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‘Legacy is RP’s version of the AIG mess’, Business:
post Mar 26 2009, 05:40 PM
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‘Legacy is RP’s version of the AIG mess’
ABS-CBN news

by LALA RIMANDO, | 03/26/2009 8:09 PM

While Americans are in a bitter public outcry over the use or misuse of the bailout funds for corporate world’s fallen giant American Insurance Group (AIG), Filipinos are also dealing with a local version that involves fraud of hard-earned funds. Legacy Group’s reach and impact may not be as global as AIG, but its story is equally riveting.

The similarities are classic. First, both involve billions worth of public funds.

For AIG, a whopping $173 billion of US taxpayers’ money has been infused to keep the bankrupt firm afloat. It was considered too big to fail.

Legacy Group, on the other hand, has reportedly duped depositors, pre-need plan holders, and investors to the tune of about P30 billion.

Both are also loathed. AIG is under fire for financially rewarding about 70 executives involved in a London-based unit that engaged in complex financial products--which turned out to be too toxic--they brought down an entire century-old global financial empire.

On the other hand, Celso de los Angeles, the businessman-turned-politician who owns the Legacy Group became the recent whipping boy for a potentially criminal and complex scheme that involved siphoning public funds from rural banks, pre-need, and investment firms. These funds apparently funded a wine-women-song lifestyle and reportedly paid protectors in power who would shield the businesses from prying eyes.

However, their differences are stark.


At the Insurance Congress of Developing Countries (ICDC) conference held March 25 to 27 in Manila, one question posed by an attendee illustrated the disparity between the failures of Legacy and AIG. It focused on regulations.

“There was lack of regulation over the AIG unit that engaged in CDS (collateral debt swaps). Its business and products are not regulated, which explains the cause of the failure. On the other hand, Legacy’s pre-need business and products are regulated. Why then did it fail?”

Pedro Benedicto, Jr., president of a local insurance firm and a business professor, posed this question because he had a first-hand experience of completing the amortization payments for an educational pre-need plan to cover the tuition expenses of his kids. He did not enjoy the benefits of his investments since the pre-need firm closed.

He raised the issue of regulation over pre-need firms by the Securities and Exchange Commission (SEC). SEC Chair Fe Barin was one of the speakers in the conference.

Benedicto added, “In a way, Legacy has become the Philippine version of AIG.”

Barin explained how the SEC is responding to the woes of Legacy’s pre-need clients through help desks, procedures for filing claims, and other details involving contracts for matured and availing plans.

Benedicto pushed a bit more. “What are you doing to help those who are silently suffering? I heard 50 percent of pre-need firms have already closed?”

Barin said that, at one time, there were about 92 pre-need firms operating. The players have since dwindled. Only 24 are actively operating, while there are 31 firms that just exist to honor the obligations to clients but are not selling new plans anymore.

Was it then SEC’s failure as a regulator that led to collapse of half of the industry players?

“Let me put this in context,” Barin said, noting that it was during her watch when the troubles of high-profile, pre-need firms started to hug the headlines.

She stressed that she assumed the SEC post only in September 2004. “The first failure occurred four months after I came in to the SEC. They were just waiting to explode. They exploded after I assumed.”

She also highlighted how the SEC was given the responsibility of regulating the pre-need industry but was not provided the human and technical resources to do the job.

“We have 400 staff in SEC. But only 26 are in the unit that oversees the pre-need industry. Even if there are only 24 firms operating and 31 firms servicing now, we don’t have enough manpower to go after each firm,” Barin said.

She said the pre-need unit’s work has been mostly based on offsite audits, which involves checking whether the firms are complying with established rules and regulations.

“This should not be an excuse, but that is the explanation,” Barin said.

Sob stories

The gravity of the pre-need firm industry’s financial concerns first became obvious to the SEC during the time of former SEC chair Lilia Bautista.

In a previous interview with Newsbreak, Bautista said the financial problems of College Assurance Plan (CAP), then the market leader in the sales of educational pre-need plans, was already emerging after a thorough review by actuarial consultants of the financial viability of the firm’s products.

CAP, as other pre-need firms then, offered open-ended plans. These are contracts that basically promised to cover all of the beneficiary’s tuition costs. However, the difference between how much the plan holders paid for and the actual tuition costs widened vastly after the government lifted the cap on tuition fee increases. Tuition fees were growing by leaps and bounds, but the funds the pre-need firms set aside were not growing as much.

The actuaries said that CAP and several pre-need firms should infuse more fresh funds to cover the gap. CAP and the others vigorously fought this recommendation.

By the time Barin took over from Bautista, CAP was hemorrhaging financially. The computations of the actuaries became real as hundreds of thousands of CAP educational pre-need plan beneficiaries suddenly found themselves out of school since CAP was cash-strapped to settle their bills with the schools. That was in 2005.

