THE National Bureau of Investigation (NBI) 7 and the Philippine National Police have confiscated documents from the office of Kapa-Community Ministry International Inc. in Barangay Poblacion, Compostela, Cebu, Monday, June 10, 2019.
A search warrant was issued by Manila Regional Trial Court (RTC) Branch 20 Judge Marivic Umali against Kapa for alleged violation of the Securities Corporation Code of the Philippines.
NBI 7 agents and Regional Special Operations Group 7 operatives seized blank and filled-up application forms, membership certificates and bid of donations, as well as chairs and a motorcycle.
“We were ordered to seize all instruments used by Kapa during its operations,” said NBI Special Investigator IV Bienvenido Panican.
Panican said most of the items were salvaged from the fire that struck the office last Saturday, June 8. These will be turned over to the court that issued the warrant, he said.
They also secured a big vault believed to contain millions of pesos in cash.
A group of 10 armed men failed to steal it when they set the office ablaze last Saturday. However, they carted away a small vault believed to contain P5 to P7 million.
Police Regional Office (PRO) 7 Director Debold Sinas doubts the armed men knew about the contents of the vaults.
“Our suspicion is that there could be an inside job,” he said.
Police will investigate 21 tenants and in-house employees of Kapa. They are considered persons of interest who may have knowledge of the incident.
Sinas said there is a possibility that an organized crime group or Kapa’s business rival had planned the fire and stolen the organization’s money.
No one was at the Kapa office when the raiding team arrived. A woman later showed up, but she said she was a canteen cook in the building and refused to give a statement.
Although they were not able to arrest any Kapa officials, the NBI, in coordination with the Securities and Exchange Commission (SEC), will file a case against founder Joel Apolinario and Kapa Cebu area manager Christopher Abad, Panican said.
Panican said the two men will be charged with violating Sections 8 and 26 of Republic Act 8799, or the Securities Regulation Code of the Philippines, for operating without a SEC license.
“(They are) operating without a license because their license was revoked by SEC last April 3, 2019, so they are illegally operating now,” he said.
In a press conference last Monday, SEC Chairman Emilio Aquino said, “We have already a case build-up. We are going to file the necessary charges against the pastor, against his men, against his directors and against the defenders or those who are abetting and propagating this scheme.”
Based on the claim of Apolinario that they had five million members as of Saturday, June 8, Aquino said Kapa is even bigger than the Aman Futures scam that duped around 15,000 people in the Visayas and Mindanao of around P12 billion in 2012.
He challenged Apolinario to “show the numbers” and prove how he can sustain delivery of the promised 30-percent monthly return on investments (ROI) for life.
Aquino warned the public that Kapa, like other investment scams, will collapse. Like other Ponzi schemes, there will be payouts initially. But it will collapse when it runs out of investors.
“Ultimately, it will collapse. It is inevitable. As sure as the sun will rise in the east tomorrow, they will never be able to sustain the 30-percent return per month for life,” Aquino said.
PNP Chief Oscar Albayalde, for his part, said the Criminal Investigation and Detection Group and NBI have been building a case against Kapa since President Rodrigo Duterte gave the order on Saturday.
“The PNP and NBI are working on it, and we have already made case build-up. Within the week, merong resulta ‘yan (we should have results),” he said.
Kapa entices its members to make a donation of P10,000 to P2 million, with a promise of 30-percent ROI monthly for life.
Aquino stressed that this is a scam that is mathematically unsustainable and the promised return is “unrealistic and ridiculously high.”
Mutual funds provide returns of only four percent to nine percent while government securities, like the 20-year Treasury bill, offers only five percent to 6.75 percent.
“Kapa is running a scam. Its financials do not show that it can deliver. It is only relying on the investors,” he said.
The simultaneous service of the search warrant was implemented in Kapa offices nationwide last June 10.
Aquino said SEC is running after Kapa for offering or selling securities to the public without a permit or license from the commission in violation of Section 8.1 of the Securities Regulation Code.
As far as the SEC is concerned, what Kapa is offering its members takes the nature of an investment contract which falls under securities and as such, requires prior SEC registration.
Even before Duterte ordered to shut down Kapa, the SEC had issued advisories and a cease and desist order (CDO) against Kapa.
The first advisory was issued as early as March 22, 2017. A second advisory was issued on Oct. 4, 2018.
On Feb. 14, 2019, SEC issued a CDO against Kapa and on April 3, 2019, SEC revoked Kapa’s Certificate of Registration.
SEC has also petitioned the Court of Appeals (CA) to freeze Kapa’s assets.
Kapa has managed to get an RTC in General Santos City to issue a preliminary injunction against the CDO issued by the SEC.
But Aquino cited Section 179 of the Revised Corporation Code, which provides that no court below the CA shall have jurisdiction over SEC.
“An RTC has no jurisdiction over us. As far as SEC is concerned, Kapa has been shut down. It is operating illegally,” Aquino said.
Meanwhile, PRO 7 Director Sinas has summoned three police officers assigned in Cebu Province who are reportedly members of Kapa.
He did not divulge their names, saying he still has to meet them and hear their side of the story.
Sinas said he has pictures and a video showing the three police officers in Kapa’s office a few weeks ago.
He also ordered them disarmed.
Some police officers who had invested in Kapa had submitted their explanations to Sinas. Most of them reasoned that their joining Kapa was not serious, comparing their action to gambling.
Sinas has obtained the list of Kapa members in the region. Investigators will trace if there are other police officers who are members.
However, there might still be a way for Kapa to dig its way out of its current hole.
According to Theresa Puno-Dela Peña, securities counsel I at SEC Cebu extension office, if Kapa re-registers as a corporation and it meets all requirements, then SEC would have no choice but to approve its application.
“What they registered for is as a religious organization. It’s a church and it depends if they will register here properly and they’re compliant with all the requirements, we can’t do anything and we have to approve it. But if it’s still a church and they have the same scheme of taking in investments, that will not be okay,” she said.
Kapa, she said, cannot use its members’ “donations” as an investment. “If you’re going to donate something, you don’t expect a 30 percent return,” she said.
Dela Peña said their office has been coordinating with law enforcement agencies on concerns of the proliferation of financial companies reportedly involved in investment scams in Cebu. (JJL, MVL, SunStar Philippines, JOB, AYB of SuperBalita Cebu, KAL)