SEC files criminal complaint against CAP officials

The Securities and Exchange Commission (SEC) filed yesterday with the Department of Justice a criminal complaint against officers and directors of College Assurance Plans Phils. Inc. (CAP) for violation of several provisions of the Securities Regulation Code (SRC).

In its complaint-affidavit, the SEC recommended the filing of criminal charges against CAP chairman Alejandro Roces, president and chief executive officer Enrique Sobrepeña Jr., treasurer James Marsh Tomson and directors Coronado Munasque, Sen. Juan Flavier, Ernesto Espaldon, Robert John Sobrepeña Jr., William Russell Sobrepeña, Romulo Espaldon, Gillian Akiko Thomson, Eusebio Tanco, Rafael Evangelista and Ma. Romela Bengzon.

SEC said the respondents are charged in complicity with Enrique Sobrepeña and Thomson for being members of the board of directors of CAP since all business activities of the corporation are conducted and controlled by its board of directors.

"As members of the board, respondents had general control and management of the business of the corporation," the SEC said.

CAP said it is ready to answer all allegations hurled against it by the SEC as soon as it gets a copy of the petition filed by the corporate watchdog.

The SEC also sought the issuance of a hold-departure order against the respondents to prevent them from fleeing the country and evading criminal liabilities.

The respondents were particularly charged with 6,434 counts of unauthorized sale of pre-need educational plans and one count of failure to provide for uniform accounting system, reports and record-keeping pursuant to Sec. 16 in relation to Sec. 73 of the SRC and the Pre-Need Rules and Regulations.

In its complaint, the SEC said CAP sold pre-need educational plans despite the fact that the company knew it had no more registered plans to sell in violation of Sec. 16 of the SRC.

Despite the acknowledgment that they oversold unregistered plans for the period covering June 2004, CAP continued to sell unregistered plans from July 1 to Aug. 31, 2004. They admitted having oversold some 6,434 plans worth P325.33 million.

A fine of P650.66 million has been imposed by the SEC but remains unpaid.

According to the SEC, CAP continues to fail to account for the amount paid by the planholders of the unregistered and oversold pre-need plans despite the SEC letter ordering them to do so.

SEC said the proceeds of the suspended account were co-mingled with the payments made by the old planholders.

"The members of the board of directors and responsible officers of CAP are jointly and solidarily liable along with CAP," SEC said.

"Under the law, directors of corporations occupy a reasonable and important business relation to the general public and in accepting such position of trust and responsibility, it is not only presumed but expected of them, that they deal with the corporate property and conduct the business of the corporationwith prudence and good faith. Being responsible for the management of the corporation, the directors had the obligation and the legal duty therefore to ensure that the corporation was operating within the bounds of the law," SEC further said.

The SEC said the members of the board along with the responsible officers are liable under Sec. 73 of the SRC which states: If the offender is a corporation, the penalty may in the discretion of the court be imposed upon such juridical entity and upon the officer or officers of the corporation."

"Any person who violates the SRC or the rules and regulations promulgated by the SEC may suffer a fine of not less than P50,000 nor more than P5 million or imprisonment of not less than seven years nor more than 21 years or both in the discretion of the court," the SEC said.