Multitel’s Baladjay convicted of securities fraud

THE MAKATI Regional Trial Court (RTC) has ordered Rosario Baladjay of the infamous Multitel “pyramiding” investment scam in the early 2000s to be put behind bars and to fork out around P8 million to compensate defrauded complainants.

The RTC has found Baladjay guilty of 65 counts of violations of the Securities Regulation Code (SRC), the Securities and Exchange Commission said in a press statement on Wednesday. This marks the second Philippine court conviction of securities fraud after Francisco Borromeo, president of Asian Capital Equity Inc., was found guilty in 2013 of defrauding clients between 1993 and 2003.

In an order dated Nov. 2, Baladjay was sentenced to seven years of imprisonment for each of the 65 counts of violation of the SRC. The court also ruled that she was civilly liable to indemnify complainants to the tune of P8 million. Baladjay’s husband Saturnino was also a respondent in this case but over the course of the proceedings, he passed away and was formally dropped from these cases as of June 6, 2014. This leaves only the wife Rosario or “Rose” facing court sanctions.

These charges were separate from the criminal charges of syndicated estafa – a non-bailable offense – that Rosario Baladjay had earlier been convicted for. Often referred to in the media as the “pyramiding” queen in the country, Rosario lost her appeal at the Court of Appeals.

For its part, the SEC brought the Baladjays to court for violations of Section 8 of the SRC, for selling or offering unregistered securities to the public. Each violation of the SRC is punishable with a fine of not more than P5 million or imprisonment of seven to 21 years or both.

The SEC cited 127 counts of SRC violations, 65 counts of which got conviction from the court. As for the rest of the complainants, the court said the prosecution failed to present sufficient evidence that Baladjay had received investments.

The Baladjay couple operated an entity called Multinational Telecoms Investors Corp. (Multitel) which was not registered with the SEC, which afterwards issued multiple cease and desist orders against Multitel and its officers. The couple then registered Multitel with the SEC but the corporate watchdog said the Baladjays had used several conduit corporations to continue illegal operations.

“Pyramiding” is an investment fraud which rewards participants by recruiting other people, in which case only those on top of the operation makes money. The selling point is that the participant can recoup investments and make more money by bringing more people into the net.Such schemes are inherently bad for investors because of the mathematical certainty that the pyramiding scheme would eventually collapse – particularly when the organization can no longer recruit but those on top would have already made their money.

With the Aquino administration’s battlecry against corruption and commitment to good governance reforms, SEC chair Teresita Herbosa said the SEC would push for “greater financial transparency to not only protect Filipino investors, but to increase overall investor confidence in the Philippines as well.”

She noted that the SEC’s efforts to achieve the public’s trust through transparency and accountability were in line with the initiatives of the Aquino administration.

Recently, the SEC also filed two cases of SRC violation against the alleged masterminds of following entities: EmGoldex, Global InterGold (GIG) and Prosperous Infinite Philippines Holdings Corp. (PIPHC). The SEC filed charges against the following people: Kevin del Mundo Miranda, Ryan Manuit, Charlez Juiz Padilla, Raahbel Ymas, John Rafael Calicdan, Jose Victorio Cajita and Paul Alviar last Nov. 6 before the Department of Justice. The Philippine National Police has also filed charges of syndicated estafa against these people.

The SEC said that with the “whole of government approach” of the Department of Interior and Local Government, PNP, National Bureau of Investigation and SEC, these gold investment scam masterminds were also facing serious criminal charges and long-term imprisonment.

It was earlier estimated by the SEC that at least 250,000 to a high of one million Filipinos had been victimized by investment scammers to date.

Some of the biggest scams seen in this country were those perpetrated by the Performance Investments Products Corp. (PIPC) and Aman Futures Group, each of which had siphoned off over P12 billion in investments. In the case of Cesar delos Angeles of the Legacy group – touted as the “Bernie Madoff of the Philippines” but who passed away without any conviction, civil cases could still continue but very little assets have remained to cover the victims.