JBI said the suit had been filed by the SEC Division of Enforcement staff.
JBI said the lawsuit arises from the restatement of the company's financial statements for the periods that ended Sept. 30, 2009, and Dec. 31, 2009.
"Under the proposed settlement, for which the SEC staff is seeking approval by the court, the company and Mr. Bordynuik would consent 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 requiring the company and Mr. Bordynuik to pay civil penalties of $150,000 and $110,000, respectively," said the JBI news release.
It said the contemplated settlement does not require payment of "disgorgement" or other amounts.
The proposed order against Bordynuik would include a five-year officer-director bar. Bordynuik stepped down from his officer and director positions with the company in May 2012 and currently serves as its chief of technology, a non-officer position, said JBI.
The company said that it notes the court has discretion regarding whether, and when, the proposed settlement will be approved and final judgments issued.
If approved by the court, the proposed settlement "would fully resolve the dispute with the SEC evidenced by the lawsuit filed in January 2012," it said.
"This is a very positive development in the life of our company, and we are pleased that this matter has been resolved," said CEO Kevin Rauber in the release.
The Daily Record reported in August that JBI, Bordynuik and a former employee, Ronald Baldwin Jr. of Palm Harbor, were defendants in a Securities and Exchange Commission complaint filed Jan. 4, 2012.
In a 28-page complaint, the SEC charged that the defendants engaged in a scheme to commit securities and accounting fraud by stating "materially false and inaccurate financial information on the financial statements of JBI Inc." for two reporting periods in 2009.
The commission stated that they misrepresented and overstated the actual value of JBI's assets and of the company itself by almost 1,000 percent and used the overvalued financial statements in two private capital raising efforts "that raised more than $8.4 million from unwitting investors."
It said Baldwin has been a licensed CPA in Florida since 1996 and an attorney and member of The Florida Bar since 2001. It said he was appointed CFO of JBI on Jan. 1, 2010, and resigned March 28, 2011.
JBI issued a news release Jan. 4, 2012, responding to the complaint, saying it was "profoundly disappointed by the erroneous allegations of fraud contained in the civil lawsuit" filed by the SEC.
"The Company regrets that its attempts to negotiate settlement of this dispute failed, and, in consultation with its litigation counsel and Board of Directors, looks forward to vigorously defending itself in court, where the Company believes it will prevail on the merits."
JBI said the allegations "concern legacy accounting issues that have since been corrected. Among other things, since restating its financial statements, the Company has hired a new chief financial officer and engaged additional experienced accounting staff as well as a reputable independent audit firm."
After the SEC complaint was filed, Bordynuik told the Welland Tribune in Ontario that in 2009 JBI was "a very small company and we had an accounting department of one." JBI formerly was based in Thorold, Ontario.
Bordynuik was quoted as saying the SEC's issue concerned "a single item on a 2009 accounting statement. I think you would be hard-pressed to find a judge that would kill this for that."
SEC Regional Trial Counsel Martin Healey said in August by email that the commission filed a civil injunction against JBI and two individuals in January 2012 in federal court in Boston, "and it is still pending in that court."
Citing SEC policy, Healey said in August the commission did not comment on pending matters beyond the public record.
Healey had no comment Monday.
The plastic2oil.com website describes JBI as "an innovative North American fuel company that transforms unsorted, unwashed waste plastic into ultra-clean, ultra-low sulphur fuel without the need for refinement."
JBI announced earlier this month that it has raised $8.05 million in two sales of preferred stock, indicating its proposed Plastic2Oil plant at RockTenn in North Jacksonville might be closer to development.
Shares in December were sold Dec. 27-31 and the January shares were sold Jan. 11-17.
JBI Inc., the Niagara Falls, N.Y., company that proposes to build a Plastic2Oil plant at the RockTenn containerboard mill in North Jacksonville, announced Wednesday that the Securities and Exchange Commission approved settlement of a lawsuit against the company and its former CEO, John Bordynuik.