The Department of Justice (DOJ) has indicted MFT Group and Foundry Ventures, along with their officers, for the unauthorized solicitation of investments from the public following the case buildup by the Securities and Exchange Commission (SEC).

In a resolution dated May 26, state prosecutors found prima facie evidence with reasonable certainty of conviction to charge MFT Group and Foundry Ventures for violating Sections 8, 26, and 28 of the Securities Regulation Code (SRC).

Section 8 states that securities shall not be sold or offered for sale or distribution without a registration duly filed with and approved by the SEC, while Section 26.3 declares unlawful for any person to engage, directly or indirectly, in any act, transaction, practice or course of business which operates as a fraud or deceit upon any person.

Meanwhile, Section 28 requires all persons engaged in the buying or selling of securities as a broker or dealer, or acting as a salesman or an associated person of any broker or dealer, to be registered with the SEC.

The DOJ implicated MFT CEO Maria Francesca Tan in the complaint, as well as other officers of the companies, including Florita Tan, Enrique Eduardo Tan, Charles Edward Tan, Christian Konstantin “CK” Agbayani, Roxanne “Roxy” Agbayani, Luis Gabriel R. Cancio Jr., Noel M. Olan, Joselito “JR” Hernandez, Christian Olan, and Tito Cosejo Jr.

Also indicted were Mae Tan, Christian “Kenchie” P. De Vera, Martin Choi, Reanne Po, Romarico “Rico” S. Ruiz, Jose Carlos R. Cancio, Alan Madlangbayan, Mildred Madlangbayan, Jeruz Madlangbayan, Ronald G. Nery, Halmond Parker R. Ong, Chiqui T. Tan, Jose Donnie “JD” B. Montelibano, Arlene M. Navarro/Mauricio, Maria Beatriz Dolores R. Tomas, Mary Ruth A. Oquendo, Joanne A. Cabaero, Thuy Nguyen, Marta Gilda M. Poursabouri, Maricris T. Tan, and Rosanna Vidal.

Isla Lipana & Co., the Philippine member firm of the PwC network, also known as “PwC Philippines,” and its auditors, Geraldine Hammond-Apostol and Ruth F. Blasco, who served as the independent auditors of MFT Group for fiscal years 2018 to 2021, were also implicated in the case.

The case stemmed from the complaint filed by the SEC in April 2024, based on complaints it received from investors of MFT Group, which later transitioned to Foundry Ventures.

MFT Group was found to be enticing potential investors to participate in its investment scheme, offering a guaranteed return ranging from 12 percent to 18 percent of the invested amount.

To prove the legitimacy of the scheme, MFT Group issued 12 post-dated checks to investors through a promissory note or a borrower-lender agreement in the form of a memorandum of agreement. The first 11 checks indicated a one percent to 1.5 percent monthly interest, while the last check reflected the interest and principal amount as stated in the contract.

The amount invested will allegedly be used to finance the purchase orders for “sure projects" of the companies’ subsidiaries.

“Undoubtedly, the transaction between the aforementioned respondents and the complainant-investors and the public is in the form of an investment contract falling within the purview of the term 'securities' as defined by law,” the resolution read.

“For failure to register the same before offering them to the public, respondents MFT Group of Companies and The Foundry, through its incorporators/directors/officers can be held liable for violation of Section 8 of the SRC,” it added.

In addition, the prosecution stated that the investment-taking activities of MFT Group and Foundry Ventures are similar to a Ponzi scheme, a type of investment fraud that relies on funds contributed by new investors to pay purported returns to existing investors.

The DOJ also found MFT Group to have committed misrepresentations in its audited financial statements from 2018 to 2021, noting that its declared dividend income either had no basis or did not correspond to the dividends declared and the retained earnings by its subsidiaries.

Meanwhile, the auditors were found to have aided and colluded with MFT Group as they validated the dividend revenue, contributing to the significant misrepresentations in its financial statements.

“[T]hese misrepresentations are used by respondent MFT Group, through the Board of Directors, as a device, scheme or artifice in making it appear that the company is profitable, and in luring investors, thereby defrauding them that their investments are legitimate, in violation of Section 26 of the SRC,” the resolution read.

It added that, “They deliberately misled and defrauded the public by persistently issuing unregistered securities and/or debt instruments.”

The SEC issued a cease and desist order against the company in January 2024 and made it permanent in April of the same year.