AFFIDAVIT OF TOM ANDERSON (an Investigator with Staff of the Ontario Securities Commission) 12/29/06
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09 Jan 2007, 05:09 PM EST
Msg. 11090 of 11093
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AFFIDAVIT OF TOM ANDERSON 12/29/06
[I have taken considerable pains to clean up the OCRed PDF]
IN THE MATTER OF THE SECURITIES ACT
R.S.O. 1990, c.S.5, AS AMENDED
and
SULJA BROS. BUILDING SUPPLIES, LTD. (NEVADA),
SULJA BROS. BUILDING SUPPLIES LTD.,
KORE INTERNATIONAL MANAGEMENT INC.,
PETAR VUCICEVICH AND ANDREW DeVRIES
AFFIDAVIT OF TOM ANDERSON
SWORN DECEMBER 29, 2006
I, TOM ANDERSON, an Investigator with Staff of the Ontario Securities Commission, in the City of Toronto, in the Province of Ontario, MAKE OATH AND SAY:
Overview
1. This matter involves what appears to be an illegal distribution of securities in Ontario of an issuer in the United States, Sulja Bros. Building Supplies, Ltd. (Nevada), ("Sulja Nevada"), the price of which appears to have been artificially inflated through trading in nominee accounts in Ontario on the instruction of Petar Vucicevich ("Vucicevich") and facilitated by Andrew DeVries ("DeVries").
2. This matter also involves what appears to be misleading disclosure in Ontario by Sulja Nevada and/or a related Ontario corporation, Sulja Bros. Building Supplies Ltd ("Sulja Ontario"). Sulja Nevada and Sulja Ontario are collectively referred to in my affidavit as "Sulja Bros."
The Parties
3. Sulja Nevada was incorporated pursuant to the laws of the State of Nevada in May 2006. Its registered office is in Las Vegas, Nevada. Attached hereto as Exhibit "1" is a copy of the corporation details for Sulja Nevada from the Nevada Secretary of State website (www.sos.state.nv.us).
4. Sulja Nevada is quoted on the Pink Sheets, an over-the-counter quotation system in the United States. Attached hereto as Exhibit "2" are screen shots for Sulja Nevada from the Pink Sheets web site (www.pinksheets.com) on December 14, 2006.
5. Based on inquiries that I have made, it appears that Sulja Nevada is not listed for trading on any exchange or trading system in Canada nor has the Commission issued a prospectus receipt in Ontario for the securities of Sulja Nevada.
6. Sulja Ontario is a company incorporated in Ontario in 1987. Its registered head office is in Harrow, Ontario. Attached hereto as Exhibit "3" is a copy of the Corporation Profile Report for Sulja Ontario from the Ministry of Consumer and Business Services dated December 8, 2006.
7. Based on a print-out of its web site (www.suljabros.com), Sulja Bros. appears to be in the building supplies business and appears to operate in the Windsor area. Attached hereto as Exhibit "4" is a copy of a print-out from the Sulja Bros. web site on December 28, 2006 which provides information about Sulja Bros. and its contact information.
8. I understand that Vucicevich is a resident of Ontario. Based on certain press releases by SulJa Bros., it appears that Vucicevich was the CEO of Sulja Bros. from September 7, 2006 to November 21, 2006, when he resigned. Steve Sulja, who was the CEO prior to Vucicevich's appointment in September 2006, was reinstated when Vucicevich resigned in November 2006. Attached respectively hereto as Exhibits "5" and "6" are copies of press releases from Sulja Bros. dated September 7, 2006 and November 21, 2006.
9. Vucicevich is also the director and, as described below, appears to be the operating mind of Kore International Management Inc. ("Kore") in Canada, a company incorporated pursuant to the laws of Ontario in May 2005. Kore's registered office is located in Windsor, Ontario. It appears that Kore has a relationship with Sulja Bros. through Vucicevich (as described below). Attached hereto as Exhibit "7" is a copy of the Corporation Profile Report for Kore from the Ministry of Consumer and Business Services dated December 8, 2006.
