Celso de los Angeles, owner of the Legacy group of companies, appears to be a financial genius. He created a scheme that fell through the regulatory cracks, and stumped both the Securities and Exchange Commission and the Bangko Sentral ng Pilipinas.
From the Senate hearings, here is the anatomy of de los Angeles’ perfect scam:
- His companies sell a pre-need plan to an investor.
- After some time, another company from the Legacy group, like Legacy Card or Legacy Motors, will buy back the plan and convert it into a deposit-like instrument with very attractive terms. For a P1-million investment, for example, you get P60,000 as advanced interest payment in lump sum and P20,000 a month after that in post-dated checks. That amounts to P240,000 per annum in interest payments alone, or 24 percent per year. On the fifth year, you get your P1 million back plus additional bonus of P200,000.
- There are other kinds of schemes. Some are double-your-money schemes in three years, some in four. All involve extremely high interest and post-dated checks that can be withdrawn from his rural banks.
- He folds his pre-need plans, assuring plan holders that they can get their money back because the trust fund is sufficient.
- Then his rural banks also close shop, with many of his depositors’ money conveniently chopped up into accounts falling under P250,000—the amount insured by the Philippine Deposit Insurance Corp.
the last part of an editorial reads: “Why is it that nobody has been arrested in connection with the kidnappings?”
but sadly, most of the lawmakers don't really know how to craft good laws or create ones with loopholes/gray areas plus the time required is too long. many investigations don't always result to new legislation...and with the elections coming up next year, solons will be busy on "pogi" points rather than focusing on the needed work
AMLC's hands are tied when they need the consent of the depositor whose accounts they need to examine but the account holder invokes his bank secrecy right
Do we expect lawmakers to create laws to prevent scam? Do they know anything about investing? I'm sure they don't know because they do not invest. Majority of them are corrupt so why invest when you can have millions of money without having to shell out anything.
BSP and SEC, what are you doing? Paulit ulit lang ang mga scams still they cannot prevent it.
I heard about De los Angeles years ago when he was head of National Home Mortgage. My contacts who deal with that GFI told me the guy was corrupt. They exposed his shady deals and eventually Angeles was kicked out of that company.
It’s hard to believe he pulled off this Legacy scam without the cooperation or negligence of regulators. They knew what he was doing since 2005. They didn’t stop him. Now it’s hard to nail him because he covered his tracks. Now regulators are washing their hands (it’s not our fault). You need hard evidences and witnesses of fraud to get a conviction. You need a paper trail or his partners in crime must implicate him. Stop fooling around and do your work!
SEC regulations, Tax laws, computer programs etc. all have loopholes or flaws. Brilliant minds will always find them.
There is a reason why people like Celso de los Angeles become successful scammers. They have brilliant minds.
Clearly , Philippine investors are not as sophisticated as philippine scammers.
Celso can be wall street material in the making. Although wall street derivatives ( CDS, CDO ) are more sophisticated variants. Net effect is the same. The government is left holding the bag.
A criminal mind is not the same as a brilliant mind. A brilliant mind connotes a person who brings about what is good. A criminal mind connotes something notorious or evil. If Celso was there, the present global financial crisis would probably been worst as it is now and bring the Philippines down with him.
He is not someone that we should even be thinking of or proud to export to the United States or other countries, do his thing there and proclaim to the whole world that he is a Filipino. They have enough persons like him there that's why we have this present crisis.
We should export our good products only.
The root of all this is greed. When I was still new to personal finance I have read so many posts about grabbing the opportunity being offered by rural banks, such as double your money scheme and the likes. They are promoting it heavily and rationalizing that if anything happens it is covered by PDIC. I wonder where they are now. quick money is equal to quick loss.
Maybe we should be made aware of other investment opportunities like the recent offer of Globe, a P3B bond issue. The rate is not big but betting on globe I think this is a good investment rather than those rural banks. http://mytwentyfivecents.wordpress.com/2009/02/13/globe-telecoms-p3-billion-bond-issue/
Also Salve, can you check on paluwagan schemes being implemented in the provinces? My officemate is encouraging me to join a paluwagan, 15k for 10 months, and it will become 180k after that, or almost 23% return! this is one of those too good to be true schemes again! I told her to be careful about these especially if its in the province you cannot go after those people who joined the paluwagan.
