on the Media Credits in their marketing efforts. Well, we don't really know that, because outsiders were not privy to those efforts. The marketing for the PIPE was conducted in secret for good reason. The fact that the Media Credits were never referred to in a PR makes no matter. They were listed as a Current Asset in the Financial Statements referred to in the negotiations, which since they were Current, were of interest to the PIPE participants. We have no idea how or if they were marketed. A PIPEholder from that PIPE may make a good witness for either side.

3.There is a paragraph saying that the Outside Consultant only had 2 accounting courses and hence was not qualified to have an opinion on the Media Credits. Well, if that was the case, why was JBI using her? This is not helping JBI as a Statement of Defence.

4. para. 27 on helping the accouintant with their personal problems is not helping JBI. The statement is that this money was payable anyway for professional services, hence there was no conflict of interest. It had to do with some personal matters (criminal charges or alcohol counselling or something) that was paid for by JBI. Well, if that was the case, why was JBI not simply paying them what was owed? Companies like JBI are supposed to pay their bills timely on some basis, like net 30 days or something. The whole thing comes across like JBI did not want to pay for professional services owed, but if he did what they wanted they would. IMO this para. is not helping JBI.

5.There is a para. where the Consultant testifies where she was not ordered to insert any "plug" numbers. Well, maybe there is some misunderstanding about what a "plug" number is. It is not generally used to inflate the numbers in any way. It is used to correct a minor error when the spreadsheet simply won't give the correct answer. Usually it is a fixable mistake, but sometimes you enter a small inconsequential number, usually to make it balance. We are talking about a 900% inflation of Current Assets here, hardly a plug number.

6. para. 32 is pretty much an admission of guilt on the part of the CFO. It states that the CFO; knew that the Media Credits were the biggest item in the Current Assets, did not consult JB, and did not do any research to ascertain their true value. Well, if he did that, then he did not do his job according to the expectations of his profession and IMO he is guilty.