Justice dep’t indicts KAPA of investment scam —SEC

The Department of Justice (DOJ) has recommended filing charges against Kapa Community Ministry International (KAPA) and its officers for employing an investment scam after investigating a criminal complaint filed by the Securities and Exchange Commission (SEC).

In a September 25 resolution, prosecutors recommended that KAPA founder and president Joel Apolinario, trustee Margie Danao, and corporate secretary Reyna Apolinario be charged with violating the Securities Regulation Code (SRC).

Justice Undersecretary Markk Perete said the Apolinarios and Danao sold or offered securities for sale without a registration statement from the SEC.

Also indicted were Marisol Dias, Adelfa Fernandico, Moises Mopia, and Reniones Catibugan for promoting and taking part in selling securities sold by KAPA.

Perete said the Apolinarios, Danao, and the rest of the respondents “employed a device, scheme or artifice to defraud, qualified by the use of computer, social media and video-sharing technology.”

The panel of prosecutors that investigated the SEC complaint found that Kapa was engaged in a Ponzi scheme “considering the impossibly high yields of return promised to investors.”

“It likewise rejected respondents’ argument that such investments were in the nature of religious donations, pointing out that the promise of return negates the giver’s liberality that is the hallmark of every donation,” Perete said in a statement Tuesday.

Persons guilty of violating the SRC, or relevant rules and regulations announced by SEC, face a maximum fine of P5 million or imprisonment of 7 to 21 years, or both.

However, SEC has pushed for higher penalty since group used Facebook and Youtube in their scheme.

Section 6 of Republic Act No. 10175 or the Cybercrime Prevention Act of 2012 provides for a penalty that is one degree higher than what the Revised Penal Code prescribes if a crime was committed through the use of communication technologies.

“The indictment of KAPA along with its founder, officers and promoters is an affirmation of our unwavering commitment to championing investors and tackling abuses in the corporate sector,” SEC Chairperson Emilio B. Aquino said.

“This should also serve as a stern warning against other groups engaging in unlawful investment-taking activities and other predatory practices to the detriment of the investing public,” he added.

The SEC filed a criminal complaint against KAPA on June 18 after it found the group had “enticed” the public to donate at least P10,000 in exchange for a 30% return with no other requirement than the donation.

The commission has warned the public against KAPA as early as March 2017.

According to the SEC, KAPA’s scheme involves selling, offering for sale, or distribution of securities through investment contracts as defined under the SRC’s Section 3.

Rule 26.3.5 of the 2015 Implementing Rules and Regulations of the Securities Regulation Code defines an investment contract as a contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits primarily from the effort of others.

An investment contract is presumed to exist whenever a person seeks to use the money or property of others on the promise of profits.

Rule 3.1.17 further provides that any solicitation or presentation of securities for sale shall be presumed to be a public offering when it involves presentation in any public or commercial place, and advertisement or announcement in any radio, telephone, electronic communications, information communication technology or any other forms of communication, among other modes.

Under Section 8 (8.1) of the SRC, securities shall not be sold or offered for sale or distribution without a registration statement approved by the SEC.

Section 28 adds that no person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered with the SEC.

Rule 26.3.5 defines solicitation as the act of seeking or asking for business or information, including the act of providing information about a security or investment product being offered for sale with the view to making another person a client or closing or bringing in a sale or purchase of security or investment product. The solicitor does not have to be a signatory to any contract relative to such offer or sale.

KAPA has also employed a Ponzi scheme, the SEC found, which is an investment program that offers high returns and pays investors using money given by other investors. —With Nicole-Anne Lagrimas/Joahna Lei Casilao/VDS, GMA News