10. I understand that DeVries is an American resident who lives in Texas. He is an associate of Vucicevich and is affiliated with Kore in the United States and Sulja Bros. (as described below).
Misleading Disclosure
11. By letters dated September 29, 2006 each of PricewaterhouseCoopers ("PWC") and KPMG LLP ("KPMG") advised Staff of the Commission that Sulja Bros. had made misrepresentations in recent press releases with respect to its relationship with PWC and KPMG. Also enclosed with their correspondence to Staff was documentation in support of their objection to the misrepresentations made by Sulja Bros. Attached respectively hereto as Exhibits "8" and "9" are copies of the correspondence package received from PWC and KPMG dated September 29, 2006.
12. In their letters to Staff, PWC and KPMG advised that, in a press release dated August 11, 2006, Sulja Bros. had made untrue statements that it was negotiating with both KPMG and PWC to handle all future Securities and Exchange filings and reportings.
Attached hereto as Exhibit "10" is a copy of the press release from Sulja Bros. dated August 11, 2006.
13. In a further press release dated August 23, 2006, Sulja Bros. made statements that PWC and KPMG were performing an audit for Sulja Bros. which would be completed in the near future. In their letters to Staff, PWC and KPMG advised that Sulja Bros. was not,
nor had it ever been, an audit client of either firm. Attached hereto as Exhibit "11" is a copy of the press release from Sulja Bros. dated August 23, 2006.
14. In their letters to Staff, PWC and KPMG enclosed copies of correspondence to Vucicevich as the CEO of Sulja Bros. and to Marquee Asset Management LLC ("Marquee"), the investor relations firm for Sulja Bros., demanding that Sulja Bros. cease and desist from making any further reference to PWC and KPMG and that Sulja Bros.
correct the misrepresentations made in respect of its relationship with them.
15. I have reviewed subsequent press releases issued by Sulja Bros. and have not found any statements by Sulja Bros. retracting the representations concerning PWC and KPMG.
Sulja Bros. Trading
16. On November 6, 2006 Corporal Gordon Aristotle and Senior Investigator Darrell Nay, surveillance officers with the OSC/RCMP/IDA Joint Securities Intelligence Unit ("JSIU"), attended at the Sulja Bros. lumber yard In Harrow, Ontario. At that time, the officers met with and recorded a voluntary statement from Vucicevich and DeVries regarding Sulja Bros. Attached hereto as Exhibit "12" is a copy of a transcription of the interview with Vucicevich and DeVries on November 6, 2006.
17. During the interview, Vucicevich advised that Sulja Nevada began trading on the Pink Sheets as a result of a reverse merger with Loftwerks, a shell company that Vucicevich claimed owed a significant debt to Sulja Bros. and Vucicevich (pp. 18-19, 52-53 and 56 of Exhibit 12). Based on Vucicevich's statements to JSIU, it appears that, in settlement of the debt, Sulja Nevada merged with Loftwerks (pp. 19 and 52-52 of Exhibit 12)
18. It appears that the merger occurred in or around July 2006 and that, following merger, Loftwerks was renamed Sulja Nevada and has continued to trade as an over-the-counter security as quoted on the Pink Sheets (Exhibit 1, and p.7 of Exhibit 2).
19. At the time of the merger, Vucicevich advised that "we issued 300 million shares" of Sulja Nevada in addition to the existing float of 500 million shares that had been issued by the company as Loftwerks, for a total of 800 million shares outstanding (pp.18 and 35
of Exhibit 12).
20. Vucicevich further advised that the shares were issued by Sulja Nevada to "raise capital for Sulja Brothers so that Sulja Brothers can expand [...]" (pp. 19-20 and 22 of Exhibit 12).
21. Vucicevich went on to explain that Su1ja Bros. entered into share selling arrangements, which he described as "trust" arrangements, with employees of Kore, Pranab Shah and Tracey Banumas, and members of the Sulja family, Samuel Sulja and John Sulja (collectively referred to as the "Nominees"), whereby they were paid to trade
newly issued shares of Sulja Nevada on behalf of the company (pp. 26-31 of Exhibit 12).