That same year, other pre-need firms also stopped paying their obligations. The likes of Pacific Plans, Platinum Plans, Professional Group and others trailed CAP’s fate.

Almost two million pre-need plan holders silently suffered. Others went to the politicians, media, and other venue to share their sob stories.

From CAP to Legacy

Former SEC chair Bautista previously told Newsbreak that before the 2005 pre-need brouhaha exploded, the commission was in a difficult balancing act of forcing the companies to financially shape up and pushing them too far that the firms might end up falling off the edge. She said she was concerned that if the latter would be the result of their decisions, more investors would end up with less.

In the end, she said the best she could do was to have the Revised Securities Act passed. It contained one provision (Section 16) that essentially left the job of regulating the pre-need industry with the SEC. She said it was supposed to be an interim arrangement since the lawmakers still couldn’t make up their mind whether to keep pre-need under SEC or toss it to the Insurance Commission (IC).

Bautista recognized way back then that regulating the pre-need industry needed more technical and manpower resources. Fast forward to 2009, Barin is still echoing the same concerns. Eventually, Legacy became the latest in the growing list of failed pre-need firms under the tutelage of SEC.

The legislators have been mulling over the fate and consequences of the pre-need industry for almost a decade now. Some politicians have also used live broadcast of their hearings on CAP, Pacific Plans, and now Legacy to enhance their media mileage.

Six years since investigations in the Senate and the lower House on the pre-need industry started in the 11th Congress, the sob stories and quality of the culprits have been more or less the same. What changed were only the names of the firms, the personalities, and the amounts involved.

For example, CAP focused on the founder’s son, Robert John Sobrepeña, whose other businesses—Camp John Hay in Baguio City, Metro Rail Transit project, and various high-end golf and residential projects—were able to source financing by tapping the funds set aside to pay obligations to educational pre-need plan holders.

In the case of Legacy, witnesses in the Senate hearings showed documents that the some of the funds meant to cover obligations to pre-need clients were able to make their way to the yachts, lavish birthday parties, high-end real estate properties, and fancy cars of owner Celso de los Angeles.

Investment or insurance

Whether the pre-need industry should be regulated by the SEC or the IC is almost a broken record-like issue.

The Federation of Pre-need Firms has strongly lobbied to keep the industry under SEC. It has prevailed. In 2008, the bills approved on third reading by the Senate and the lower House assigned the regulation over the pre-need firms to the SEC.

In other words, pre-need products are still considered investments, thus, under SEC. Financial products considered investments are regulated based on the concept of full disclosure. The SEC, with its limited manpower, acts based on the information the firms volunteer.

Barin described the ‘full disclosure’ regulatory template: “Investment protection doesn’t mean we will hold the hand of investors and tell them where to go. It means [the firms] disclose all info about the securities, so the investors would know the risks involved and intelligently use these info for choosing their investments.” She added that, on their own, investors can get the information from the firm that is selling the product, the regulator, or other sources.

This approach for pre-need products has been criticized over and over. Investors in pre-need firms are not usually the sophisticated bunch. They are housewives, small business owners, simple traders, low- to high-level employees. A good number of them are overseas Filipino workers. Some even stopped working abroad as soon as they finished the amortization payments for their pre-need plans.

On the other hand, insurance products are more strictly regulated by the Insurance Commission (IC).

If pre-need plans are considered insurance products, and thus regulated by the IC, they would not be allowed to just set aside 45 to 51 percent of the clients’ total amortization payments to cover future obligations, explained former Insurance Commissioner and SEC pre-need consultant Evangeline Escobillo.

Insurance firms, Escobillo added, set aside almost all of the amounts entrusted to the firms by clients. She stressed that this is so unlike the case among pre-need firms, which basically just act as middlemen between the clients and trustee banks. Pre-need firms raise funds from the public, then turn around and assign a portion (45 to 51 percent) of those collected funds to the trustee banks. It is the trustee banks that would then have to invest and grow the funds to eventually cover the future obligation of the pre-need firms to clients.

Apparently, the pre-need firms have made unrealistic investment rate assumptions. In 2008 alone, the Federation of Pre-Need Firms said they assumed that the investments could grow between 6 to 12 percent. In reality, the funds only grew by a meager 2 to 3 percent.

The Federation has since hinted that some of their member firms may not be able to pay the full sum of what they owe clients. The potential amount that could go unpaid in the future was worth about P48 billion as of June 2008.

In the case of the three Legacy pre-need firms, the aggregate trust funds amount only to over P500 million. This is a far cry from the estimated P7 billion obligations to about 20,000 Legacy clients.

The sorry fate of the pre-need industry, Escobillo said, is the fault of the politicians who have taken too long a time to transfer regulation to the proper body, which is the IC. She also faulted the SEC for its lax regulatory oversight, and the Federation of Pre-Need Firms for their lobbying.

