Statement of Allegations: In the Matter of Sohan Singh Koonar et al.

IN THE MATTER OF THE SECURITIES ACT

R.S.O. 1990, C. S.5, AS AMENDED

- AND -

IN THE MATTER OF

SOHAN SINGH KOONAR,
SPORTS & INJURY REHAB CLINICS INC.,
SELECTREHAB INC.,
SHAKTI REHAB CENTRE INC.,
NIAGARA FALLS INJURY REHAB CENTRE INC.,
962268 ONTARIO INC.
APNA HEALTH CORPORATION AND APNA CARE INC.

STATEMENT OF ALLEGATIONS

OF STAFF OF THE ONTARIO SECURITIES COMMISSION

Staff of the Ontario Securities Commission ("Staff") make the following allegations:

Introduction

1. Sohan Singh Koonar ("Koonar") is an individual residing in Ontario, and is, and was at all material times, an officer and/or director of Sports & Injury Rehab Clinics Inc. ("SIRCI"), SelectRehab Inc. ("SelectRehab"), Shakti Rehab Centre Inc. ("Shakti"), Niagara Falls Injury Rehab Centre Inc., 962268 Ontario Inc. ("962268"), Apna Health Corporation ("Apna Health") and Apna Care Inc. ("Apna Care") (collectively, referred to as the "Companies"). Koonar has not been registered in any capacity under the Securities Act R.S.O. 1990, c. S.5, as amended (the "Act").

2. Each of the Companies is incorporated under the laws of Ontario, with the exception of Apna Health, which is incorporated under the laws of the State of Delaware. Each of the Companies has not been registered in any capacity under the Act. The Companies are not reporting issuers in Ontario.

1. As set out below, during the period from August 1995 to May 1998 (the "material time") Koonar and the Companies traded in securities, where such trading was a distribution of such securities, without having filed a preliminary prospectus and a prospectus and obtaining receipts therefor from the Director as required by section 53(1) of the Act, and without registration contrary to section 25(1) of the Act. As a result of these illegal distributions, an amount in excess of $1,000,000.00 was raised from over 300 investors during the material time.

Trading by the Respondents Without a Prospectus or Registration Contrary to the Requirements of Ontario Securities Law

Sports & Injury Rehab Clinics Inc. ("SIRCI")

2. Between August 21, 1995 and February 29, 1996, 15 investors made payments to SIRCI in the amount of $474,216.00. As consideration for these payments, investors received promissory notes from SIRCI (the "SIRCI Notes") in the amount of their payments. The notes provided for interest to be paid on the principal amount at the rate of 25% per annum.

3. SIRCI and Koonar traded in securities, namely the SIRCI Notes, where such trading constituted a distribution of such securities, without filing and obtaining a receipt for a prospectus and without an exemption to the prospectus requirement, contrary to section 53(1) of the Act. Koonar and SIRCI traded in securities, namely the SIRCI Notes, without registration and without an exemption to the requirement for registration, contrary to section 25(1) of the Act.

SelectRehab Inc. ("SelectRehab")

4. Between August 31, 1996 and December 9, 1996, 28 investors made payments to Select in the amount of approximately $351,317.00. As consideration for these payments, investors received promissory notes from Select (the "Select Notes") in the amount of their payments. The notes provided for interest to be paid on the principal amount at the rate of 2% per month and the notes were to be repaid within 45 days of the payment being received by Select.

5. Koonar signed the Select Notes for and on behalf of Shakti, Niagara Falls Injury Rehab Centre Inc., 962268 and SelectRehab. Many of the payments made by investors to Select were deposited into a bank account held in the name of Shakti.

6. Shakti, Niagara Falls Injury Rehab Centre Inc., 962268, SelectRehab and Koonar traded in securities, namely the Select Notes, where such trading constituted a distribution of such securities, without filing and obtaining a receipt for a prospectus and without an exemption to the prospectus requirement, contrary to section 53(1) of the Act. Koonar, Shakti, Niagara Falls Injury Rehab Centre Inc., 962268 and SelectRehab traded in securities, namely the Select Notes, without registration and without an exemption to the requirement for registration, contrary to section 25(1) of the Act.