You mean suckers are born every second. You can smell a ponzi scheme when returns are big in a short period of time.
The government deserved to be scammed by these companies. That's the only way they will do their job. Unfortunately the victims lose their money also.
Paying 20%pa on a 5 Year Time Deposit by some Rural Banks, is not necessarily an indication of unsound banking practice, let alone a 'scam'.
I took out a 'secured loan' at such a Bank for 5 months, and paid 3%pm as the Lone Interest. With Documentary Stamps, Insurance, Processing Fee etc, together with the Interest on the Loan, it represented 45.5%pa in total.
Clearly if a Bank has a steady stream of borrowers, then offering 20%pa is possible and still leaves good margin for bad debt, overheads and expenses, and make a good profit. Secured Loans of 5%pm are also taken, so unsecured loans must be even higher.
This is why myself, my wife, and her 24 year old daughter, placed deposits in several of these Legacy Group Banks.
The first of these was in March 2005.
Considering only 1 x Legacy Group Bank had previously been closed since 1998 (Center Bank in Feb 2006), it seemed that such 'DYM5' Peso Deposits paying 20%pa were fairly low risk, yet offering return higher than INFLATION.
Income from these Banks, enabled me to retire here in the Philippines, from age 50.
The fact these Deposits were covered by the PDIC, was very important, as it represented my life savings.
If the Banks were to get closed, the PDIC should pay out.
Then we find all 12 x Legacy Group Banks, get closed in December 2008.
I never expected this and meant a big loss of monthly income. This was made worse by the PDC's of the Legacy Pre-Needs Buy Back, bouncing from October 8th. Replacement
"Checks were promised, but never delivered.
In February 2008, my Mother-in-law suffered a heart attack and a stroke. We managed to save her life by spending a lot of money (Php900K+), but it did not stop there! Her kidneys had shut down, and only 1 came back, and only partial working. This necessitated kidney dialysis twice a week ever since.
Many Pinoy families could not have covered such outlay, as even the ongoing cost of the dialysis was Php45K+ per month.
At least up until November Mama enjoyed an extended life, but could no longer walk properly from the stroke.
In November she had another stroke and again had to spend time in the ICU to try and save her life a 2nd time. She was in coma like state for over 3 weeks die to blood in her brain pressing on a certain area that prevented her from waking up.
Now we faced a real big financial problem.
Nearly all the income we had been receiving from some 5 x Legacy Group
Banks and these PNBB2 plans, was gone!
The PDIC were stalling on the payout. We lost the interest from these 5 LFG Banks, for December. January, and now February.
All our savings are gone, the Credit Cards at the maximum, almost. My wife has resorted to pawning her jewelry to get the funds for her Mama's dialysis sessions.
The PDIC has started paying out for those with Deposits of Php100K and below.
My first Deposit in BEA was for Php100K, but they say we have to wait for announcement.
Well Mama can't wait for such announcement! We don't have any more funds, and can't get any more loans, so cant cover her needed Kidney Dialysis.
It looks like Mama may well die now, in part due to the PDIC taking 3 months since MRB issued. Still no announcement for claims being accepted, for those with Time Deposits!
I e-mailed PDIC, asking if they have any FAST Track, or Loan facility against Claim, for such 'emergency life or death' situation, but no reply.
As I said before in this blog, “It’s hard to believe he pulled off this Legacy scam without the cooperation or negligence of regulators.” (2-12-09) As revealed in recent Senate investigation, my intuition is correct. Legacy’s illegal activities were rampant since 2003. I know this myself I’m not even a regulator. You mean BSP and SEC officials don’t know it or can’t do anything about it? C’mon they weren’t born yesterday. Good luck to the good guys there!
