Falls businessman vows to ‘vigorously’ defend against suitBy Dan Dakin Niagara Falls Review
A Niagara Falls businessman who is facing allegations by the U.S. Securities and Exchange Commission says his company will be just fine.
John Bordynuik's company, JBI, Inc., discovered a way to efficiently produce fuel from recycled plastic and has been refining what it calls its Plastic2Oil process over the past three years. The headquarters of the publicly traded company are in Allanport while its processing plant is in Niagara Falls, N.Y.
The SEC announced this week it has filed an action in U.S. federal court against Bordynuik, the chief executive officer, along with Ronald Baldwin Jr., the former chief financial officer — accusing them of "engaging in a scheme to commit securities and accounting fraud."
The allegations go back to the second half of 2009, when the SEC says JBI overstated certain company assets to make itself look more successful than it was as it tried to raise private capital money.
The $8.4 million raised was then used to get their Niagara Falls, N.Y., operation, where recycled material is converted to sellable fuel, off the ground.
The SEC allegations say after that money was raised, JBI issued a public statement saying its financial statements couldn't be relied upon, partially because of errors on its balance sheet.
The securities commission says Bordynuik and Baldwin Jr, a resident of Palm Harbor, Fla., were either aware that their 2009 filings violated federal securities law, or were reckless in making the filings.
After the SEC announcement, JBI issued a statement to the media saying: "We believe that JBI, Inc. acted in good faith in correcting the legacy accounting issues in question … we regret that our attempts to negotiate settlement of the dispute have failed. At this point, I can only say that we look forward to vigorously defending the suit."
On Friday, Bordynuik expanded on that, saying the lawsuit isn't much of a concern.
"In 2009 we were a very small company and we had an accounting department of one," he said.
"The issue is around a single item on a 2009 accounting statement. I think you'd be hard-pressed to find a judge that would kill this for that."
On Friday, two days after the announcement, it was business as usual at JBI.
Set up in an old industrial park about five kilometres from the Rainbow Bridge, the company is located in a relatively small building that is surrounded by fencing.
At an entrance gate, an off-duty Buffalo police officer kept guard — keeping prying eyes away from what Bordynuik says is proprietary technology.
"We take (security) very seriously. This is proven technology. It's unquestionable. There hasn't been a viable alternative energy company," he said.
Since launching three years ago, JBI has refined a process where plastic packaging is broken down and turned into fuel.
The raw material is given to them from companies that typically would have to pay big money to dispose of it and then the end product is a fuel that can be sold to a wide variety of companies.
Bordynuik first built a one-kilogram processor to prove his conversion technology worked. That was then used as a model to build a one-ton test processor, and then the 20-ton commercial unit now in full operation in Niagara Falls, N.Y.
The company has about 100 employees in Canada and the U.S.
"A lot of people thought this was like what was already out there. There are other companies, but they don't have a final product like we do," said Bob Molodynia, the company's vice president of business development.
Molodynia, also of Niagara Falls, Ont., said only about 7% of all plastic waste gets recycled.
From the plastic JBI processes, 90% is converted into sellable fuel and 8% is gas that's used to power the company's processing machines, which can produce up to 109 barrels of fuel per day.
While much of the final product is sold as oil for commercial companies, JBI now has a licence to produce a clean fuel for transportation use. On Dec. 23, it announced a deal to provide Canadian XTR Energy stations with both gasoline and diesel.
The SEC action this week resulted in JBI's stock plummeting from $2.35 Wednesday morning to 54 cents 24 hours later, though it had recovered to $1.42 by the time markets closed Friday.
http://www.niagarafallsreview.ca/ArticleDisplay.aspx?e=3428015
ddakin@nfreview.com
Twitter: @dandakinreview
With files from the Niagara Gazette
