So JB knew BEFORE the 10Q that the CEO of Domark had misled him and even though he was advised not to by several business consultants - he made the choice to file the improper value of the media credits and proceed with the pipes. Wow. Makes it kind of hard to call it a 'simple accounting mistake'.
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.