“Too many Filipinos have already suffered,” she concluded.
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post Mar 27 2009, 03:06 AM
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that AIG bonus brouhaha was only the tip of the iceberg. I was just reading MORE scandals & fraud. The US financial system is IMPLODING... hell with it.. it was time for a major overhaul anyway.
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post Mar 27 2009, 04:39 PM
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More than 12,000 soldiers, cops are victims of Legacy

ABS-CBN news | 03/27/2009 8:02 PM

The nation's soldiers and policemen have not been spared from the multibillion-peso fund scam of the Legacy Group of Companies.

Officials of the Armed Forces and Police Savings and Loan Association Inc. (AFPSLAI) said a total of 12,047 soldiers and policemen gave P317 million in payments to Scholarship Plans Philippines Inc., which is one of the companies under the Legacy Group owned by Sto. Domingo, Albay Mayor Celso de los Angeles.

One of the victims is Col. Ariel Querubin, a bemedalled military officer who figured in a standoff inside Fort Bonifacio linked to an alleged planned coup d’etat against the Arroyo administration. In an interview, Querubin's wife said their family started paying monthly installments to SPPI for the education plans of their children as early 1999 when Querubin was still a batallion commander in Southern Palawan.

She said the monthly installments were deducted from Querubin's salary until the full amount of P109,000 was completed.

Gilberto Tan Acuesta, AFPSLAI senior vice-president for operations, said AFPSLAI received authorization to deduct regular monthly payments from AFPSLAI members who availed of SPPI educational plans.

He said the organization is set to file a complaint before the Securities and Exchange Commission next week after SPPI omitted almost 5,000 AFPSLAI members from the list of plan holders with fully paid educational plans.

The SEC earlier said holders of plans sold by bankrupt pre-need firms under the Legacy Group should not expect to recoup their investments in full since these companies’ trust fund assets amounted to only P360 million as of end-2008. The assets are in the form of cash, real estate, government securities, shares of stock and other investments.

Legacy pre-need firms Legacy Consolidated Plans, Inc., All Asia Corp. and Scholarship Plan Phils., Inc. all closed in January.

"For a start, all fully paid and availing educational, life and pension plans of these companies shall be paid proportionate sums of money from the proceeds of the trust funds not later than April 30," the regulator said.

"The plan holders are advised not to expect the claims under their plans to be paid in full."

The owners and executives of the Legacy group of companies are facing several syndicated estafa cases related to its failed 13 rural banks and preneed company. Its owner—Mayor Celso de los Angeles of Santo Domingo, Albay—is also facing several congressional investigations. Report from Maricar Bautista, ABS-CBN News
as of 03/28/2009 1:12 AM
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post Mar 27 2009, 04:48 PM
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Timeline: Legacy Mess | 03/16/2009 3:51 PM

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This is a chronicle of the rise and fall of the Legacy Group of financial service companies.

The Central Bank (predecessor of the Bangko Sental ng Pilipinas, BSP) includes Celso de Los Angeles in the watch due to his involvement in three defunct small banks: Thrift Savings and Loan Association, Federated Thrift Bank, and Rural Bank of Calumpit.

According to a BSP report, de Los Angeles has been “involved in the commission of unsound banking practices” that contributed to the failure of the above-mentioned banks.


Celso De Los Angeles, Jr successfully acquires Scholarship Plans Philippines, Inc. (SPPI) and Legacy Plans, Inc (LPI) to form the Legacy Group. De Los Angeles then becomes its chairman and president.

In the same year, Legacy Group acquires Rural Bank of Parañaque (also known as Banco Paranaque) and its five branches in Metro Manila. The group also acquires Rural Bank of Bisayas Minglanilla (now Bank of East Asia) and Rural Bank of Carben, both in Cebu, and First Interstate Bank in Leyte.


The Securities and Exchange Commission (SEC) grants a permit to Legacy Group, allowing it to sell one billion worth of pension securities, a type of pre-need plan products.


Despite being on the BSP watch list, de Los Angeles became the chair of RBoP. On August, BSP disqualifies De Los Angeles in his chairmanship of RBoP.

In the same year, the Legacy Group ranks 18th in the list of pre-need companies with the highest gross sales.


Legacy Plans, Inc is renamed as Legacy Scholarship Pension Plans Inc, still under the Legacy Group.

December: During the trial of former President Joseph Estrada, star witness Chavit Singson has named de Los Angeles as a jueteng operator. Singson has also stated that de Los Angeles issued a bouncing check amounting to P1.8 million in Estrada’s account.


May: De Los Angeles runs for office as the lone representative of the city of Marikina but loses the race.

June 8: BSP approves Legacy Group’s acquisition of RBoP and de Los Angeles reclaims chairmanship of the bank.

Prospero Nograles, majority floor leader of the House of Representatives, admits he started investing in Legacy. According to De Los Angeles, Nograles invested his family funds that are around P18 to P20 million.

