PLEASE forgive the weak pun that I’ve chosen for a title, although it probably makes sense only to those who’ve heard of Madonna. But I was trying to look for a light-hearted way to view what’s happening with the Kabus Padatoon (Kapa)-Community Ministry International Inc. and all I could see was potential heartbreak.
Last Thursday, some 50,000 members of Kapa gathered in a gym in General Santos to listen to their founder, Pastor Joel Apolinario, who arrived in a maroon helicopter, according to a report by Rappler’s Bobby Lagsa. The same report stated that Kapa asks its members to hand over a minimum “donation or love gift” of P5,000, for which it promises a return of 30 percent per month. For life.
How is Kapa able to afford such returns? That’s what Securities and Exchange Commission (SEC) Chairman Emilio Aquino has challenged Apolinario to explain. He said that the SEC had reviewed the earnings of the top 1,000 corporations in the country, and that not one had managed to make the P108 billion per year that Kapa would need to deliver on its promises.
“It’s ridiculous,” the SEC chairman said. The other week, the Court of Appeals froze Kapa Ministry’s bank accounts and assets, as petitioned by the SEC and the Anti-Money Laundering Council. Aquino confirmed he received text messages from those claiming that they had received what Kapa had promised. “But where did you get that money? That money came from somebody else!”
Unless Kapa explains the activity that has allowed it pay some of its member-donors, one can’t help but compare it with hundreds of Ponzi schemes that have been documented in the last 30 years. The most high-profile one involved Bernard Madoff, who was arrested nearly 11 years ago for defrauding investors of some $20 billion.
By now, the racket sounds familiar: investors are promised extremely generous returns, but only those who invested early manage to get anything. They receive fat payouts using funds poured in by those who signed up later, drawn by the promise of quick and large returns. Early-stage investors play a critical part, in that they provide the word-of-mouth promotion, if not do the actual recruiting that brings others into the scheme.
The scheme is named after Charles Ponzi, who was arrested in 1920 in the United States for mail fraud. At that time, he owed his investors some $7 million. His www.biography.com entry states that he had promised investors as much as 100 percent in 90 days but paid them “using money from other investors, rather than with actual profit, as in the criminal scheme of Bernie Madoff.”
What is not known is how many of the early-stage investors bother to find out just how exactly their money has grown so fast. I have heard anecdotes about how some wealthy members of society invest early in schemes like this, but then get out fast because they know that it’s bound to collapse. Why they choose to profit from schemes like this, instead of educating others to steer clear of them, is a matter for their conscience to grapple with.
On average, a Ponzi scheme runs for four years, an Emory University study observed. Most depended on commission-earning recruiters and referral rewards to reel their victims in, like unsuspecting fish. What makes the case of Kapa more painful is that it veils its activities with claims of faith. How can late-stage investors get their funds back once this scheme fails, as it certainly will, when they were clearly told they were giving “donations or love gifts”? It’s a heartbreaking combination of gullibility and greed.
Talk of Kapa’s activities have also circulated in the church where my family belongs, as with most places these days. Last Sunday, our pastor cited a verse from Proverbs 13 as a reminder: “Dishonest money dwindles away, but he who gathers money little by little makes it grow.”