SEC files criminal complaint vs. KAPA

The Securities and Exchange Commission (SEC) on Tuesday filed a criminal complaint against Kapa-Community Ministry International Inc. (KAPA) before the Department of Justice (DOJ).

The SEC filed the criminal complaint against KAPA along with its founder and president Joel A. Apolinario, trustee Margie A. Danao, and corporate secretary Reyna L. Apolinario, among others, for “perpetrating an investment scam in violation of Republic Act No. 8799, or the Securities Regulation Code (SRC).”

The corporate regulator also implicated Marisol M. Diaz, Adelfa Fernandico, Moises Mopia, Catherine Evangelista, and Rene Catubigan for supposedly “promoting the investment scam.”

The SEC intends to name more respondents as it identifies other persons who have participated in the unlawful public offering and selling of securities by KAPA.

The commission said it found KAPA to have enticed the public to donate at least P10,000 in exchange for a 30% monthly “blessing” or “love gift” for life, “without having to do anything other than invest and wait for the payout.”

The corporate regulator has issued an advisory against KAPA’s investment scheme as early as March 2017.

The SEC then issued a cease and desist order on February 14, 2019 and a revocation order on the nonstock corporation’s registration on April 3, 2019

“In the interest of affected investors, the Commission, through the Anti-Money Laundering Council, obtained a freeze order from the Court of Appeals on June 4 to preserve assets linked to KAPA,” it said.

The SEC case against the company is a welcome development, said Danny Mangahas, convenor of KAPA members’ Ahon sa Kahirapan Movement. This will give officials and members a venue to explain and defend their investment scheme in a proper forum.

“Actually matagal na namin inaantay ‘yan para masagot na ng KAPA kung anuman ang binabato nila,” Mangahas told GMA News Online.

“‘Yan nga ang challenge namin sa SEC, sa NBI (National Bureau of Investigation) na mag-file na ng kaso para masagot na namin at ng mga lawyers ... para bigyan kami ng venue para masagot na namin itong mga isyu na ito laban sa KAPA,” he said.

KAPA’s investment scheme involves the sale and offering for sale or distribution to the public of securities in the form of investment contracts, according to the SEC.

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.

Those who sell or offer securities to the public without the necessary license may be held criminally liable and accordingly sanctioned or penalized.

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

The SEC said it also found KAPA to have employed a Ponzi scheme, an investment program that offers impossibly high returns and pays investors using the money contributed by other investors.

This qualifies as fraudulent transaction prohibited under Section 26 (26.3) of the SRC. —VDS, GMA News