SEC tips off public on “fraudulent” NGO

CEBU, Philippines - The Securities and Exchange Commission is advising the public to be cautious in dealing with personnel from North East Luzon Foundation, Inc. and to report to the commission any operation involving the company.

This following the successive reports received by the commission on the operations of the foundation in Region-7.

In August 26, 2010, the SEC revoked the Certificate of Registration of NELFI for the alleged illegal and fraudulent activities.

In its decision, SEC cited that it received numerous complaints against the foundation. NELFI reportedly promised each prospective member, upon payment of P200, a collateral and interest free loan ranging from P50,000 to P500,000.

The members who acted as coordinators were reportedly assured of NELFI salaries ranging from P15,000 to P30,000 and additional P5,000 allowance, depending on the position.

This prompted the SEC to announce that NELFI is not authorized to grant loans since it is not included in the foundation’s purpose as stipulated on its Articles of Incorporation.

But even after this, the SEC continued to received letter-complaints and affidavits from various parts of the country.

“However, while holding itself out as a legitimate foundation, it is more interested in resorting to devices and schemes to defraud the public by recruiting members, collecting from them various fees and charges, and promising them with all sorts of benefits, which were never deliver,” the decision stated.

In its answer to a petition dated March 10, 2008, NELFI defended that no salary was promised to member recruiters and that no loan was promised to entice membership.

It further added that prospective members were only informed of a possibility of acquiring financial assistance ranging from P100, 000 to P500, 000, depending on the feasibility of the proposed projects of the members and capability to effectively manage them.

Further, SEC’s Compliance and Enforcement Department also found out that NELFI’s total funds balance for the year 2005 was only 0.20 percent of its minimum aggregate promised loans. This means that it can only grant the loan, NELFI promised, to a maximum of only five members without financing its daily operations.

SEC said that NELFI committed acts of fraud in procuring its certificate of registration and serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the general public. — (FREEMAN)