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SEC sues Kapa: ‘Investment scam in guise of religion’

/ 05:01 AM June 19, 2019

The Securities and Exchange Commission (SEC) on Tuesday filed a criminal complaint against Kapa Community Ministry International Inc. (Kapa), its founder and other top officers, saying they committed an investment scam.

SEC chair Emilio Aquino said Kapa “amassed wealth through an investment scam in the guise of religion and at the expense of the investing public.”

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The complaint was filed in the Department of Justice against Kapa and its founder and president Joel Apolinario, trustee Margie Danao and corporate secretary Reyna Apolinario.

The SEC also implicated Marisol Diaz, Adelfa Fernandico, Moises Mopia, Catherine Evangelista and Rene Catubigan in promoting the investment scam, which violated Republic Act No. 8799, or the Securities Regulation Code (SRC).

The SEC said Kapa employed a Ponzi scheme, an investment program that offers “impossibly high returns” and paid investors using the money contributed by other investors. This fraudulent transaction is prohibited under Section 26 of the SRC.

Unlawful sale of securities

The SEC said it would name more respondents who had participated in the “unlawful public offering and/or selling” of securities by Kapa.

Those found to have violated the SRC, or the relevant rules and regulations promulgated by the SEC, face a maximum fine of P5 million or imprisonment of seven to 21 years, or both.

But the SEC said the penalty to be imposed against Kapa officers should be one degree higher than what was prescribed by the SRC since they used social media sites Facebook and YouTube in their illegal investment scheme.

‘Blessing,’ ‘love gift’

Kapa was found to have been enticing the public to “donate” at least P10,000 in exchange for a lifetime monthly return called “blessing” or “love gift” equivalent to 30 percent of the donated amount.

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To protect the public, the SEC said it issued an advisory against Kapa as early as March 2017, a cease and desist order on Feb. 14, 2019, and an order revoking its registration on April 3 this year.

The SEC, through the Anti-Money Laundering Council, also obtained a freeze order from the Court of Appeals on June 4 to preserve assets linked to Kapa.

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

Section 28 adds that nobody can engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associate of any broker or dealer unless registered with the SEC.

Those who sell or offer securities to the public without the necessary license may be held criminally liable and accordingly sanctioned or penalized, in accordance with the decision of the Supreme Court in  SEC v. Oudine Santos on March 19, 2014, and within the definition of securities solicitation in the 2015 SRC Rules.

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 a view to making others clients 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. —Reports from Doris Dumlao-Abadilla and Dona Z. Pazzibugan

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TAGS: DoJ, investment scam, Joel Apolinario, KaPa, Margie Danao, Ponzi scheme, Reyna Apolinario, SEC
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