THE MAKATI Regional Trial Court (RTC) has ordered Rosario “Rose” Baladjay of the infamous Multinational Telecoms Investors Corp. (Multitel) “pyramiding” investment scam in the early 2000s to be put behind bars and to fork out some P8 million to compensate defrauded complainants.
The RTC found Baladjay guilty of 65 counts of violations of the Securities Regulation Code (SRC), the Securities and Exchange Commission (SEC) 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 in prison for each of the 65 SRC violations. The court also ruled that she was civilly liable to indemnify the complainants of some P8 million.
Baladjay’s husband, Saturnino, who was also a respondent in the cases, had passed away over the course of the proceedings and was formally dropped from the cases as of June 6, 2014. This left only Rosario Baladjay facing court sanctions.
Syndicated estafa
The SRC violations are separate from the criminal charges of syndicated estafa—a nonbailable offense—that Rosario Baladjay had earlier been convicted of. The “pyramiding queen” lost her case at the Court of Appeals (CA) which affirmed, in February this year, the decision of the Muntinlupa City Regional Trial Court convicting her of estafa for duping a couple of about P200,000 in a phony investment scheme 13 years ago.
The CA denied Baladjay’s appeal for a reversal of the guilty verdict, and instead upheld her prison sentence of four to 13 years. It also ordered her to pay back the complainant.
The SEC brought the Baladjays to court for violating Section 8 of the SRC, when it sold or offered 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.
Investment fraud
The SEC actually sued the Baladjays for 127 counts of SRC violations, 65 of which won conviction at the RTC. As for the rest of the complainants, the court said the prosecution failed to present sufficient evidence that Baladjay had received such investments.
The Baladjay couple operated Multitel which was not registered with the SEC. After the SEC issued multiple cease and desist orders against Multitel and its officers, the couple registered the company with the SEC, which, however, said they had continued their illegal operations using several conduit corporations.
“Pyramiding” is an investment fraud which rewards participants for recruiting other people.
The selling point is that participants can recoup their investments and make more money by bringing more people into the net. Initially, early participants—or those on top of the pyramid—gain huge returns as the scheme starts attracting more investors.
But such schemes are inherently bad for investors because of the mathematical certainty that the pyramid would eventually collapse—particularly when the organization can no longer recruit other participants.
With the Aquino administration’s crusade against corruption and commitment to good governance reforms, SEC chair Teresita Herbosa said the SEC will push for “greater financial transparency not only to 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 the following entities: EmGoldex, Global InterGold and Prosperous Infinite Philippines Holdings Corp. The SEC filed charges at the Department of Justice on Nov. 6 against Kevin del Mundo Miranda, Ryan Manuit, Charlez Juiz Padilla, Raahbel Ymas, John Rafael Calicdan, Jose Victorio Cajita and Paul Alviar. The Philippine National Police also filed charges of syndicated estafa against them.
The SEC said that with the “whole of government approach” of the Department of the Interior and Local Government, the PNP, the National Bureau of Investigation and the SEC, these gold investment scam masterminds were also facing serious criminal charges and long-term imprisonment.
At least 250,000 to a million Filipinos had been victimized by investment scammers to date, the SEC estimated earlier.
Some of the biggest scams seen in this country were those perpetrated by Performance Investments Products Corp. and Aman Futures Group, each of which had siphoned off over P12 billion in investments.
In the case of Cesar delos Angeles, touted as the “Bernie Madoff of the Philippines,” of the Legacy group—who passed away without any conviction—civil cases could still continue though very little assets remain to compensate the victims.