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TOP 2 in the Top 5 Scams in the Philippines by Mon Lao

http://www.marvingermo.com/top-5-scams-in-the-philippines/

Legacy Group. The BSP describes the Legacy Group as a swindling syndicate. The late owner, Celso delos
Angeles, allegedly misused depositors money leading to the collapse of 12 rural banks and 3 pre-need firms. He
siphoned depositorsmoney to finance his extravagant lifestyle and to pay off government officials for protection.

As a lender, the group used the schemes Motorcyle Loan Program and Investments Loan program to entice fake
borrowers to sign loan documents in exchange for commissions. They made it appear that funds were withdrawn by
the fake borrowers but the proceeds were actually deposited to another account controlled by Delos Angeles.

To attract depositors into the bank, the group offered the following :

Double your money in three years

Double your money in five years

Double your money in six years

Hybrid five years

Hybrid six years

3-Year-Buy-Back

In the double your money schemes, the deposits would yield 100 percent after three to six years. It was offered in all
rural banks affiliated with the Legacy Group.

The hybrid five years scheme, offered 20 percent per annum interest. The initial 20 percent was given upfront to the
depositor. Then they were given monthly interests equivalent to 20 percent interest per annum. On the fifth year, they
get back their principal deposit.

For the 3-Year-Buy-Back scheme. deposits will double in three years and then the investors will receive 12
quarterly post dated checks as payment of the investment in an amount that is double the amount of the original
investment. So attractive was the scheme that their bank in Leyte was able to attract depositors even outside the
Samar and Leyte areas.

As of September 30, 2008, the bank was able to accumulate P467 million in total deposits. But in reality, the bank was
already operating at negative net worth of P239 million. When it closed on Dec. 12, 2008, the bank only had about P1
million cash on hand.

As of October 2010, the Philippine Deposit Insurance Corporation said it has already shelled out a total of P11 billion
to depositors.

10 Biggest Investment Scam in the Philippines by Argel Tiburcio

https://www.argeltiburcio.com/10-biggest-investment-scams-philippines/

High Return, Low Risk

With the promise of high returns with low risk, scams and fraudulent investment schemes are one of the mortal
enemies of financial literacy advocates and financial advisers like me.

Sadly, Pinoys are prone to these scams and schemes due to lack of financial literacy and lack of financial awareness.
Sometimes, I even think that greed gets the better of them.
Personally, I use this information to fuel my passion and my desire to help and reach out to more Pinoys so I can raise
their financial awareness. I believe that awareness and a positive action plan can really help people become more
financially literate and eventually financially free.

1. Legacy Group

Known losses: PhP 30 Billion

Investment and loan programs with guaranteed commissions of up to PhP 15,000

Common denominator

If you observe, most of these investment scams offer high and guaranteed returns. Be vigilant of this red flag if you
come across these kinds of offerings or investments. Scams work because scammers know how to tap into
the greed of fresh investors that are misled by their charismatic leaders.

Video: https://www.youtube.com/watch?v=0d33x7VMv0g&feature=player_embedded
What Went Before: The closure of banks under Legacy Group
Philippine Daily Inquirer / 05:29 AM March 29, 2012
Celso de los Angeles INQUIRER FILE PHOTO
In December 2008, the Bangko Sentral ng Pilipinas (BSP) shut down 13 rural banks under the
Legacy Group of Companies for being insolvent and for engaging in unsound practices.

The banks, which had a combined P14.03 billion in insured deposits in 132,642 bank accounts,
were placed under the receivership of Philippine Deposit Insurance Corp. (PDIC).

The closure of the banks prompted the filing of a string of charges against Legacy group founder
and owner Celso de los Angeles Jr. and other Legacy bank officials.