December: BSP examiners find evidences that de Los Angeles has been continuing involvement in RBOP even though he was earlier disqualified as chairman of the said bank.


Legacy Group ranks 9th in terms of gross sales and 2nd in terms of growth in the pre-need industry. The company has recorded a 519 pecent increase in sales from 2001.

Lilia Bautista took over SEC chair from Yasay. Bautista implemented a tighter watch over the pre-need firms.

January: De Los Angeles files a request to be removed from the watch list but the Monetary Board defers action on his request and his motion has been pending for review.

October 3: De Los Angeles insists to be removed from BSP’s watch list, telling them he has no intention of re-entering the banking scene.

December 10: De Los Angeles completes BSP requirements to be removed from the watch list.


Legacy Group acquires Pilipino Rural Bank in Cebu, Rural Bank of DARBCI in South Cotabato, Center Rural Bank in Muntinlupa, and Philippine Countryside Rural Bank in Cebu.

February 10: De Los Angeles acquires Consolidated Plans Inc and merges it with Legacy Scholarship Pension Plans, Inc to form Legacy Consolidated Plans, Inc. LCPI has a paid-up capital of P198 million and a trust fund asset of P557 million. It services more than 100,000 clients and offers pre-need products as education, pension, and memorial services.

February 14: The Monetary Board approves de los Angeles’ request and his name is subsequently removed from the watch list.


September - Fe Barin assumes post as SEC chairman.

May: Prospero Nograles “pulls out” his investments in Legacy Group and uses it for his reelection campaign.

De Los Angeles contributes to the political campaign of then running Vice-President Noli de Castro.

September: De Castro appoints de Los Reyes chairman of the National Home Mortgage and Finance Corporation (NHMFC), the government agency which provides community mortgage programs to the urban poor.


April: Philippine Deposit Insurance Corporation (PDIC), headed by Ricardo Tan, finds out that several rural banks have been offering high yields to clients.

BSP's examination team finds out that five Legacy-linked rural banks are capital deficient. The BSP probe was prompted by a PDIC finding that the rural banks were offering unusually high yields to clients.

After finding out that these banks are under Legacy, PDIC president Tan and then house majority leader Nograles discuss the situation. Nograles reporetedly requests Tan to “go easy” on Legacy banks investigations.

In the middle of the year, de Los Angeles files a medical leave as chair of NHMFC and leaves the position, less than a year after he was appointed by de Castro. De Los Angeles has been accused by non-governmental organizations of alleged graft and corruption during his term in NHMFC.


April: Tan resigns from his post as PDIC president.


April: BSP issues a Certificate of Authority to RBoP, enabling the bank to “amend its articles of incorporations, including the extension of its corporate life for another 50 years.”

May: De Los Angeles is elected as mayor of Sto. Domingo in Albay.

June 8: News articles report on a group who were allegedly attempting to extort money from RBoP and Legacy Group Inc by releasing “false information.” NBI uncovered a syndicate that victimizes banks to extort money. NBI named Ramon Dino, Abdullah Shahara and Victor Fortuna in the syndicate and were issued warrants of arrests.

RBoP officials submit documents for the amendment of the company’s articles of incorporation.

June 9: Some RBoP officials file complaints before the BSP and SEC, stating that the documents earlier submitted by another group of RBoP officials were made behind their backs and did not contain the required stockholders and board approval.

Former Banco Paranaque president/owner Honorio Bulos Jr. and retired Southcom chief Maj. Gen. Ramberto Saavedra alleged that RBoP management is covering up irregularities that affect the bank. They also expressed concern on the various complaints that have been filed against the bank’s officials regarding lending operations and time deposits. Bulos has been blacklisted by the BSP for banking violations.

June 11: An unnamed BSP official expressed disgust over the statements issued to the media by an alleged extortion group preying on banks. The official said that the extortion group uncovered by the NBI falsely uses the name of BSP to harass prospective victims.

July: BSP finds out that the number of capital-deficient Legacy rural banks has increased to nine. These banks have an estimated deficiency of P2.5 billion.

BSP deputy director Nestor Espenilla would later be quoted as saying that BSP could have stopped the group as early as this time if not for the case filed by the Legacy Group of rural banks in 2008 that invoked deposit secrecy on the examiners of the BSP.

December: Jose Nograles, Jr., brother of representative Nograles assumes post as president of PDIC.


May: The Rural banks file a case in the Manila RTC to prevent MB from acting on the findings of the latest BSP audit.

June: Legacy’s pre-need companies, including LCPI, were also in financial trouble. LCPI’s trust funds (amount the firm has set aside to pay for future obligation) are defiant up to P46.83 billion. The full-year figure is expected to have worsened.

June 4: Legacy rural banks obtain court order from the Manila RTC rejecting BSP appeal. Rural banks of the group obtained a Temporary Restraining Order and Injunction.

