SEC files raps vs Legacy owner

MANILA, Philippines - The Securities and Exchange Commission (SEC) filed Friday with the Department of Justice (DOJ) its complaint against Celso de los Angeles, former head of the troubled Legacy Group of Companies, and 13 other individuals for committing fraud and violating several provisions of the Securities Regulation Code (SRC) and Corporation Code.

State prosecutors, however, refused to show a copy of the complaint to reporters.

Sources said the SEC recommended the filing of criminal charges against the respondents for selling unregistered securities and engaging in misrepresentation by assuring investors that the principal amount of their investments is guaranteed.

Sources said the SEC was supposed to hold a press briefing last Friday but decided not to push through with it upon the directive of the corporate watchdog agency’s chairman Fe Barin.

This surprised many industry observers, with the SEC getting brickbats from all sides for allegedly failing to prevent the collapse of some pre-need firms.

Section 16 of the SRC provides that no person shall offer to the public any pre-need plan without the approval of the SEC, while Section 26 prohibits anyone from employing any device or scheme to defraud.

A review of the complaint will be undertaken by the DOJ to determine whether criminal charges will actually be filed against those who were allegedly found to have committed fraud for personal enrichment.

The complaint stemmed from an investigation into several complaints received by the SEC against the Legacy Group, claiming they were defrauded millions of pesos by the group’s double-your-money scheme.

According to the SEC, the double-your-money program is a kind of Ponzi scheme wherein potential investors are wooed with promises of unusually large gains. The returns are repaid, at least for a time, out of new investors’ principal, not from profits. This can continue as long as new investors line up with cash, and old investors don’t try to withdraw too much of their money at once.

Under the Legacy Group’s double-your-money program, investors will supposedly double their investment in three years and immediately get 10 percent of the plan’s maturity value. The balance of 90 percent will be paid in 12 equal installments through post-dated checks issued by Legacy Consolidated Plans, one of three pre-need firms under the Legacy Group.

Investors said only the first three or four of the 12 checks issued by the group were funded.

If convicted, respondents will face imprisonment of not more than 21 years, or fined P50,000 to P5 million.

De Los Angeles, incumbent mayor of San Jose town in Albay, was tagged as the mastermind behind the financial schemes that led to the collapse of the Legacy Group which comprised 13 rural banks and affiliate firms 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.

Among the rural banks were Rural Bank of Parañaque, Rural Bank of San Jose (Batangas), Rural Bank of Carmen (Cebu), Pilipino Rural Bank, Philippine Countryside Rural Bank, Rural Bank of Calatagan (Batangas, now Dynamic Rural Bank), Rural Bank of DARBCI, Rural Bank of Kananga (Leyte, now First Interstate Rural Bank), Rural Bank of Bisayas (Minglanilla, Cebu, now Bank of East Asia), and San Pablo City Development Bank.

These banks reportedly offered returns of as much as 30 percent per annum on huge deposits and misused collaterals surrendered by clients.

Two weeks ago, the Bangko Sentral ng Pilipinas (BSP) submitted various cases to the Department of Justice (DOJ) for possible filing of criminal charges against the Legacy Group-owned banks.

BSP Governor Amando Tetangco said 116 counts of falsification of public and commercial documents were filed, along with two counts of false statements against 18 officers, employees, and agents of four rural banks belonging to the Legacy Group.

De los Angeles was not included in the charges since the BSP has yet to find evidence linking him to the alleged fraudulent schemes.

DOJ summons Legacy officers, employees

The DOJ has summoned officers and employees of rural banks under the Legacy Group in connection with complaints filed against them by the BSP.

Provincial Prosecutor Emmanuel Velasco, head of the special panel tasked to conduct preliminary investigation on charges of falsification of public and commercial documents and false statements against the Legacy bank officials, said they have set hearings on the first week of March.

The complaints had named as respondents bank officers of Rural Bank of Parañaque, Rural Bank of DARBCI in South Cotabato, Rural Bank of San Jose in Batangas, Dynamic Rural Bank in Calatagan, Batangas, and Bank of East Asia.

During the validation process, BSP found that many of the banks’ borrowers denied having obtained loans from the closed banks, while others admitted having signed blank documents in consideration of commission fees ranging from P10,000 to P15,000 for supposed loans amounting to millions of pesos.

Tetangco said the BSP also discovered that falsified documents were used to support alleged loans. Public documents falsified included

Mayor’s Permits and Department of Trade and Industry Registration Certificates.

In effect, the fictitious loans were used to siphon money from the banks.

In an interview with reporters at the DOJ, Velasco said they would also send subpoenas to De los Angeles Jr. and 13 others in connection with a criminal complaint of a group of investors for the company’s alleged failure to deliver their promised return of investments amounting to over P187 million.

Last week, twelve subscribers of different companies under the Legacy Group led by Francisco Obsenares filed with the DOJ a joint complaint for syndicated estafa against De los Angeles, his wife Ma. Concepcion, son Nicolo Martin, mother Purita and brother Victorino, and nine other officers of their companies.

In a 30-page complaint, Obsenares and the complainants alleged that the Legacy owner and officers committed “illegal and fraudulent acts” of syndicated estafa in violation of Presidential Decree No. 1689. –With Edu Punay