Depositors face estafa raps for insurance fraud

MANILA -- Charges of estafa were recently filed against 88 depositors before the Department of Justice (DOJ) for defrauding the government by as much as P9.73 million.

According to the Philippine Deposit Insurance Corporation (PDIC), spouses Manu and Champa Gidwani conspired with 86 other depositors to pretend as recipients of insurance money following the closure of several banks under the defunct Legacy Group in 2008.

They did this by falsifying commercial and official documents, results of the PDIC investigation show. It found out that a bank with a branch in the Visayas region accepted 683 “crossed checks” issued by PDIC as deposit insurance payments to 86 individuals who misrepresented themselves as owners of accounts in various Legacy banks in conspiracy with the Gidwani couple.

The bank allowed the deposit of the said “crossed checks” to a single account despite PDIC’s specific instruction that the checks should be “For Payees Account Only.”

Republic Act 8791 or the General Banking Law provides that the bank’s failure to heed warnings and admonitions of the supervisory and regulatory authorities was tantamount to conducting business in an unsafe and unsound manner.

On June 29, 2010, the PDIC issued Bulletin No. 2010-14 reminding all member-banks to strictly observe the provisions of the manual of regulations for banks on second-endorsed checks in relation to payments approved by PDIC for deposit insurance claims.

The Gidwani spouses and the 86 other respondents had maintained 471 accounts in various Legacy banks amounting to P118.19 million.

These accounts were simultaneously opened and funded through checks issued by only one individual or through fund transfers from a single account.

Also, 10 of the respondents who placed a total deposit of P20.96 million were actually employees or household help of the couple.

Under the PDIC Charter, all deposits in a bank maintained in the same right and capacity of the depositor for his benefit either in his own name or in the name of others shall be consolidated into one deposit account entitled to the maximum deposit insurance coverage.

The maximum deposit insurance coverage was only P250,000 at the time of the closure of the Legacy banks, touted as the largest financial scam in the banking system after it cost the PDIC some P12 billion in insurance claims. (Virgil Lopez/Sunnex)