What went before: Rosario “Rose” Baladjay

SEVERAL estafa cases had been filed against Rosario “Rose” Baladjay for enticing thousands of people to invest in her “pseudoinvestment” company, Multinational Telecom Investors Corp. (Multitel), which offered high interest rates to attract potential investors.

In February this year, the Court of Appeals (CA) affirmed the decision of the Muntinlupa City Regional Trial Court (RTC) convicting Baladjay of estafa for duping a couple of about P200,000 in the pyramiding scam.

Earlier, in November 2013, the appellate court also upheld the Makati RTC’s conviction of Baladjay on two counts of estafa, but modified her sentence by increasing her jail term. The CA sentenced the businesswoman “to suffer an indeterminate penalty of 10 years and one day of prision mayor, to 20 years of reclusion temporal, for each case.” The lower court had originally sentenced Baladjay to a prison term of from eight to 14 years.

Dubbed the “pyramid scam queen,” Baladjay was an administrative clerk of Eastern Telecommunications Philippines Inc.’s cooperative, where, according to a former officemate, she might have learned her “trade.”

Ponzi scheme

The Securities and Exchange Commission (SEC) said that Baladjay’s Multitel was engaged in a classic Ponzi scheme, which operated on a “rob-Peter-to-pay-Paul” principle. This meant that the couple was using money obtained from new investors to pay off earlier ones. New investors are lured by ridiculously high interest rates. The system eventually becomes unsustainable, with the most recent investors unable to have the returns promised them.

In March 2001, the SEC issued a cease and desist order (CDO) against Multitel, after discovering that it had been illegally issuing securities to the public. It was later lifted by the SEC, which also subjected Multitel to an audit to determine if the company was complying with existing laws, rules and regulations.

Baladjay, who ran the company with husband Saturnino, managed to continue Multitel’s investment-taking activities despite this crackdown through the incorporation of Multitel International Holdings Inc. (MIHI) in September 2001. MIHI took over Multitel’s operations.

In January 2002, the SEC issued a CDO following the discovery that Multitel and its partners engaged in deposit-taking “without license from the Bangko Sentral ng Pilipinas and despite (the) absence of such purpose under their respective Articles of Incorporation.”

During a Senate hearing in 2002, Baladjay admitted that she duped people into putting money in her company by promising them a monthly interest of 4 to 15 percent. The scheme, however, collapsed after the number of investors dwindled.

On March 11, 2003, acting on an order by then Sen. Robert Jaworski, members of the National Bureau of Investigation and the national police’s Criminal Investigation and Detection Group (CIDG) nabbed Baladjay in Mangaldan, Pangasinan. As chair of the Senate committee on trade and commerce, Jaworski had ordered the arrest of 12 persons, including Baladjay, for contempt, after they failed to attend the Senate hearings on the pyramiding scam.

That same day, the Department of Justice charged the Baladjay couple, along with nine others, with syndicated estafa, violation of the bouncing check law and the securities code before a Makati court. Inquirer Research, Inquirer Archives