Court convicts two former officers of Legacy bank – BSP

Two former officers of the Rural Bank of San Jose (Batangas) Inc. (RBSJI), a member of the Legacy Group, have been convicted of submitting false financial reports to the Bangko Sentral ng Pilipinas (BSP).

RBSJI former President Zacarias A. Carticiano and former Compliance Officer Jose Girlo P. Caramat were found guilty by the 22nd Branch of the Metropolitan Trial Court (MeTC), Manila under Section 35 of R.A No. 7653 or The New Central Bank Act.

Citing the MeTC decision on September 16, the central bank on Tuesday said that both officials of the rural bank “consciously and deliberately” violated provisions of the central bank law.

In February 2009, the Bangko Sentral noted that the rural banks of the Legacy Group pulled off the "grandest" banking fraud in Philippine history, luring depositors with double-your-money schemes and siphoning off deposits into fictitious accounts.

Back then, Nestor A. Espenilla Jr., Bangko Sentral ng Pilipinas deputy governor for bank supervision and examination, noted how bank examiners discovered a group of ghost borrowers which the rural banks used to diverted funds to themselves and affiliate companies.

The ghost borrowers were even paid commissions ranging from P10,000 to P15,000 by Legacy officials millions of pesos worth of loans.

The BSP on Tuesday said the two former officers of the Legacy Bank submitted two financial reports “that falsely represented an enhanced financial position of RBSJI. ” Its consolidated statement of condition and statement of condition bore the signature of Caramat for and in behalf of Carticiano.

According to the central bank, RBSJI noted in the documents that its real and other properties acquired or ROPA amounted to P429,293,722.25 as of September 2008 compared P7,293,722 in August 2008.

“It was this sudden and massive increase in the balance of the ROPA amounting to P413,000,000.00 in a span of one month only that prompted the BSP to investigate,” the central bank said.

Investigation revealed that Carticiano acquired on behalf of RBSJI five parcels of real estate properties for P3,790,080 as shown by a deed of absolute sale dated August 28, 2008, but was recorded in the books as P413,000,000.

The value was based on an appraisal of the properties by Valueworld Appraiser Inc., but an engineer from the BSP Asset Management Department found the market value of the same properties to be P3,750,864.00

The BSP said Carticiano allowed the use of Valueworld’s valuation, as well as the overstatement of the ROPA, when he executed a deed of assignment on September 11, 2008 covering the same five parcels of land.

Caramat prepared the statements of condition which he signed for and on behalf of Carticiano. The documents were then submitted to the BSP.

The decision against Carticiano and Caramat are the first convictions in a wave of cases filed by the BSP in 2009 against multiple banks connected with the Legacy Group of the late Celso delos Angeles. 

“Officers of these Legacy banks were charged with using falsified documents and fictitious loans to siphon money from the banks,” the BSP said.

Several undercapitalized banks under the group folded up in 2008. Investigations pointed out that the funds in the banks were dissipated through fictitious loans. – Jon Viktor Cabuenas/VS, GMA News