June: De los Angeles hosts a victory party to celebrate the TRO. House speaker Nograles was seen in the party. Likewise, Nograles and former representative Prosper Pichay are the main guests during De Los Angeles’ birthday party earlier.

BSP appeals the Legacy case to the Court of Appeals.

September 20: BSP examiners found out that the Rural Bank of DARBCI, one of the Legacy-linked rural banks, have an actual cash position that was less than P1 million when its total deposit liabilities was P830 million. It later declared a bank holiday.

September 30: CA upholds the RTC decision and prevents BSP from closing the rural banks. The TRO stopped BSP’s submission to MB of 2007 Reports of Examination covering the group’s banks and prevented the MB to act on the reports. BSP brings the appeal to the Supreme Court.

October: Claims against Legacy Consolidated amounted to P1.06 billion.

November 23: The Supreme Court issues a TRO on the appellate and RTC rulings and allows regulators to act on the BSP recommendations. By then, the rural banks were able to collect P1.3 billion additional deposits. The high court is yet to give a final decision.

December: SEC relaxed the rules on capital buildup and asset valuation covering the pre-need industry after the sector warned that maintaining these regulations could lead to their demise as investments continue to suffer due to the financial crisis.

Legacy’s pre-need firms and rural banks start closing one by one.

Pre-need LCPI closes its office without notifying SEC.

The two other rural banks unrelated to the Legacy group close down. These are the Community Rural Bank of San Joaquin in Iloilo and the Rural Bank of Nueva Caceres in Naga City

December 8: Legacy-linked Dynamic Bank of Batangas declares a bank holiday. The said bank has been under BSP monitoring due to “unsound banking practices.”

December 10: Cebu-based Legacy-linked rural banks, the Philippine Countryside Rural Bank and Pilipino Rural Bank in Mandaue City, declare bank holidays and are put under PDIC by December 15.

Pre-need LCPI files an application for voluntary dissolution. It includes in its petition that the company assets can no longer cover the liabilities, saying that “inhospitable and bleak market conditions” has affected its investment in other industries.

LCPI fails to submit by January 9 a list of creditors and cases pending before administrative and quasi-judicial bodies, an inventory of its assets, and audited financial statement for 2007.

December 11: Two rural banks in Cebu cease operation, causing “heavy withdrawals” among bank depositors in the province. These banks are the Bank of East Asia in Minglanilla and Rural Bank of Bais or Supreme Rural Bank in Mandaue City. The four banks have 11 branches in Cebu, 1% of the total rural banking industry.

Due to the sudden closure of four banks, the Rural Bank of Subangdako in Mandaue, another Legacy-linked bank, experiences heavy withdrawals from the depositors.

December 12: Central Bank declares the 48-year-old Rural Bank of San Jose in Batangas bankrupt.

December 15: Rural Bank of San Jose is reportedly closing down, a surprise for most depositors since it had an earlier promotion that invited people to open an account in exchange for a cellphone and a laptop. The bank has almost 5,000 depositors.

December 16: About 45,000 depositors have been affected by rural bank holidays in Cebu. PDIC has yet to asses the records of the banks and has yet to give a schedule on the release of insurance claims for depositors.

Two more rural banks affiliated with the Legacy group have been closed down by the BSP and currently under the PDIC: Dynamic Bank (Rural Bank of Calatagan) in Batangas and San Pablo City Development Bank in Laguna. The banks have declared bank holidays before they were closed down.

December 18: After bank holidays, BSP wants the Senate to amend the Central Bank Act so BSP can become a stronger authority in handling banks to prevent outrageous schemes.


January: Nineteen investors in Legacy’s pre-need buyback plans file syndicated estafa cases against De Los Angeles, his son Nicolo Martin, and other officers.

January 5: Mandaue-based Rural Bank of Saubangdaku declares bank holiday. It says it is not part of the Legacy Group but was affected by depositors flocking to rural banks to withdraw. Two of its 3 branches are beside closed Legacy-related rural banks.

When the other banks under Legacy Group declared bank holidays last December, RBS declares it can accommodate all withdrawals.

PDIC says they would pay “valid claims” from depositors of the banks placed under receivership last December.

BSP files criminal charges against 16 Legacy officers, employees and agents for 49 counts of falsification of public and commercial documents plus one case each of false reporting and false statement. Involved in the first filing of charges were: 1) the Rural Bank of Parañaque; 2) Rural Bank of San Jose in Batangas; 3) Dynamic Rural Bank in Calatagan, Batangas; and 4) Rural Bank of DARBCI in South Cotabato.

January 14: PDIC declares insurance claims from the clients of the 14 banks closed in December will reach P14 billion. The claims consist of over 133,000 individual deposit accounts. PDIC says in December that they have P54 billion funds accumulated in 2008 that can be used to compensate the 45,000 depositors affected by the massive closures of the banks and its loans and debts. The entire rural banking system has P150 billion assets.

