SEC sees progress in criminal cases against Kapa

The Securities and Exchange Commission (SEC) is looking forward to the progress of the cases pending in various courts against Kapa-Community Ministry International (KAPA) for scamming the public, in violation of the country’s securities law and Revised Penal Code, following the arrest of Joel Apolinario for syndicated estafa.

The combined forces of the National Intelligence Coordinating Agency, Philippine National Police, Philippine Army and Philippine Coast Guard arrested Apolinario in an isolated resort in Lingig, Surigao del Sur around 7:30 in the morning of July 21, as announced by the Police Regional Office 13 (CARAGA).

The law enforcers arrested 25 others during the operation, where an encounter with the armed men of Apolinario ensued. The gunfight killed two of the KAPA founder’s men and another seriously wounded.

High-powered firearms were seized during the operation, as follows: 30 units of M16 rifle; two units of M4 rifles; one Garand rifle; four 7.62mm, M60 light machineguns; one Cal 50 sniper rifle; three Cal 22 rifles; one carbine; one shotgun; two RPG rifles; five Cal 45 pistols; two rocket propelled grenade; and several rounds of live ammunition of different caliber.

The operation was based on a search warrant issued by the Cantilan, Surigao Del Sur Regional Trial Court Branch 41 for violations of Republic Act No. 10591, or the Comprehensive Law on Firearms and Ammunition, and Republic Act No. 9516, the law on illegal/unlawful possession of explosives.

Apolinario and the 25 others arrested on July 21 will face charges for violations of the Comprehensive Law on Firearms and Ammunition, the law on illegal possession of explosives, Articles 147 (illegal association) and 148 (direct assault) of the Revised Penal Code, according to the Police Regional Office 13.

The operation also carried out the warrant of arrest issued last February 18 by the Cagayan de Oro City Regional Trial Court Branch 21 against Apolinario, along with eight other people connected to KAPA, for syndicated estafa.

Aside from syndicated estafa, Apolinario, along with other officers and promoters of KAPA, faces criminal charges before the regional trial courts in Bislig City, Quezon City and Antipolo for various violations of Republic Act No. 8799, or The Securities Regulation Code (SRC).

The Bislig City Regional Trial Court Branch 29 earlier issued warrants of arrest against

Mr. Apolinario, together with KAPA Corporate Secretary Reyna L. Apolinario, Trustee

Margie A. Danao and promoters Reniones D. Catubigan, Marisol S. Diaz, Adelfa

Fernandico and Moises Mopia.

On February 19 and 27, the Apolinarios and Catubigan respectively surrendered and posted bail for their temporary liberty while facing the investment fraud charges filed by the Department of Justice (DOJ).

In separate Informations, the DOJ has accused KAPA of “willfully, unlawfully and criminally” engaging in the selling or offering for sale or distribution of securities in the Philippines without a registration statement duly filed with and approved by the SEC.

Accordingly, the DOJ charged KAPA, Mr. and Mrs. Apolinario and Danao of violating Sections 8(8.1), 26.1 and 28 of the SRC. It also indicted Diaz, Fernandico, Mopia and Catubigan for violation of Section 26.1 of the SRC for promoting the investment scam.

The DOJ further charged Diaz before the Antipolo Regional Trial Court for violation of Section 28. It filed similar Informations against Mopia and Fernandico with the Quezon City Regional Trial Court Branch 93, which then issued warrants of arrest against the respondents on December 2, 2019.

The criminal proceedings stemmed from the complaint filed by the SEC on June 18, 2019 against KAPA, after finding the group to have enticed the public to invest at least P10,000 in exchange for a 30% monthly return for life, without having to do anything other than invest and wait for the payout.

The Commission 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 later investors.

In a resolution issued on September 25, 2019, the DOJ found probable cause to bring charges against KAPA.

“With the mastermind already behind bars, we are positive about the progress and resolution of the criminal cases we have initiated to bring KAPA to justice,” SEC Chairperson Emilio B. Aquino said.

“The Commission stands committed to protecting the public from predatory and fraudulent investment schemes, more so during the pandemic. It will be persistent in pursuing the perpetrators.”

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 7 to 21 years, or both.

Considering the use of Facebook and YouTube in the illegal investment scheme, the DOJ recommended that the penalty to be imposed against KAPA, its officers and agents be one degree higher than what is prescribed by the SRC, pursuant to Section 6 of Republic Act No. 10175, or the Cybercrime Prevention Act of 2012.

The SEC has secured convictions under the SRC since its enactment in July 2000.

In November 2015, for instance, the Makati City Regional Trial Court Branch 56 convicted spouses Saturnino and Rosario Baladjay, who operated a pyramiding scam through Multitel International Holdings, Inc., of 65 counts of violation of Section 8 of the SRC.

The court sentenced the Baladjays to serve seven years in jail for each count of violation for a total of 455 years and ordered them to pay the complainants a total of P8 million. In addition, Rosario was sentenced to suffer life imprisonment in a separate conviction for syndicated estafa, affirmed by the Supreme Court in July 2017.