De los Angeles denied any wrongdoing and blamed interference by regulators, unfair media
reporting, extortion and adverse global economic conditions for the closure of the rural banks.
On Jan. 5, 2009, the BSP filed 49 counts of falsification of public documents against 16 officers, employees and
agents of several Legacy banks who allegedly forged documents to support fictitious loans. The BSP said the loans
were not really applied for by real borrowers but were siphoned off for the personal gain of bank officials.
On Feb. 6, the BSP filed 116 counts of falsification of public documents against 18 officers, employees and agents of
four Legacy banks.
On Feb. 11, the Bureau of Immigration barred De los Angeles from leaving the country.
SEC charges
On Feb. 13, the Securities and Exchange Commission (SEC) filed criminal charges against De los Angeles and other
officials of Legacy Consolidated Plans for offering and selling unregistered securities.
On Feb. 26, the BSP filed a P1-billion estafa case against De los Angeles and other company officials in the
Department of Justice for swindling the public and for siphoning off deposits from the bank.
On the same day, the SEC filed two more criminal charges against the Legacy founder for duping hundreds of people
with investment securities that were not registered with the corporate regulator.
Behind bars
On July 13, De los Angeles, who was confined at St. Lukes Medical Center for throat cancer, was served a warrant of
arrest for several estafa cases filed against him at the Cagayan de Oro Regional Trial Court. He, however, remained
under hospital arrest for his chemotherapy sessions.
The Regional Trial Court in General Santos City, where De los Angeles had pending estafa cases, also allowed him to
be put under hospital arrest.
On Aug. 3, 2010, De los Angeles was taken out of the hospital and detained at the Quezon City police station based
on a warrant issued by the Regional Trial Court in Ormoc City, Leyte province, in relation to syndicated estafa charges
filed against him by the BSP.
On Aug. 19, he was transferred to a jail compound in Ormoc City to face the charges against him.
But a day after his turnover, he was brought to Ormoc Sugar Planters Association-Farmers Medical Center after his
petition to stay in a hospital for treatment was granted. He was later transferred to Divine Word Hospital in Tacloban
City.
Too ill
In February 2011, state prosecutors of Danao City, Cebu province, found probable cause to charge Legacy officials
led by De los Angeles with syndicated estafa committed by the Rural Bank of Carmen, the groups unit in the
province.
In September, De los Angeles was excused from arraignment proceedings by the Regional Trial Court in Ormoc City
after jail officials said he was too ill to travel from Tacloban to Ormoc. Lawrence de Guzman,Inquirer Research

http://newsinfo.inquirer.net/168787/what-went-before-the-closure-of-banks-under-legacy-group#ixzz4rbvJMFjX
Designing fraud? How Legacy Groups schemes work

By CARMELA FONBUENA, abs-cbnNEWS.com/Newsbreak

Posted at Mar 08 2009 05:25 PM | Updated as of May 09 2009 06:04 AM

The Bangko Sentral ng Pilipinas (BSP) knew that businessman-turned-politician Celso de los Angeles is behind the
capital-deficient Legacy-linked rural banks, but couldnt pin him down for years since de los Angeles name does not
appear on any corporate document.

The BSP has filed criminal charges against Legacys bank executives, but it was only in February 26 when it finally
named de los Angeles as one of the respondents in its syndicated estafa case filed at the justice department. Last
Friday, the BSP filed a second syndicated estafa case that detailed P347 million in questionable transactions, which,
the BSP alleged, sucked public and government funds into a scam.

Both cases followed a trend: While de los Angeles and his accomplices are not officials of the financial services
armsthe rural banks and pre-need companiesthey allegedly masterminded a scheme where public money in
banks and investment instruments were siphoned into companies that de los Angeles allegedly owned.

BSPs smoking gun came from no less than de los Angeles lieutenants in the scheme.

Key officers, including the presidents, of the Legacy rural banks helped the BSP build the first syndicated estafa case
against Celso de los Angeles.

abs-cbnNEWS.com/Newsbreak obtained copies of the affidavits signed by William Lucero Escalante of Rural Bank of
DARBCI Inc. in General Santos, Mabini Urgelles Sanico of First Interstate Bank Inc. in Leyte, and Ernest Carmel
Jurado Sr. of Bank of East Asia in Cebu.

These affidavits were included in BSPs first estafa case filed at the Justice Department.

Mastermind

The banks presidents claimed that between the last quarter of 2006 until November 2008, de los Angeles presided in
at least four meetings of presidents of Legacy banks to discuss the Motorcycle Loan Program, Investments Loans
program andbefore the banks closed in December 2008the necessary clean up to cover their tracks.