January 16: SEC issues an order that prevents Legacy Groups and its affiliates to be removed from the company register.

January 22: the Monetary Board approves Circular 640, listing activities that can be considered as unsafe and unsound banking practices.

January 26: Trade Union Congress of the Philippines (TUCP) reports that over 1,000 workers has been displaced by the closure of rural banks. Most of these workers are branch heads, cashiers, accountants, tellers, and credit investigators.

PDIC announces it will start paying out insurance claims by some 135,000 depositors by mid-February.

January 27: SEC finally rejects the application of the Legacy Group for voluntary dissolution due to incomplete documents.

PDIC seeks P14-B loan from BSP to pay the deposit claims of the 15 rural banks padlocked by regulators last December. PDIC says its funds were enough to settle the claims but “decided to borrow anyway to avoid depleting the DIF.” The Deposit Insurance Fund (DIF) is the pool of funds from insurance premium paid by banks. DIF is valued at P60.5 billion.

To date, the PDIC has P72.5 billion in total loans obtained from the central bank. Deposit claims from the group of 15 banks is estimated to reach P14 billion.

January 30: SEC releases Office Order No. 36 that contains guidelines approved by the commission en banc to be followed in filing complaints against the 11 pre-need companies under the Legacy Group.

February 2: Senate begins probe on the beleaguered pre-need industry and partly blames the House of Representative and the SEC. The Senate has passed the pre-need plans code but cannot be passed into law as there is no counterpart measure from the lower house.

SEC’s Barin told Senators that they were informed only between December 8 and 10 that Legacy applied for voluntary dissolution.

The Legacy Group owns: 1) Legacy Consolidated Plans, 2) Scholarship Plan Philippines, and 3) All Asia Plans Corporation.

The Parents Enabling Parents (PEP) Coalition also assailed government agencies as they had been informing Legacy Groups of plan holders’ complaints since 2006. At that time, De Los Angeles threatened to sue PEP for libel.

February 3: De Los Angeles and SEC’s Barin appear before the House of Representatives for investigation. The issues discussed were: 1) Legacy’s voluntary dissolution, 2) the closure of the rural banks, 3) actions taken by BSP and SEC, 4) the Pre-need Code Bill of Laban ng Demokratikong Pilipino (LDP), 5) the Pre-need Insurance Corp bill of Lakas.

Barin tells Congress that SEC has not totally checked the 30 corporations of De Los Angeles under the Legacy Group and confirms the more than P300 million trust fund by Legacy. De Los Angeles claims the trust fund is enough to pay plan holders. Barin also told the investigating panel that none had been imprisoned since RA 9474 (An Act Governing the Establishment, Operation, and Regulation of Lending Companies) two years ago.

De Los Angeles admits and states 10 companies under the Legacy Group:

1. Legacy Consolidated Assets Holdings Inc.
2. Legacy Consolidated Plans Inc.
3. Scholarship Plan Phils. Inc.
4. Legacy Card Inc.
5. One Realty Corp.
6. Galaxy Realty and Holdings Inc.
7. Legacy Motors Inc.
8. Shining Armour Property Inc.
9. Fusion Capital Corp.
10. Conventional Realty Corp.

February 9: BSP files a second wave of charges against 116 counts charges against 18 executives, personnel of Legacy group rural banks. The group was charged with 116 counts of falsification of public and commercial documents and two counts of false statements. The banks identified were: 1) Rural Bank of Parañaque, 2) Rural Bank of DARBCI in South Cotabato, 3) Rural Bank of San Jose in Batangas and 4) Bank of East Asia.

De Los Angeles was not included in the list of officers that BSP filed a case against as BSP has yet to complete its investigation on the closure of rural banks under the Legacy Group. Only five of the 13 banks under Legacy were investigated and there are no evidences that link De Los Angeles.

De Los Angeles claims that Efren Reyes, the brother of former BSP officer Alberto Reyes, loaned P726,000 in one of his banks in May 2000. The amount ballooned to P1.4 million by July 2003 but every time the bank would follow-up on the loan payments, BSP would conduct specials audits on his company. Alberto Reyes belies De Los Angeles’ harassment claims.

BSP deputy governor Nestor Espenilla refutes de Los Angeles claims that BSP “harassed” Legacy, causing the demise of the group’s businesses. Espenilla calls the Legacy group “an organized syndicate” and urges PDIC and SEC to file appropriate charges against the Legacy group and its officials based on their investigations.

February 11: SEC in Cebu says it will only receive complaints against the Legacy Group only until March 31.

February 12: Twelve investors in the beleaguered Legacy Group of Companies file a 30-page P187 million syndicated estafa case against de los Angeles and his family with P187-M estafa case.

February 13: PDIC starts paying insurance claims with account balances of P100,000 and below for the depositors of the closed Nation Bank.

Plan holders question the source of the money De Los Angeles used to buy the 1,900 square meters Lapu-Lapu resthouse of Legacy owners in 2002.

