Plastic2Oil Inc (PTOI)

[scion]

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.


http://www.sec.gov/litigation/complaints/2012/comp22220.pdf