Based on the affidavits, abs-cbnNEWS.com/Newsbreaks computation show that the Motorcycle Loan Program and
Investment Loan program siphoned P1.6 billion up to P2 billion from the three banks to other companies allegedly
owned by de los Angeles.

Besides the three bank presidents, officials of at least eight more Legacy banks attended the meetings, the
documents showed.

The 13 Legacy banks had an estimated P24 billion in total deposits when they were closed. Out of this, only P14
billion will be returned to depositors whose bank accounts were P250,000 and below. This will be shouldered by the
taxpayers through the state-owned Philippine Deposit Insurance Corporation.

From the very start, the investment loans program of Mr. Celso de los Angeles was just a means of [de los Angeles-
owned] Fusion Capital to siphon bank funds from from BEA, Jurado sai in his affidavit.

I followed all the instructions of my superiors as I was afraid of losing my job, Escalante also said in his affidavit.

While the bank documents do not register de los Angeles as the controlling owner of the banks, the presidents said
they know that he is the titular head. They also claim that most orders from Manila office were explained to them as
instructions from de los Angeles.
Motorcycle Loan Program

The first series of meetings were held in the last quarter of 2006 in de los Angeless office in Makati City. Escalante
and Sanico detailed how de los Angeles explained the Motorcycle Loan Program.

During these meetings, Mr. Celso de los Angeles explained to us that his company, Legacy Motors Inc. (LMI), would
purchase motorcycles from China and these would be offered for loans through our banks to interested borrowers,
Escalante said in his affidavit.

The procedure was simple. The banks will convince the prospective borrowers to each avail of the P55,000
motorcycle loans. For every approved loan, P51,000 would be deposited to the account of LMI. The rest was
recognized as income by the bank.

LMI would deliver the motorcycles to the approved borrowers, who would pay a monthly amortization of P3,000 for
period of three years.

Escalante said his bank in General Santos was able to deposit more than P200 million to the account of LMI from the
loan scheme. Based on abs-cbnNEWS.com/Newsbreak computation, that involved at least 3,921 approved loans.

Out of the total motorcycle borrowers, only a few motorcycles were delivered and distributed to the borrowers,
Escalante wrote.

Sanicos bank in Leyte, on the other hand, was able to convince at least 2,000 motorcycle borrowers and deposited at
least P102 million to the account of LMI.

Out of the 2,000 borrowers, only 100 motorcycles were delivered and distributed to the borrowers, Sanico said.

These allegations by Escalante and Sanico were supported by affidavits of bank employees who executed the
scheme.

The LMI account covered all the funds that would be taken out from the bank. A withdrawal slip was issued every
time de los Angeles asked for funds from the bank to be deposited to the LCPI account at Banco De Oro Corp Bel-Air
Branch, Escalante said.

The said account was also used to clean up simulated loans, motorcycle loans, and other Legacy related loans and
to pay for marketing incentives, Escalante wrote.

Investors Loan Program

De los Angeles presided in another meeting in November 2007. It was held at the 29th floor of the World Center
Building in Makati City. It is said to be the personal office of de los Angeles.

Aside from Escalante and Sanico, the meeting was also attended by Jurado of Cebus Bank of East Asia. Jurado only
joined BEA in 2006.

This time, de los Angeles allegedly discussed the Investment Loan program. He tasked Legacy bank presidents and
employees to look for investors and give priority to existing depositors of Legacy owned banks as they would be
credible.

The concept of the investment loans program is for the bank to grant loans to individuals with the proceeds of their
loans to be invested in Fusion Capital Corporation, a company owned by Mr. Celso de los Angeles, explained Jurado
in his affidavit.

Escalante also testified that Fusion Capital Corporation was owned by de los Angeles.

In this program, the borrower individual is given one percent incentive/commission by the bank in consideration for
his/her loan availment and investment at Fusion Capital. Mr. Celso de los Angeles also said that these loans shall be
unsecured loans. Mr. de los Angeles encouraged us to market said product to our existing depositors, friends, and
relatives, Jurado added.

The office of the Fusion Capital Corporation was in the 30th floor of the same building. A follow up meeting was called
by de los Angeless known consultant, Alex Petralba, explained the mechanics further.

