Kapa execs get life in prison for duping millions in Ponzi scheme

Joel Apolinario  —KAPA MINISTRY’S FACEBOOK

The leaders of a religious-themed investment scam that promised its victims a lifetime of profits will spend a lifetime behind bars instead.

A Dec. 12 decision by the regional trial court in Butuan City showed that the masterminds of a scam perpetrated by Kapa Community Ministry International Inc., whose members ran in the millions at its 2019 peak, were found “guilty beyond reasonable doubt of eight counts of syndicated ‘estafa.’”

Named in the decision were Kapa president and founder Joel Apolinario, Cristobal Baradad and Joji A. Jusay, who were among its incorporators.

“All three were sentenced to suffer the penalty of life imprisonment, and to pay eight actual damages amounting to P195,000 to complainants,” said the Securities and Exchange Commission (SEC), quoting from the decision.

The SEC had led the crackdown against Kapa, a religious corporation accused of perpetrating a Ponzi scheme, or an investment scam that offers impossibly high returns and pays early investors using the money collected from newer investors. 30-percent return

The profits, however, are fake, as the money is never invested into any venture, and the operation collapses once there is not enough flow of new money to sustain it.

Based on the SEC’s investigation, Kapa was enticing the public to invest at least P10,000 in exchange for a 30-percent monthly return for life, without having to do anything other than putting money in and waiting for the payout.

The criminal proceedings stemmed from the complaint filed by the SEC on June 18, 2019, against Kapa for the unauthorized sale or offering for sale or distribution of securities to the general public.

As outrage mounted among those duped by the scam, then President Rodrigo Duterte advised the public against patronizing Kapa because the group was engaged in a continuing crime. He also ordered the police and the National Bureau of Investigation to arrest Kapa officials.

The SEC issued a cease and desist order against Kapa on Feb. 14, 2019, which became permanent in the next month, followed by an order of revocation of Kapa’s certificate of incorporation on April 3, 2019.

The SEC, through the Anti-Money Laundering Council, obtained a freeze order from the Court of Appeals on June 4, 2019, to preserve assets linked to Kapa.

‘Blessings’

Kapa’s operations had focused on Southern Mindanao, promising its victims perpetual high returns, which it called “blessings.”

“Relying on this false pretense, the complainants were duped to invest their money. As a result, they suffered damage since nothing was returned from their investments,” according to the court.

It also affirmed the finding of the SEC that the solicitation activities of Kapa were consistent with a Ponzi scheme.

“The Court takes credence on the testimony of the witness from SEC, who testified that the means employed by Kapa is akin to a Ponzi scheme,” read the decision.

“In People of the Philippines vs. Rosario Baladjay, which is on all fours with the present cases, a similar ruling was made by the Supreme Court which explained the too-good-to-be-true promises of a Ponzi scheme, wherein the purported investment program offers impossible high returns and pays these returns to early investors out of the capital contributed by later investors,” the court ruled.

Kapa’s leaders are facing several other fraud cases in various courts, including in Bislig City in Surigao del Sur, Cagayan de Oro City, and Manila.

In August, the Court of Appeals affirmed the validity of search warrants issued by a Manila court against Kapa officials led by its founder Apolinario.

Estafa under the law

The crime of estafa is defined under the Revised Penal Code as when a person defrauds another.

Under Presidential Decree No. 1689, estafa and other forms of swindling shall be punished by life imprisonment or death if the swindling “is committed by a syndicate consisting of five or more persons formed with the intention of carrying out the unlawful or illegal act, transaction, enterprise or scheme and the defraudation results in the misappropriation of money contributed by stockholders … or of funds solicited by corporations/associations from the general public.”

READ: CA affirms revocation of Ponzi firm’s registration with SEC