AGREED FACTS: "purpose was conduct CONTRARY to the public interest."
15. Bordynuik adopted this practice, which violated the terms of the Childrens’ Trust, so as to put free trading and not restricted stock, in the hands of third parties.
Name Date of Order Bordynuik, John W. April 04, 2014
Details
Name: Bordynuik, John Ontario - Ontario Securities Commission Date of Order or Settlement April 04, 2014 Banned with or without exceptions until
Sanctions Director, Officer and/or Supervisor Ban with or without exceptions
Administrative Penalty or Fine Reprimand Payment agreed and/or ordered Administrative Penalty or Fine/Pénalité ou amende administrative: $125,000; Costs/Frais: $45,000
Violations and/or conduct Acting contrary to the public interest Illegal or unregistered distributions Making false or misleading statements
5. During the years 2008 to 2011 (the “Distribution Period”) Bordynuik raised money for JBI and/or its predecessor entities.
6. In doing so he caused JBI to raise a total of approximately $11.2 million U.S. from 433 Ontario investors through activities which breached Section 53 of the Act and which were not in compliance with Ontario securities law.
7. During part of the Distribution Period, Bordynuik caused to be prepared and signed financial statements of JBI in which JBI’s financial position was misstated by approximately $10 million as a result of attributing an excessive value to one of the company’s assets, namely certain media credits. This misstatement was first made in JBI’s third quarter financial statements for the quarter ended September 30, 2009 and contained in its Form 10-Q. It was repeated in JBI’s 2009 year-end financial statements contained in its Form 10-K for the year ended December 31, 2009. Both documents were filed with the Securities Exchange Commission (“SEC”) and are collectively referred to as “the Financial Statements”.
8. JBI reported in the Financial Statements that it owned media credits having a valuation of $9,997,134. This valuation was erroneous, and was not in compliance with Generally Accepted Accounting Principles or “GAAP”.
9. Bordynuik certified that, based on his knowledge, the Financial Statements fairly presented in all material respects the financial condition of the registrant, JBI. In fact the Financial Statements did not do so.
10. Monies were raised from Ontario investors during the time that the Financial Statements contained the erroneously high valuation for the media credits.
11. The media credits were eventually written off in their entirety in JBI’s amended form 10-K filed on July 9, 2010. The proper valuation of the media credits under GAAP was nil. 12. While Bordynuik was raising funds on behalf of JBI, he established a trust for the benefit of his two minor children (the “Childrens’ Trust”), which was subject to a formal trust agreement.
13. Bordynuik caused shares of JBI or John Bordynuik Inc. to be irrevocably settled on his mother as trustee of the Childrens’ Trust. The Childrens’ Trust held those shares in a securities account at RBC Dominion Securities (“DS”).
14. Having irrevocably settled JBI shares in trust Bordynuik then directed his mother as trustee to transfer the shares out of the trust account at DS to a number of transferees whom he designated, contrary to the terms of the formal agreement governing the Childrens’ Trust.
15. Bordynuik adopted this practice, which violated the terms of the Childrens’ Trust, so as to put free trading and not restricted stock, in the hands of third parties.
16. Bordynuik used the Childrens’ Trust in part as a reservoir of JBI shares which could be distributed to others, including Bespoke Growth Partners, in aid of acquiring a listing on the AMEX or NASDAQ exchanges. Bordynuik’s misuse of the Childrens’ Trust for this purpose was conduct contrary to the public interest.
WHEREAS on April 3, 2014, the Ontario Securities Commission (“the Commission”) issued a Notice of Hearing (the “Notice of Hearing”), pursuant to sections 127 and 127.1 of the Securities Act, R.S.O. 1990, c. S.5, as amended (the “Act”), to consider whether it is in the public interest to make orders as specified therein against and respect of John W. Bordynuik (“Bordynuik”);
AND WHEREAS Bordynuik entered into a Settlement Agreement with Staff of the Commission dated January 28, 2014, (the “Settlement Agreement”) in which Bordynuik agreed to a proposed settlement of the proceeding commenced by the Notice of Hearing dated April 3, 2014 subject to the approval of the Commission;
AND WHEREAS on April 3, 2014, the Commission issue a Notice of Hearing pursuant to sections 127 and 127.1 of the Act to announce that it proposed to hold a hearing to consider whether it is in the public interest to approve a settlement agreement entered into between Staff and Bordynuik;
AND UPON reviewing the Settlement Agreement, and the Notice of Hearing and the Statement of Allegations of Staff and upon hearing submission from counsel for Bordynuik and from Staff;
AND WHEREAS the Commission is of the opinion that it is in the public interest to make this order pursuant to sections 127 and 127.1 of the Act;
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