22. From the interview, it appears that the Nominees opened brokerage accounts at TD Waterhouse and RBC Action Direct (the "Nominee Accounts") for the purpose of trading the securities of Sulja Nevada and that shares of Sulja Nevada were received by journal entry into the Nominee Accounts through the company's transfer agent (pp. 26-31 and 34 of Exhibit 12).
23. Based on Vucicevich's statements to JSIU, it appears that the shares were subsequently sold out of the Nominee Accounts at his direction. It further appears that the proceeds of the trading went back, to Sulja Bros., either directly and/or through Kore, to
to pay debts owed by Sulja Bros., including to the Sulja family for their interest in the company, and to expand and operate the business (pp. 6, 19-22 and 27 of Exhibit 12). Vucicevich explained that the Nominees had entered into trust agreements which set out the terms of this share selling arrangement (pp. 26 - 31 of Exhibit 12).
24. Based on further statements made by Vucicevich during the interview, it appears that Vucicevich directed the trading by telling the Nominees when to trade and how many shares to trade at a given price (pp. 27-30 of Exhibit 12). Vucicevich stated in the interview that he directs the trading to keep the price at $.012 (pp. 20, 40 and 67 of Exhibit 12). He also advised that they have raised $7.8 million by trading approximately 150 million shares in this manner (pp. 20-21 and 61 of Exhibit 12).
25. Vucicevich further explained that the Canadian and U.S. operations of Kore are involved with Sulja Bros. to oversee the expansion of Sulja Bros. and that Kore U.S. "[... ]at this point, they're controlling 280 million shares" (pp. 13 and 27 of Exhibit 12).
26. Vucicevich advised that he is the directing mind of Kore's operations in Canada and that DeVries is the operating mind of Kore in the U.S. (p. 28 of Exhibit 12). Vucicevich advised that DeVries is responsible for the share structure of Sulja Bros. and "is the one that is authorized to distribute the shares" (p. 41 of Exhibit 12).
27. Vucicevich indicated in the interview that he had provided funding to Sulja Bros. "long before Sulja went public" (p. 12 of Exhibit 12) and that in accordance with the "agreement" that he signed with the Sulja family "in the beginning", Kore will be remunerated for its involvement in expanding Sulja Bros. (p. 72 of Exhibit l2).
Account Statements for the Nominee Accounts
28. Following the JSIU interview with Vucicevich and DeVries, I obtained the following account opening documentation and account statements for the Nominee Accounts during the period between January 2006 and November 2006:
(a) RBC Action Direct Inc., Account #680-4193-1-1 in the name of Pranab Pratap Shah (the "Shah Account"), attached hereto as Exhibit "13";
(b) TD Waterhouse, Account #80X035 in the name Tracey Banumas (the "Banumas Account"), attached hereto as Exhibit "14";
(c) TD Waterhouse Account #59B400 in the name of John Sulja (the "John Sulja Account"), attached hereto as Exhibit "15";
(d) TD Waterhouse Account #73W846 in the name of Samuel Sulja (the "Sam Sulja Account"), attached hereto as Exhibit "16"; and
(e) TD Waterhouse Account in the names of Samuel and Vladko Sulja (the
"Joint Sulja Account", attached hereto as Exhibit "17".
29. Based on a review of the account statements for all of the Nominee Accounts, there appears to be high levels of trading in both Loftwerks (from February 2006 to July 2006) and Sulja Nevada (from July 2006 to November 2006).
30. I require more time to interview others involved with Sulja Bros., Kore, and possibly other entities in order to understand to understand the nature of the relationships between the Respondents and the nature and scope of the trading in Sulja Bros. securities.
I estimate I will need at least six months to do that.
SWORN BEFORE ME at the City of Toronto,
In the Province of Ontario, this 29th day of December, 2006.
A Commissioner for taking Affidavits
Pamela Foy
TOM ANDERSON
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