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Case 1:13-cv-11906-MLW Document 49 Filed 06/24/14 Page 2 of 36

media credits at a value of $9.997 million, thereby becoming the single largest asset on the
Company’s balance sheet, when they should have been initially booked at a value of $1,000,000
when acquired in August 2009, and subsequently written down to zero as of the end of the
company’s third fiscal quarter on September 30, 2009.

The Individual Defendants’ willful misconduct resulted in the filing of a

complaint against JBI by the Securities and Exchange Commission (“SEC”) on January 4, 2012
(the “SEC Complaint” or the “SEC Action”). The Company and the SEC ultimately entered into
a settlement on January 23, 2014 wherein the Company and Bordynuik consented to the entry of
orders enjoining them from future violations of certain provisions of the federal securities laws
(including the antifraud, reporting, and books and records provisions), and required the Company
and Bordynuik to pay civil penalties of $150,000 and $110,000, respectively. The SEC order
against Bordynuik also included a five-year officer/director bar.

The SEC Complaint charges Bordynuik and Baldwin with knowingly engaging in

a scheme to commit securities and accounting fraud by knowingly reporting materially false and
inaccurate financial information on JBI’s financial statements for two reporting periods during

According to the SEC Complaint, during the third and fourth quarter of 2009, the

Individual Defendants willfully caused the Company to materially overstate certain assets in an
effort to bolster its balance sheet and achieve success in two private capital raising efforts
(Private Investment in Public Equity or PIPES) geared toward raising the capital necessary to
begin commercial operation and production of its process for converting plastic waste into oil,
known as “Plastic2Oil,” or “P2O.” The SEC Complaint asserts that JBI illicitly raised over $8.4
million for the Company in PIPES just before the Company issued a public statement indicating