Government regulators have failed to stop the proliferation of investment scams despite the harsh penalty imposed on economic fraud, and senators want to know why.
Sen. Aquilino Pimentel III has filed a resolution for a Senate inquiry into why the Securities and Exchange Commission (SEC) and the Department of Trade and Industry (DTI) failed to prevent Aman Futures Group Philippines Inc. and other similar groups from preying on thousands of people.
Sen. Francis Escudero, head of the committee on justice and human rights, said the Anti-Money Laundering Council (AMLC) ignored red flags involving Aman Futures’ bank transactions, allowing similar groups to increase and con thousands of people.
Escudero said it was puzzling that despite the red flags, the AMLC did nothing.
Pimentel proposed a joint investigation by the blue ribbon committee and the committee on trade and commerce that will also look into the reported involvement of public officials and the alleged investment of public funds in illegal investment schemes.
“[The] stiff penalty provided under our criminal laws for syndicated estafa and the existence of government regulatory agencies such as the SEC and the DTI, among others, have failed to deter the proliferation of corporations, partnerships, associations or persons operating illegal investment schemes in the country,” Pimentel said in his resolution.
He said the investigation was “imperative” to determine loopholes in the laws and institutional lapses that allowed investment fraud to flourish.
The objective enables Congress to enact “remedial measures that would prevent the rise of similar fraudulent activities,” Pimentel said.
Pimentel cited the scams pulled by Aman Futures Group and Visioner 2020 Trader’s International in Pagadian City, the Coco Rasuman Investments in Lanao del Sur and the Parents-Teachers Pyramid Scam in Quezon City, “which have collectively victimized at least 15,000 investors all over the country [who lost] P12 billion.”
Half-million pesos and up
Escudero said the Aman Futures scam had been out in the open in Pagadian for two months. Evidence should be available by now, he said.
“In fact, the Securities and Exchange Commission website has come out with a warning on the Aman investment scam,” Escudero said in a statement.
Asked what signs the AMLC ignored, Escudero replied: “Any transaction in excess of P500,000 and, in this case, way over and in excess of the threshhold.”
“We’re talking of the tens of millions, which [AMLC] should have detected and they should have raised the alarm,” Escudero told the Inquirer in a text message.
Escudero said the magnitude of the debacle could have been controlled had the AMLC been more insightful about these developments.
Pimentel also wanted to look into reports that government funds had been invested in the illegal schemes.
“[It] was reported by the media that local government officials where these fraudulent operations were carried out may not only be involved in these illegal investment schemes but, worse, they may have used the internal revenue allotment of their respective local government units as their personal investment in [these] fraudulent schemes,” Pimentel said.
Pimentel said the use of public funds in the fraudulent schemes “underscores the need for the legislature, as holder of the so-called power of the purse, to recommend the filing of appropriate charges in the Office of the Ombudsman, should it find that there is probable cause against certain local government officials.”
Pimentel said that as early as 2007, authorities had unmasked various corporations, partnerships, associations or persons operating illegal investment schemes, running either a Ponzi scheme or a pyramid scheme.
Ponzi, pyramid
He said the US Securities and Exchange Commission defined a Ponzi scheme as an investment fraud involving the payment of purported returns to existing investors from funds contributed by new investors who were promised investment opportunities, generating high returns with little or no risk.
The Department of Justice (DOJ) defines a pyramid scheme as an illegitimate program, which lures participants with the promise of easy money by compensating them from investments of additional participants rather than from legitimate product sales.
Justice Secretary Leila de Lima on Wednesday said the National Bureau of Investigation had found that the Rasuman scam was bigger than the Aman Futures scam.
“Although [fewer] investors are involved in the Rasuman scam, the amount of investment there is bigger,” De Lima told reporters.
De Lima said the “minimum” estimated capital of Rasuman was P1.3 billion but the NBI had yet to verify the accuracy of that figure.
She said Jachob “Coco” Rasuman, the brains behind the Rasuman scam who was arrested in Marawi City on Tuesday, was taken to the NBI office in Manila for his safety.
Relieved
The NBI in Cagayan de Oro City on Wednesday said Rasuman showed signs of “relief” when he was arrested in his home in Marawi City.
“He and his family were expecting his arrest and the moment we knocked on the gates of their house, we were let in and were faced by Rasuman,” NBI Special Agent 3 Froilan Grahida said.
He said even Rasuman’s family wanted him to be arrested for his and their safety.
Grahida said the Rasumans locked themselves in their house for protection.
“They could not go out. They were like prisoners because of the threat to their lives,” Grahida said.
He described Tuesday’s arrest as something for the movies—NBI agents transporting a “high-value target” while many people were trying to ge the suspect.
The difference is that the people were not out to rescue Rasuman but to kill him, Grahida said.
Trial in CDO
Rasuman had asked for protection since the exposure of his scam. The authorities could not arrest him because no charges had been brought against him.
But after estafa charges had been brought against Rasuman, Judge Bonifacio Macabaya of the Regional Trial Court Branch 20 issued a warrant for his arrest on Tuesday.
Cagayan de Oro Prosecutor Fidel Macauyag said the trial would be held in Cagayan de Oro but the DOJ would handle the case. With reports from Christine O. Avendano in Manila; Bobby Lagsa and Cai Panlilio, Inquirer Mindanao