SEC files a 21-page complaint against De Los Angeles and Legacy officials for violating the Securities Regulations Code.

February 14: Legacy Group states that it will file a petition for insolvency at the Makati Regional Trial Court next week to protect all 14,000 investors and creditors of the company’s “double-your-money” scheme.

February 18: Philamlife president Jose Cuisia says the financial problems faced by the Legacy group’s pre-need firms were isolated cases and does not reflect the entire state of the pre-need industry. Cuisia also said the market share of the pre-need firms under the Legacy group were “small.”

February 25: SEC says they consider requiring pre-need firms to set aside more funds out of the amount clients invest in their pre-need plans. Meaning, firms will set aside 70% instead of the current 5% out of the amount clients pay in the first year.

February 26: BSP files a P1 billion syndicated estafa case against De Los Angeles and six other officers of Legacy’s affiliate companies for alleged swindling and siphoning of public funds from the Rural Bank of DARBCI. It is the third set BSP filed against the operators of Legacy banks. BSP asks DOJ to include the charged people in the BIR watch list. BSP hires former ombudsman Simeon Marcelo to lead the legal team

March 2: Senate hearing on the state of the pre-need industry resumes and Mar Roxas, chairman of the Committee on Trade and Commerce, invites Legacy plan holders to narrate how de Los Angeles and his managers “sweet-talked” depositors.

Former Legacy Plans vice president Myrna Axalan testifies that de Los Angeles “cooked up the scheming programs and deliberately planned to fool investors, steal the savings of plan holders and depositors.”

The House of Representatives approves HB 5911, a bill that doubles the PDIC maximum insurance coverage from P250,000 to P500,000.

March 3: De Los Angeles continues to deny allegations that he stole depositors’ money in a Ponzi scheme. A witness debunks this and hands out several deposit slips and cash vouchers showing the money going to de Los Angeles’ personal accounts and some were used in his 2007 election campaign.

PDIC reveals during the House hearing that they discovered a number of suspicious bank accounts opened before the Legacy rural banks closed in December and January, each account does not exceed P250,000. PDIC suspects that the owners of the accounts were Legacy owners who wanted to recover money after the banks collapsed. De Los Angeles did not show up in the hearing because of his ailing mother.

A witness states during the House probe that from 2006 to October 2008, Paranaque representative Eduardo Zialcita has been receiving regular cash payments from the company. The money was allegedly as “consultation fees.” Zialcita denies receiving money.

March 5: Two former employees of the Legacy group surfaces after being under Senate custody. Carolina Hiñola, the company’s senior vice president, says she was also named chairman and president without her consent. Namnama Santos, chief finance officer of LCPI, admits that de Los Angeles asked her to “hide abroad” to avoid being questioned about the supposed scam.

March 6: BSP files the second estafa case against De Los Reyes and 13 other Legacy executives for siphoning P487 million of depositors and government money. The BSP case centers on another rural bank: First Interstate Bank (FIB) in Leyte.

March 9: Hiñola identifies SEC Commissioner Jesus Martinez of protecting Legacy. Martinez was allegedly a close friend of De Los Angeles. Martinez is Zialcita’s cousin. She also said she gave P1.4 million in cash last November 9, 2007 to Martinez as payment for a purchased Ford Expedition acquired by Rural Bank of San Jose that was personally being used by De Los Angeles.

Hiñola and Santos also said they were summoned by De Los Angeels last December 26, 2008 in a resort in Bicol to discuss “moves on how to go about the cases filed against them.” One of the proposals were business plans to prove that Legacy have businesses.

Santos also said that LCPI gave P38 million in company funds for De Los Angeles’ 2007 mayoral bid. The money includes the P1.8 million payment to Zialcita as consultancy fee and the checks were disbursed from January to August 2007. De Los Angeles denies using the money for the elections and said the money came from his private company, Legacy Motors.

Zialcita admits receiving “donations” from Legacy but denies being a consultant for the group. He also admits that De Los Angeles has supported various charity programs in Paranaque.

Senate President Juan Ponce Enrile asked Martinez to resign from his SEC post. Another transaction involving Martinez was the P3.2 million house and lot in Paranaque City which was paid by Legacy but was transferred to Martinez’s son. Martinez denies being close to De Los Angeles but mentioned that it was his son, Jesus III, who was close to De Los Angeles’ son.

March 10: PEP says there are other SEC and BSP officials who were involved in the Legacy scam. SEC chief Barin will convene with other commissioners to hear Martinez’s side of the story. BSP Governor Amando Tetangco Jr said they are waiting for an official complaint before investigating the alleged involvement of BSP officials in the scam,

Malacanang orders SEC Commissioner Martinez to file a leave of absence. Presidential Anti-Graft Commission (PAGC), BSP, SEC, and DOJ was asked by President Arroyo to conduct investigations on Martinez and his family. DOJ was also asked to assist BSP and SEC in helping victimized plan holders.