The banks of Escalante and Jurado were able to generate from the Investment Loan P800 million and P500 million
respectively. There seemed to be a typographical error in Sanicos affidavit. It said his bank was able to generate
more or less P385,000,00.00. It is not clear if it meant P385 million or P38.5 million.

A cashiers check was issued in the name of the borrower to make it appear that they received the loan. But the
banks presidents said the proceeds were deposited to the account of Fusion Capital Corp. maintained in their banks.

The cash discrepancy in the bank cannot be noticed because it would be covered by the alleged withdrawal from the
account of FCC in our bank, Escalante said.

These allegations were also supported by affidavits of bank employees and fake borrowers who signed loan
documents amounting to P2 million in exchange for P10,000 to P15,000 commission.

Covering their tracks

Jurado also testified about meetings in August and November 2008, which de los Angeles presided jointly with
Petralba.

During the meeting, Mr. de los Angeles and Mr. Petralba instructed all presidents of Legacy banks, including myself,
to secure real properties from Legacy Consolidated Assets Holdings Inc. (LCAHI) and Fusion Capital, or for Fusion
Capital to purchase and acquire real properties from prospective individual owners who are willing to sell their
properties at a low price, Jurado said in his affidavit.

According to Mr. Petralba, the purpose of this scheme was to clean up and erase all traces of the investment loans
and simulated loans from the books of BEA and replace them in BEAs books with real properties, Jurado added.

Before the closure of BEA in December 2008, Jurado said Petralba also instructed him to get rid of the originals and
loan documents covering the investment loans and simulated loans.

BEA burned some of the documents, Jurado said.

Legacy Plans, too

Sanico and Escalante also mentioned how Legacy Plans Inc. chief finance officer Namnama Pasetes and chief
executive officer Carolino Hinola would instruct them to take out funds from the bankranging from P100,000 to P1.5
millionto deposit to the account of Legacy Consolidated Plans Inc.

Ms. Pasetes and Ms. Hinola would explain to me that those were directives of Mr. Celso de los Angeles, thus, I have
no other choice but to follow their instructions because Mr. de los Angeles is the titular head of our bank, Sanico said.

Escalante had the same excuse. I have no choice but to follow their instructions. Sometimes, in giving these
instructions, Ms. Pasetes and Ms. Hinola would tell me that these instructions have to be followed as the Chairman of
the Legacy, Mr. de los Angeles, needs the funds, he said.

Petralba, Pasetes, and Hinola were also tagged by the BSP as respondents in the syndicated estafa case.

