By James Loyola and Calvin Cordova
The Court of Appeals (CA) has ordered the freezing of several banks accounts and other assets linked to Kapa-Community Ministry International, Inc. (KAPA), a non-stock corporation found to be operating a fraudulent investment scheme.
The freeze order was issued by the appellate court last June 4 upon the petition of the Securities and Exchange Commission (SEC) and the Anti-Money Laundering Council (AMLC).
(Juan Carlo de Vela / MANILA BULLETIN)
Under Section 10 of Republic Act No. 9160 (Anti-Money Laundering Act of 2001), the CA may issue a freeze order upon a verified ex parte petition by the AMLC and after determining that probable cause exists that any monetary instrument or property is in any way related to an unlawful activity.
Among the unlawful activities covered by RA 9160 are fraudulent practices and other violations under Republic Act No. 8799 (Securities Regulation Code).
The SEC earlier revoked the certificate of incorporation of KAPA for serious misrepresentation as to what it can do or is doing to the great prejudice of or damage to the general public.
KAPA was found to have recruited and encouraged members to "donate" any amount in exchange for a 30 percent monthly return for life, without having to do anything other than invest and wait for the payout.
Such scheme constituted the sale and offer of securities, in the form of investment contracts, and required a secondary license, according to the SEC.
In offering and selling securities, KAPA committed an ultra vires (beyond one’s authority) act exceeding the privilege granted to it and misrepresented itself to the public by concealing this investment scheme in the guise of a donation to entice the public to donate when in truth and in fact they are investing, the Commission noted.
The investment-taking activity of KAPA also constituted a Ponzi scheme, an investment program that offers impossibly high returns and pays investors out of the capital contributed by later investors.
Unsustainable
The SEC noted that KAPA’s investment scheme is unsustainable. To illustrate, KAPA will need P15 billion a month to pay 5 million members, who have contributed at least P10,000 each. Without recruiting new members or soliciting more investments from the public, the pooled funds will not last beyond three months.
Prior to issuing an order of revocation against KAPA, the SEC issued a cease and desist order (CDO) against the nonstock corporation on February 14. It subsequently made the order permanent after KAPA failed to file a motion for the lifting thereof within the prescribed period.
The CDO covered the partners, officers, directors, agents, representatives and all other persons acting for and in behalf of KAPA, which also operates as KAPA Kabus Padatuon (Enrich the Poor), KAPA/ KAPPA (Kabus Padutoon), KAPA-Co Convenience Store and General Merchandise, and KAPA Worldwide Ministry.
The SEC also issued an advisory against KAPA as early as March 2017, noting the non-stock corporation did not have a license to solicit investments from the public. It issued another advisory in October 2018 and in March 2019.
The Commission advises the public to be cautious in dealing with KAPA and to report to its head office or extension offices any continued investment-taking activity by KAPA and its allied entities.
Burned
Last Saturday, President Duterte ordered the National Bureau of Investigation (NBI) and the Criminal Investigation and Detection Group of the Philippine National Police (PNP-CIDG) to shut down KAPA over the alleged fraudulent get-rich-quick pyramiding scheme. And the President’s verbal order is enough for law enforcement agencies to take action in the absence of a court order, Presidential Spokesperson Salvador Panelo said.
He admitted that the President has received many complaints about the investment scheme employed by KAPAN which prompted the closure order.
Read more: Panelo says closure order on Kapa Ministry well within authority of government
In Cebu City Monday, NBI agents raided the office of KAPA Ministry Community International in Compostela town.
"The President ordered us to close KAPA so we will comply," NBI 7 director Tomas Enrile told Manila Bulletin before the raid in the Northern Cebu town. The raid was still ongoing as of press time. The KAPAoffice was damaged after it was set on fire by at least 10 unidentified armed men Saturday dawn after the President ordered it closed.
The perpetrators also took the mobile phones, laptops and other personal belongings of the 21 stay-in workers.
A vault containing an undetermined amount of money was also carted away by the culprits.
Police Brig. Gen. Debold Sinas, director of Police Regional Office in Central Visayas, said investigators are looking into the possibility that what happened was an inside job.
"Before exploring other motives, we will first check if this is an inside job. How come the perpetrators knew that there was money in the office? And how did they know where the vault was kept?" said Sinas.
Sinas previously threatened to relieve personnel of PRO 7 who will be caught investing in KAPA.
Most of the investors recruited by KAPA are government workers like teachers, firemen and jail officers.
Meanwhile, Cebu Archbishop Jose Palma advised the public to be careful when investing especially in schemes that that offer "to good to be true" returns.
"Some people have ways to use schemes to fool other people so let us be careful about joining investments or being gullible about joining certain offers," the prelate said.
Palma also called on authorities to help prevent the public from falling prey to investment scams.
"I practically think it is the duty of the government to find ways and means to determine which ones are valid and lawful. On my part, I am not an economist so I would not know. But when we say the interests are too high and money seems relatively easy, be careful with that, " Palma added.
Justice Secretary Menardo Guevarra said the NBI already began to move against the religious ministry and expects arrests to be made soon.
Read more: Guevarra expects NBI to arrest religious ministry officials involved in investment scam
PNP chief Gen. Oscar Albayalde, for his part said investigators are currently conducting case-build up against all people and groups involved in investment scams.
“It’s not Kapa alone, there are also a lot of groups which are operating in Mindanao and even in Region 8 (Eastern Visayas). We are now conducting case buildup against these groups,” said Albayalde. (With reports from Genalyn D. Kabiling, Jeffrey G. Damicog, and Aaron B. Recuenco)
Read more: PNP vows to go after Kapa Community Ministry International, other scam groups