Mindanao planholders sue Legacy Group for syndicated estafa

Around 800 Mindanao-based plan holders, with a combined investment of over P1 billion to the Legacy Group’s pre-need firms, are joining the growing list of disgruntled investors that are suing the troubled firm for syndicated estafa.

Plan holders from Davao, General Santos City and Agusan del Sur are set to file multiple charges of estafa against the Legacy Group’s former chairman Celso de los Angeles, incumbent mayor of San Jose, Albay.

Luis Lumbatan, lawyer of the Mindanao-based Legacy Group plan holders, said his clients, mostly retired teachers and policemen, were lured into investing in the group’s “double your money” scheme over a three-year period.

Under the program, a 10-percent return will be paid out immediately upon sign-up. The remaining 90-percent was split in 12 quarterly installments and released as post-dated checks to each individual investor as proof of promise that the company will be on time to pay its commitment.

Lumbatan said the Legacy Group, likewise, issued certificates attesting that the money invested by investors were placed in a certain company with a promise that the pre-need group would buy back the certificates at double the price of what they invested.

He said the scheme turned out to be a dud when checks issued to investors bounced.

The Legacy Group is comprised of 12 rural banks and affiliate firms, which include Legacy Consolidated Plans, Scholarship Plan Phils., Legacy Card Inc., One Realty Corp., Galaxy Realty and Holdings Inc., Legacy Consolidated Asset Holdings Inc., Fusion Capital Corp.,

Conventional Realty Corp., Shining Armour Property Inc., and Legacy Motors Inc.

De los Angeles’ 12 rural banks have more than 130,000 depositors in 50 locations in Metro Manila, Bicol, the Visayas, and Mindanao.

He said the depositors have filed claims amounting to P14.4 billion based on the maximum insured amount of deposits of P250,000 after the rural banks closed when the Legacy Group went bankrupt.

Lumbatan said The Legacy Group’s failure has broken the lives of people and children “who were relying on these investments for their education.”

Plan holders are pushing for the dissolution of the Legacy Group to safeguard the latter’s assets, which can be used to partly settle investors’ claims.

Lumbatan said the trust funds of the Legacy Group’s pre-need firms are no longer enough to cover investors’ claims with only P300 million left.

“Plan holders will get back only a small amount of their investments,” Lumbatan said.

Roxas starts probe on pre-need industry

The Senate will conduct a hearing today on the state of the pre-need industry with focus on ensuring strict monitoring by the government of pre-need companies and protecting consumers’ investments amid the global financial crisis.

Sen. Manuel Roxas II, who sought the inquiry, said the hearing intends to determine the legislation needed to address recent reports of the industry’s huge financial problems.

Invited to attend the hearing were leaders of the pre-need industry, Finance Secretary Margarito Teves, Securities and Exchange Commission chairperson Fe Barin and representatives of organizations of pre-need plan holders.

Roxas will conduct the hearing as trade and commerce committee chair along with the Senate banks committee chaired by Sen. Francis Escudero.

“It is important to protect the interest of the plan holders who invested their money for the future of their family. We knew a long time ago that the industry has problems, and we will ask SEC and finance officials why they did nothing to solve these,” Roxas said.

He said the Senate investigation would also take off from the passage of the Pre-Need Code, which Roxas also authored with Sen. Edgardo Angara, former chairman of the Senate banks committee, which the Upper Chamber passed on third reading last June.

“Since the Pre-Need Code already sought the additional regulations to protect the public from scammers in the pre-need industry, it is important to assess the industry’s situation in the light of the global financial crisis and how to protect the investment of plan holders,” Roxas said.

The Senate investigation stemmed from an industry position paper claiming that the value of the pre-need industry’s trust fund dropped by P40 billion that triggered fears of its imminent collapse.

“Additional legislation may be needed to protect consumers’ interest, and due to the wide-ranging and catastrophic impact of the global financial crisis in other markets abroad, it is our primary responsibility as the country’s leaders to ensure our investing public will not be in the losing end again,” he said, adding that it is important that this time, the government will do the right thing. – With Aurea Calica