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De los Angeles charged by SEC

By Benjamin B. Pulta

02/27/2009

The corporate regulator filed criminal charges against Legacy Group owner Celso de los Angeles and other officials of the failed group of banks and pre-need firms, two months after these firms folded up.

In two separate complaint-affidavits, the Securities and Exchanges Commission (SEC)’s Compliance and Enforcement Department filed charges against the Legacy Card Inc. (formerly Legacy Group Inc.), One Realty Corp. and its officers Celso de los Angeles Jr., Martin Nicolo de los Angeles, Victorino de los Angeles, Purita de los Angeles, Norman Tiongson, Carolina Hinola, Christine Antenor Cruz, Rita Maniacup, Basilio Ponciano Carpio Roy Hilario, Christin Limpin and Madeline Cobarrubias.

It was the first time that Sto. Tomas, Albay Mayor De los Angeles was charged in relation with the closure of his companies after escaping prosecution from the series of charges the Bangko Sentral ng Pilipinas (BSP) filed against officials of the Legacy Group.

The charges were for alleged violations of the Securities Regulation Code’s (Republic Act 8799) provisions requiring the registration of investment securities (Section 8) and prohibiting the use of the said securities for fraudulent transactions (Section 26).

They were also charged for alleged violation of the Corporation Code’s prohibition against so called ‘ultra-vires acts’ of corporations or exercising acts beyond its authority (Section 45).

The violations of the Securities Regulations Code’s provisions, the SEC complaint said, are punishable by a fine of between P50,000 to P5 million or imprisonment of seven years to 21 years, while the violation of the Corporation Code is punishable with a fine of between P1,000 to P 10,000 and imprisonment of 30 days to five years.

SEC Compliance and Enforcement Department Director Hubert Guevara and SEC lawyers Leila Laureta-Agustin and Geraldine Pama in the complaint noted that in its SEC papers Legacy Card declared that its primary purpose is to promote, hold and sell all credit cards.

“Thus, the act of Legacy Card in issuing post-dated checks to secure the payment or return of the investments solicited by Legacy Consolidated Plans Inc. was in excess of the primary purpose for which it was incorporated. As such, the said act is ultra vires and amounts to misrepresentation as to what the corporation can or cannot do.”

In the complaint against One Realty, the SEC said “taken as a whole, it appears that respondent One Realty acted as the business conduit of Legacy Consolidated Plans Inc. in its grand scheme to defraud the investing public.

“There was a commonality in the modus operandi in the companies involved where there was a patent unity of purpose or design in their concerted solicitation efforts.”

Legacy Card and Legacy Consolidated Plans Inc. which had secured investments from hundreds of investors abruptly closed their offices and ceased operations on Dec. 8, 2008, without prior notice to the SEC and to its investors.

The SEC included the names of 20 investors who filed complaints with the SEC which invested amounts ranging from P50,000 to P1 million. The biggest investors had multiple investments in the two Legacy firms.

The complainants fell prey to the unusually high rate of interest offered to every investors through five investment products offered by Legacy Consolidated Plans which they called the Double Your Money Program, Mutual Fund,Pre-Need Buy Back with Deed of Assignment; Motor Vehicle with Money Back; Maxicore and such other bank products like certificate of time deposits and Once Card International.