http://news.abs-cbn.com/business/03/08/09/designing-fraud-how-legacy-group%E2%80%99s-schemes-
work
Legacy banks faked borrowers BSP
Published February 9, 2009 1:40am
MANILA, Philippines - The rural banks belonging to the Legacy Group pulled off the "grandest" banking scam in the
countrys history, the central bank said, by luring depositors with "double-your-money schemes" and siphoning
deposits into fictitious accounts.
In a briefing late Friday, Nestor A. Espenilla Jr., Bangko Sentral ng Pilipinas deputy governor for bank supervision and
examination, said bank examiners discovered a bevy of "ghost" borrowers through which the rural banks diverted
funds to themselves and affiliate companies.
Furthermore, these ghost borrowers were paid "commissions" ranging P10,000 to P15,000 by Legacy officials for
loans running into the "millions of pesos."
"What we found was that the money was being dissipated through fictitious loans and advances to related
companies," Mr. Espenilla said.
The scam, the official also said, was the "most complete criminal banking model" witnessed in the Philippines.
On Friday, the central bank filed charges against 18 officials of four rural banks with the Justice department.
This was the second time it had done so. On Jan. 5 the first working day of the year the central bank filed
complaints against other officials of other rural banks with the Justice department.
"The cases were filed as BSPs investigations uncovered massive diversion of funds by said banks using fictitious
loans," the BSP said in a statement late last week.
Thirteen rural banks either belonging to or linked with the Legacy Group were shuttered and placed under the
receivership of the state deposit insurer in December for insufficient capital, poor liquidity and for practicing unsound
and unsafe banking practices.
The Philippine Deposit Insurance Corp. has estimated it needs to shell out a total of P14 billion to the banks
depositors.
Mr. Espenilla said the Legacy rural banks also lied about the entry of potential investors and manufactured documents
to support the fake loans.
These documents included counterfeit mayors permits and Department of Trade and Industry registration certificates.
There were no investors, no Bank Mega of Indonesia as claimed by Celso de los Angeles Jr., former Legacy Group
chairman who could have shored up the banks finances.
"They (Bank Mega representatives) showed up, but they never submitted any concrete investment or rehabilitation
proposal [for Legacy]," Mr. Espenilla said.
"They (Legacy) said they had injected fresh capital into their companies, but we checked and found out that this was
not true," Mr. Espenilla said.
To improve the groups financial statements, the BSP official said the Legacy banks would sell supposedly
repossessed land for about 10 times their real value to affiliate companies.
And to meet liquidity requirements, the Legacy banks "borrowed" capital from affiliate companies.
Finally, to meet their obligations to old depositors, the banks used funds from new depositors.
"They had a mechanism for attracting new investors, a mechanism for cleaning their books and a mechanism for
siphoning accounts," Mr. Espenilla said.
He said Mr. De los Angeles had expanded his network by acquiring undercapitalized banks on the verge of being
closed by the BSP.
Mr. Espenilla also clarified he never owned a rural bank in Masbate as Mr. De los Angeles had alleged.
"Since its establishment up to the present, I never owned any share of stock in RB San Jacinto nor was I involved in
its management. I absolutely have no dealings with the bank, either as a borrower or an investor. I have never been
employed by RB San Jacinto," he said.
BSP Governor Amando M. Tetangco Jr. defended the deputy governor, saying that the latter was being subjected to
unfair allegations.
"I have known Deputy Governor Nestor Espenilla in the 27 years that he has been a central banker. In all these years,
I have known him to be a person of integrity who applies his intellect, professionalism, and dedication in serving the
country well as a central banker," Mr. Tetangco said in a statement sent Sunday.
Legacy bank officials were not available for comment. Paolo Luis G. Montecillo,BusinessWorld
http://www.gmanetwork.com/news/money/content/147890/legacy-banks-faked-borrowers-bsp/story/

