MASTERMINDS of Kapa Community Ministry International, Inc. (KAPA), touted as the largest investment scam in Philippine history, have been sentenced to suffer the penalty of life imprisonment for syndicated estafa, following a case build-up by the Securities and Exchange Commission (SEC) over its illegal investment-taking activities.
In a decision promulgated on December 12, Branch 33 of the Regional Trial Court (RTC) of Butuan City found Kapa leaders Joel Apolinario, Cristobal R. Baradad, and Joji A. Jusay guilty beyond reasonable doubt of eight counts of syndicated estafa, as defined and penalized under Article 315 (2)(a) of the Revised Penal Code, in relation to Presidential Decree No. 1689.
Apolinario, also referred to as Pastor Joel, was the founder and president of KAPA, while Baradad and Jusay 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.
Syndicated estafa is committed by any person who shall defraud another by, among others, means of false pretenses or fraudulent acts executed prior to or simultaneously with the commission fraud, by using a fictitious name, or falsely pretending to possess power, influence, qualifications, property, credit, agency, business, or imaginary transactions, or by means of other similar deceits.
The RTC found all elements of estafa present in the case, given that there was false pretense or misrepresentation made by Apolinario and the other accused when they claimed to be authorized to engage in a profit-making venture or business. The case was actively prosecuted by Assistant City Prosecutor Claudine L. Calo and City Prosecutor Aljay O. Go.
“Clearly, [Apolinario] together with [Baradad and Jusay] employed fraud or deceit by falsely pretending or misrepresenting that they are authorized by the SEC to engage in profit-making business when in truth and in fact, they are not authorized to do so being a non-stock corporation,” the RTC held.
The accused promised investors a 30% monthly interest for life on their investments. 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, the RTC held.
The court affirmed the finding of the SEC that the solicitation activities of KAPA were akin to 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 noted.
The decision comes around six years after the SEC found KAPA to have enticed the public to invest P10,000 in the guise of a donation, in exchange for a 30% monthly return for life dubbed as a “blessing.”
Under Section 8(8.1) of the SRC, securities shall not be sold or offered for sale or distribution within the Philippines without a registration statement duly filed and approved by the SEC.
Section 26.1 further provides that it shall be unlawful for any person, directly or indirectly, in connection with the purchase or sale of any securities to employ any device, scheme, or artifice to defraud.
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.
The SEC issued an advisory against KAPA as early as March 2017, warning investors of its Ponzi-like characteristics. A cease and desist order was later issued on February 14, 2019, followed by an order of revocation of KAPA’s certificate of incorporation on April 3, 2019.
To further protect affected investors, 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.
The SEC also continued to remind the general public to exercise more caution and discernment as certain supporters and promoters of KAPA peddled false information about the group’s supposed revival. SECURITIES AND EXCHANGE COMMISSION