Court junks Kapa’s injunction case against SEC

MANILA, Philippines — The Regional Trial Court in General Santos City has junked a petition for injunction filed by the controversial Kapa-Community Ministry International Inc. (KAPA) against the Securities and Exchange Commission (SEC), allowing the corporate watchdog to continue its crackdown against this group’s alleged illegal investment solicitation.

KAPA filed the petition for an injunction last April 4, around two months after the SEC ordered it to cease and desist from selling and offering to the public investment contracts in the guise of donations, without the necessary license to do so.  SEC has since then revoked KAPA’s corporate registration.

SEC, through the Anti-Money Laundering Council, on June 4 obtained a freeze order from the Court of Appeals to preserve assets linked to KAPA. On June 18, SEC filed a criminal complaint against KAPA along with its operators and promoters before the Department of Justice (DOJ), citing violations of Republic Act No. 8799, or the Securities Regulation Code.

 DOJ is currently conducting preliminary investigation on the complaint filed by SEC.

In the meantime, the Regional Trial Court of Davao City issued on July 4 a precautionary hold departure order against operators and promoters of KAPA.

 The National Bureau of Investigation (NBI), along with three aggrieved investors, also filed a complaint against KAPA before DOJ on July 8 for syndicated estafa.

 SEC issued an advisory against KAPA as early as March 2017. The group had been enticing the public to “donate” at least P10,000 in exchange for a 30 percent monthly “blessing” or “love gift” for life, without having to do anything other than invest and wait for the payout.

 The arrangement between KAPA and its members constituted an investment contract, a form of security regulated by the SEC.

 Section 26 of the Securities Regulation Code further prohibits fraudulent transactions, including Ponzi schemes where investors are lured with impossibly high returns and paid using the money contributed by other investors.