Trial courts proposed vs pyramiding, Ponzi scams


A lawmaker has called for the creation of commercial trial courts to help suppress pyramiding” and Ponzi scams that have hit more than a million Filipinos with over 25 billion in combined financial losses.

“The establishment of commercial courts is long overdue. Once we have the new courts in place, there’s no question a greater number of embezzlers will be put behind bars faster, and this in turn should help discourage other would-be swindlers,” according to Makati City (Metro Manila) Rep. Luis Campos Jr., also deputy minority leader.

As proposed by Campos in House Bill 5339, commercial courts shall be established in every province or city in the country.

Such courts, he said in a statement on Monday, shall have sole jurisdiction to hear and resolve all cases of investment fraud, as well as those involving theft of corporate funds, intellectual property violations, financial rehabilitation and liquidation, intra-corporate disputes and violations of admiralty and maritime laws.

Under the bill, the trial of every case before a commercial court, once begun, shall be non-stop.

Proceedings shall be completed within three months from the filing of a case.

Judgment shall be delivered inside 30 days from the submission of the case for decision.

Because of lack of commercial courts, Campos said, only two individuals have been convicted of investment fraud under the 16-year-old Securities Regulation Code, or Republic Act (RA) 8799.

He was referring to “pyramiding queen” Rosario Baladjay, who ran the Multinational Telecom Investors Corp. rip-off in the early 2000s, and Francisco Borromeo, who defrauded his clients at Asian Capital Equity Inc. from 1993 to2003.

Baladjay and Borromeo were convicted in 2015 and 2013 respectively.

Meanwhile, Campos said many investment scams that victimized tens of thousands of Filipinos are still unresolved.

These include the cases against Performance Investment Products Corp. and Aman Futures Group Philippines Inc., each of which had robbed some P12 billion from unsuspecting investors, as well as the cases against the Legacy Group of Companies, Emgoldex Philippines, Forward Direct Selling Corp., One Lightning Corp., and Hyper Program International Direct Sales and Trading Corp., among others.

Campos also cited the case against Jose Cecilio Peñaflor, a dismissed employee of the Philippine Stock Exchange who ran a Ponzi scam that conned P330 million from investors.

Both pyramiding and Ponzi schemes are fraudulent operations that pay unusually high returns using fresh capital supplied by new investors, rather than real profits earned from legitimate sources.

The Securities and Exchange Commission (SEC) has repeatedly warned the public that scammers are now increasingly employing highly creative instruments that use precious metals, foreign currency trading, hidden treasures, travel opportunities, expensive cars and other extravagances to mask their phony activities.

When Congress passed the Securities Regulation Code of 2000 and abolished the quasi-judicial powers of the SEC, Campos said, the plan was to transfer the powers to new commercial courts patterned after those in the United States.

The transfer of the SEC’s quasi-judicial powers to existing Regional Trial Courts (RTCs) was meant to be temporary only, he noted.

“The Senate-House conference committee that finalized RA 8799 agreed clearly on the need for Congress to quickly pass a separate law that would establish new commercial courts,” Campos said.

“The bicameral panel was convinced that the handover of all cases [previously brought before the SEC]to existing RTCs would worsen docket congestion, and set back the administration of justice. Thus, the intention was really to create distinct commercial courts,” he added.


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