March 11: Jesus is Lord (JIL) and Citizens’ Battle Against Corruption (Cibac) denies any existing links with Marinez.

DOJ chief Raul Gonzalez orders BI to place Martinez on its hold departure list.

PDIC said Legacy Group has P129 million more insured deposits in Rural Bank of Polanqui (RBP) in Sto. Domingo Albay, which suddenly declared a bank holiday last month.

March 12 - WORD WAR. Celso de los Angeles says Sen. Mar Roxas is using the senate hearings on Legacy in aid of his 2010 presidential bid. Roxas harked back and said he is not the issue but the Filipinos who have to bear the billions-peso-worth of lost funds in Legacy.

PDIC FILES ESTAFA. The deposit insurer files a syndicated estafa case at the justice department against Celso de los Angeles and 20 other officials involved in the Legacy Group scheme. It also filed a perjury case against de los Angeles at the Ombudsman office. The PDIC cases stemmed from transactions from the Rural Bank of Carmen.

March 13 - DOUBTFUL DEPOSITS. PDIC holds a press conference where it said it had gone through 55 percent of the thousands of depositor accounts. Of the P6.43 billion deposits it has verified, P6.05 billion deposits are doubtful because of incomplete documents or had 'questionable transactions.'

EX-WIFE TALKS. Celso' ex-wife, Ma. Concepcion "Connie" Panlilio-de los Angeles, and son, Nicolo Martin, grant tearful media interviews to say they have nothing to do with Celso's scheme. They added that they just blindly signed incorporation papers and Deed of Assignment documents but it was still Celso who called the shots.

March 16 - FE BARIN'S HUSBAND. The SEC chair is herself dragged into the scandal as Mar Roxas shows check vouchers and internal office memoes that detail a Mitsubishi Pajero sale between Alejandro Barin, the SEC chair's husband, and an executive of the Legacy Consolidated, which SEC is regulating. There is no direct link that Legacy nor Barin benefitted from the transaction.

March 18 - TASK FORCE. Malacanang creates interagency Task Force Legacy under Administrative Order 258. Executive secretary Eduardo Ermita said Presidential Anti-graft Commission, Securities and Exchange Commission, Bureau of Internal Revenue, Housing and Land Use Regulatory board, Justice Department, Labor Department have 6 months to finish its investigation of Legacy's fraudulent schemes. Results will be forwarded to the Monetary Board, various church groups, and the media.

March 19 - PDIC PAYOUT. Depositors of Legacy Group's 12 closed rural banks trooped to the group's 48 branches today to get their claim forms from the PDIC for the reimbursement of their accounts with more than P100,000. The queues were long and depositors who expected to be paid today were dismayed.

EX-WIFE. Celso's ex-wife and son, Nicolo Martin, went to the justice department to offer themselves as state witnesses in exchange for not being included in the estafa cases. However, justice secretary Raul Gonzales said they cannot testify because the rules of evidence prohibit wives from testifying against their husbands.

COMPROMISE. Justice sec. Gonzales rejects a compromise offered by Legacy Group owner, Celso de los Angeles to plead guilty to all Legacy-related charges provided his ex-wife, son, and other Legacy officials are cleared. Gonzales said this could weaken the syndicated estafa charges filed against the other accused.

PRE-NEED PAYOUTS. The SEC wrote an open letter to clients of Legacy's 3 pre-need firms saying they should not expect to get their money back in full. It said the 3 firms only have P360 million in their trust funds and may not be enough to cover all obligations to planholders.

March 24 - CRIMINAL CASE. SEC impleads 3 more persons, including Legacy fund scam witness Namnama Pasetes, as respondents in the complaint it filed with the Department of Justice for violation of the provisions of the Securities Regulation Code (SRC) which prohibits the sale of securities without the approval of the commission.

ESTAFA CASE. BSP filed its 3rd estafa case agst De los Angeles, other Legacy execs for fraudulently siphoning off P500 million worth of deposits and investments from the Rural Bank of Bais Inc. in Negros Oriental.

March 25 - ESTAFA CASE. Sen Mar Roxas joined joined six plan holders of the dissolved Legacy Consolidated Plans Inc. in filing a case of syndicated estafa against Legacy Group owner Celso delos Angeles and 19 board members and directors of the pre-need firm.

TUITION FEES. SEC said it will try to issue checks for planholders of the Legacy Group's closed pre-need firms in time for June enrolment.

March 26 - POLITICAL CONNECTIONS. National Bureau of Investigation (NBI) filed graft charges against former SEC commissioner Jesus Enrique Martinez for allegedly colluding with Legacy Group owner Celso de los Angeles in misappropriating Legacy’s financial resources.

- With Leilani Chavez, and Lala Rimando,

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Lo-Fi Version Time is now: 25th October 2016 - 10:06 PM