Apna Health Corporation ("Apna Health")

7. Between April 1, 1997 and approximately January 5, 1998, Koonar and Apna Health sold shares of Apna Health to a number of investors. The 77 shareholders of record in Apna Health owned an aggregate of 11,637,750 issued and outstanding shares and consisted of the following: (i) 22 investors paid either $1.00 or $2.00 per share and received shares from the treasury of Apna Health; (ii) 19 investors paid either $1.00 or $2.00 per share directly to Koonar and received Apna Health shares that had been previously issued to Koonar; (iii) 29 investors exchanged their Select securities or SIRCI securities for shares in Apna Health; and (iv) the balance of investors received Apna Health shares for services rendered to Apna Health or for no consideration, as reflected in the records of Apna Health.

8. As referred to above, Koonar sold 44,000 of his Apna Health shares to 19 investors and received funds in the amount of $72,000.00 (the "Secondary Trades"). Apna Health received funds in the amount of approximately $66,000.00 from the sale of shares to 22 shareholders of record.

11. Apna Health and Koonar traded in securities, namely the Apna Health shares, where such trading constituted a distribution of such securities, without filing and obtaining a receipt for a prospectus and without an exemption to the prospectus requirement, contrary to section 53(1) of the Act.

12. As the distribution of securities by Apna Health in the first instance was a violation of section 53(1) of the Act, the subsequent secondary trading of these shares by Koonar without filing and obtaining a receipt for a prospectus was a further distribution in violation of section 53(1) of the Act.

13. Both Koonar and Apna Health traded in securities, namely the Apna Health shares, without registration and without an exemption to the requirement for registration, contrary to section 25(1) of the Act.

Apna Care Inc. ("Apna Care")

14. Between November, 1997 and the end of January, 1998, Koonar and Apna Care sold units of Apna Care to at least 270 investors for proceeds of at least $132,200.00.

15. Each unit consisted of 100 Apna Care shares, and warrants to purchase an additional 100 shares at a specific price (the "Apna Care Warrants"). Units were generally sold to investors at a price of $200.00 per unit.

16. Apna Care and Koonar traded in securities, namely the Apna Care units, where such trading constituted a distribution of such securities, without filing and obtaining a receipt for a prospectus and without an exemption to the prospectus requirement, contrary to section 53(1) of the Act. Both Koonar and Apna Care traded in securities, namely the Apna Care units, without registration and without an exemption to the requirement for registration, contrary to section 25(1) of the Act.

Books and Records /Failure to Account/Use of Proceeds

17. Koonar and the Companies did not maintain books and records necessary to record properly the business transactions and financial affairs of the Companies. Further, Koonar and the Companies have failed to provide to Staff and investors an accounting of the use of any or all the funds raised from investors who purchased securities in the Companies.

18. Koonar has not made repayment to investors of the principal amounts paid by investors for the purchase of securities in the Companies, with the exception of a nominal payment made to one investor.

19. As noted in paragraph 10 above, Koonar received proceeds in the amount of $72,000.00 from the illegal trading of his holdings of Apna Health shares to 19 investors (referred to above in paragraph 10 as the Secondary Trades). Koonar has failed to provide to Staff an accounting of the use of these funds.

20. In addition, Koonar and his wife, N.K., also directly received at least $33,300.00 of investor funds from investors who purchased shares of Apna Care. Koonar has not provided to Staff an accounting of the use of these funds.

21. During the material time, Koonar used the services of a cheque cashing business to negotiate cheques received from investors for the purchase of shares of Apna Health and Apna Care for cash. These cheques were made payable to Apna Health and Apna Care. Between approximately April, 1997 to December, 1997, Koonar cashed at least 47 cheques from Apna Health and Apna Care investors, payable to Apna Health or Apna Care, for proceeds of at least $32,600.00. Koonar has not provided to Staff an accounting of the use of these funds.

22. In summary, during the material time, Koonar and his wife, N.K., directly received proceeds of at least $137,900.00 from the Secondary Trades, the Apna Care sales and cheques from investors negotiated for cash, as outlined above in paragraphs 19, 20 and 21. Koonar has not provided to Staff an accounting of the use of these funds.