After Legacy: Changing the image of rural banks


TAKIN' CARE OF BUSINESS By Babe Romualdez | Updated July 7, 2009 - 12:00am

The filing of a large-scale estafa case against Celso delos Angeles and the former officials of the Pilipino Rural Bank is just the
latest episode in the sorry saga of the Legacy group, whose questionable transactions and practices have placed the future of so
many people in jeopardy. Whats even more unfortunate about the whole thing is that many of the victims are poor and
hardworking fishermen, farmers, market vendors and ordinary people who entrusted their hard-earned money in the coffers of the
Legacy-affiliated rural banks.
While the smoke seems to be clearing now with the intervention of the Bangko Sentral ng Pilipinas and the Philippine Deposit
Insurance Corp., it remains to be seen if all the depositors will be able to get their money back and how soon. No doubt the
scandal has also tainted the rural banking industry, especially with depositors going into a panic and withdrawing deposits when
news broke about the sudden closure of the Legacy banks in various parts of the country in December last year.
Fortunately, people have since made the distinction between honest-to-goodness rural banks (whose real intention is to be
catalysts for countryside development) from institutions whose real motivation is to dupe people out of their hard-earned money.
Today, the public is being extra careful about choosing the kind of banks where they plan to deposit their savings.
Not many people know that rural banks came into being via Republic Act 720, better known as the Rural Banking Act of 1952
authored by the late Senate President Eulogio Amang Rodriguez. RA 720 paved the way for the creation of rural banks that
would serve the credit needs of poor people in the rural areas. In the past, ordinary folks had no recourse but to turn to usurers and
loan sharks for credit to buy farming implements and seeds, to buy or repair bancas, and other needs.
Amang Rodriguez set the example by putting up the first rural bank in the country, with others following his lead by setting up other
rural banks in various locations. By 1956, the number of rural banks rose to 26, and in 1957, the Rural Bankers Association of the
Philippines (RBAP) was officially founded. The only trade organization for rural banks in the Philippines, RBAP has certainly been
instrumental in bringing progress in the countryside, partnering with government for the implementation of policies and legislation
supportive of rural economic development.
To date, RBAP has 650 member banks with over 2,000 branches spread all over the country and over the years, has been working
to serve the unserved and underserved communities. In fact, in many areas, there are no other forms of financial institutions other
than these rural banks, such as Alabat in Quezon, Lagawe in Ifugao and Jordan in Guimaras.
Outgoing RBAP president Tomas Gomez and Vicente Enteng Mendoza told me over lunch that rural banks have been extending
crucial financial assistance in many provinces, particularly among farmers, fishermen and even sari-sari store owners who want to
expand into mini-groceries. (Enteng Mendoza is the grandson of Amang Rodriguez so it doesnt come as a surprise that hes now
at the forefront of the rural banking industry.)
These rural folk need small capital to sustain or grow their trade, and this is what rural banks can provide, Gomez says, particularly
since they have more access to the smallest-income individuals or business enterprises mostly in the agriculture and agrarian
sectors. Even before the word microfinance was coined, the rural banks have already been serving this market segment
composed of people engaged in traditional backyard businesses like basket weaving, handicraft making or manufacture of sweets
and delicacies.
Of course, the public has to be careful in choosing the bank they want to borrow from or invest in. RBAP advises depositors to dig
the history of the bank and its owners reputation. It would also help to find out how the bank has helped the community it serves,
where the money is invested and why the interest rates (on deposits, for instance) are priced that way. It can be recalled that
Legacy used gimmicks to inveigle depositors like offering cellphones, laptops and promising fantastic double-your-money
schemes within three to five years. The BSP has already warned about copycat banks attempting to repeat the tactics used by
the Legacy group, and some of these are not small fry.
While the RBAP cannot police its own ranks as of yet (we understand the Legacy-affiliated rural banks are not RBAP members),
part of its plans is to take on a policing function among its members to prevent the occurrence of misguided banking practices.
RBAP has a strong set of standards by which members have to live by, such as adherence to the Code of Ethics, compliance with
BSP regulatory standards as well as transparency and governance. By being able to police its own ranks, RBAP will be able to
help depositors by ensuring that the rural bank where they are investing their money is legitimate and has the capacity to protect
their investment.
http://www.philstar.com/business/484058/after-legacy-changing-image-rural-banks

10 Biggest Accounting Scandals in Recent Years in The Philippines

Published on July 19, 2017 at 8:41 am by BOJANA PETKOVI in Lists,News

As for the largest financial incidents that occurred in the recent years in the Philippines, it comprises various frauds and scams.

There are tax evasions, pyramid or Ponzi scams, even a hackers attack which has been the most prominent nowadays. Filipinos

Securities and Exchange Commission has its hand full when it comes to investment companies. There are so many of them it is

hard to differentiate the real ones from the unscrupulous deceivers. The proper information is hard to find, but we managed by

consulting with Marvin Germo, Finance Manila, Philstar, Inquirer, CNN Philippines, World Socialist and the good old Forbes.

Apart from the latest incident with Bangladesh, all the other data is scarce, which justifies why the archipelago is a heaven for

Ponzi schemes and fake investors. But we are getting ahead of ourselves.

The criteria the financial affairs are listed is the amount of money which was/is in question. The order of financial crimes

corresponds to the amount of money which was illegally obtained, or on one occasion, almost obtained. That was the main criteria,

while the years are given to justify the recent in our headline.

Without further ado, here are the 10 biggest accounting scandals in recent years in the Philippines.
8. Legacy Group Scam Amount: over $9 million Year: 2008

This swindling syndicate contributed to the collapse of 12 rural banks and 3 pre-need companies. Late Celso Delos Angeles was

behind it all (no angel there, thats for sure). Once again, another money grabbing hybrid five years scheme was introduced and

lured the nave Filipinos to invest their money in a program which was to ensure their financial future.

http://www.insidermonkey.com/blog/10-biggest-accounting-scandals-in-recent-years-in-the-philippines-591039/?singlepage=1

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