Representations Made by Koonar to Staff

23. On or about March 26, 1998, in response to inquiries made by Staff, Koonar told Staff that 37 investors had purchased shares of Apna Care for proceeds in the amount of $60,000.00. As described above, by the end of January, 1998, Koonar and Apna Care had sold shares of Apna Care to at least 270 investors for proceeds of at least $132,200.00. At the time Koonar made his representation to Staff, he knew or ought to have known that at least 270 investors purchased Apna Care shares for proceeds of at least $132,200.00.

Further Violations of Ontario Securities Law

24. In or about April 1998, Koonar solicited further funds from investors in Apna Care in respect of the exercise of certain Apna Care Warrants (as defined above in paragraph 15). At a meeting held on or about April 16, 1998 for shareholders of the Companies (the "Shareholders Meeting"), Koonar represented to investors that the Apna Care Warrants would expire if such warrants were not exercised by April 30, 1998. Contrary to Koonar's representations, the Apna Care subscription agreements signed by investors did not reflect any expiry date in respect of the exercise of the Apna Care Warrants. Koonar further made representations to investors relating to the future value or price of Apna Care securities.

25. Following the Shareholders Meeting, in or about late April 1998 and May 1998, certain investors made payments to Apna Care for the purchase of additional Apna Care shares.

26. Accordingly, in April and May, 1998, Apna Care and Koonar traded in additional securities, namely the Apna Care shares, where such trading constituted a distribution of such securities, without obtaining a receipt for a prospectus and without an exemption to the prospectus requirement, contrary to section 53(1) of the Act. Koonar and Apna Care traded in securities, namely the Apna Care shares, without registration and without an exemption to the requirement for registration, contrary to section 25(1) of the Act. At the time that Koonar traded in these securities, he was aware that Staff was reviewing whether Koonar and one or more of the Companies had breached the registration and prospectus requirements of Ontario securities law.

Conduct Contrary To The Public Interest

27. In summary, during the material time Koonar and the Companies violated Ontario securities law and engaged in conduct contrary to the public interest, by reason of the following:

(a) Koonar and the Companies traded in securities, as outlined above, where such trading constituted a distribution of such securities, without filing and obtaining a receipt for a prospectus and without an exemption to the prospectus requirement, contrary to section 53(1) of the Act;

(b) Koonar and the Companies traded in securities without registration and without an exemption to the requirement for registration, contrary to section 25(1) of the Act;
(c) Koonar and the Companies failed to maintain books and records necessary to record properly the business transactions and financial affairs of the Companies;
(d) Koonar and the Companies have failed to account for the funds in excess of $1,000,000.00 raised from investors from any of the distributions of securities by Koonar and the Companies. In relation to the funds raised, Koonar and his wife, N.K., directly received proceeds of at least $137,900.00 from investors. Koonar has failed to provide to Staff an accounting of the use of these funds;
(e) Koonar represented to Staff in March 1998 that 37 investors had purchased shares of Apna Care for proceeds in the amount of $60,000.00 when Koonar knew or ought to have known that by the end of January, 1998, Koonar and Apna Care had sold shares of Apna Care to at least 270 investors for proceeds of at least $132,200.00;
(f) Koonar made certain representations to Apna Care shareholders in April 1998, relating to the future value or price of Apna Care securities for the purpose of effecting further sales of Apna Care shares to investors;

(g) In April, 1998, Koonar solicited further funds from investors in Apna Care in respect of the exercise of certain Apna Care Warrants. At the time Koonar solicited investors for additional funds, Koonar was aware that Staff was reviewing whether Koonar and one or more of the Companies had breached the registration and prospectus requirements of Ontario securities law; and

(h) In April and May 1998, Apna Care and Koonar traded in additional securities, namely the Apna Care shares, without a prospectus contrary to section 25(1) and section 53(1) of the Act and without registration contrary to section 25(1) of the Act.

1. Such additional allegations as Staff may advise and the Commission may permit.

DATED at Toronto, this 18 th day of June, 2001