Salve,
Look at the Letter to Editor from Ramon Dino about BSP and Legacy. His name sounds familiar. I must have spoken with him over the phone back in 2006. If I’m not mistaken he’s a minority stockholder or the lawyer of a minority stockholder of a Legacy bank. He’s more credible than the Legacy officers who testified in the Senate hearing. Those gals were part of the scam until the banks collapsed. Mr. Dino and company were blowing the whistle since 2006 but BSP seemed deaf. I hope he cooperates in the Senate investigation.
Share ko lang. Nagtatampo kay Mar Roxas over demise of pre-need. Ay naku.
http://www.abs-cbnnews.com/feedback/04/08/09/open-letter-sen-mar-roxas-pre-need-issues
An open letter to Sen. Mar Roxas on pre-need issues:
Ako po ay sumulat sa inyo upang maipahatid ko ang aming hinaing sa inyo at sa iba pa ninyong kasamahan sa Senado.
Hindi ko pa maintindihan kung bakit ganon na lamang ang panggigipit na ginagawa nyo sa mga pre-need companies ngayon? Ako po ay isa lamang empleyado at hindi naman ganon karunong sa batas. Ang naiintindihan ko ay dahil sa mga ginagawa nyo, mas maraming empleyado ang mawawalan ng trabaho.
Maaari po ba n'yong bigyan ng linaw ang mga sumusunod :
1.) Ang nangyari sa Legacy group ay walang duda na isang Scam, bakit kailangan nyong idawit ang ibang pre-need companies na patuloy na tapat na nag-seserbisyo sa kanilang mga planholders?
2.) Sa ibang bansa, ang gobyerno ang gumagawa ng paraan para ma-isalba ang mga apektadong Kumpanya. Dito sa Pilipinas, kayo ang gumagawa ng paraan upang mapabagsak ang pinagkukunan namin ng kabuhayan.
3.) Nauunawaan nyo po ba na apektado din ng global crisis at economic downturns ang mga pre-need companies?
4.) Ilan na lang po ang mga pre-need companies na tumagal sa industriya. Na-check nyo po ba kung ilan na ang mga estudyanteng napagtapos nila dahil sa mga education plans? na kung ilan na ang nabigyan nila ng pension ? na kung ilan na ang memorial services na ang kanilang naiserbisyo?
Kami po ay parte ng isa sa mga kumpanyang ito Senador Roxas. Na anytime soon ay nanganganib na rin na mawalan ng trabaho. Alam nyo po ba na marami na kaming sakripisyo na pinag-daanan upang maprotektahan namin ang interest ng aming mga planholders? At patuloy pa rin pong gumagawa ng mga paraan upang maisakatuparan namin ang aming mga obligasyon sa mga pamilyang Pilipino gayon din upang patuloy na mabigyan ng pag-asa ang ilang libong pamilya na sa kumpanyang ito ay umaasa. Ano po ang maipapangako nyo sa amin kung kami'y mawalan ng hanapbuhay?
5.)Kung totoo pong concern kayo sa mga mamamayang Pilipino, bakit ngayon lang po kayo nag-dadadakdak dyan sa Senado? Matagal na ang kaso ng CAP at Pacific Plans pero wala kayong ginawa. Kung noon pa lang ay naaksyunan na ito, eh di sana'y hindi na nakapanloko pa ang Legacy.. siguro dahil malapit na ang 2010 at kailangan nyo nang magpapogi. Nakakalungkot isipin na marami sa ating mga pulitiko ngayon na ginagamit na ang entablado ng kamara upang magpakitang gilas sa masa. Hindi nyo po ba kayang gawin na bantayan ang SEC at gayon din protektahan din kami? Sa tingin ko po'y masyadong one-sided ang tingin nyo sa sitwasyon.
Senador, sana po ay mabigyan nyo ng tuon ang liham kong ito at sana po ay matulungan nyo kami.
Lubos na umaasa,
Isang botante at taxpayer
s.allyson[at]rocketmail.com
I love placing sports bets online. Unfortunately, I'm down since I started my online gambling journey but I've been on the upswing. Here is one thing I have learnt in my sports betting experiences. Do your research! Find out whos injured, not 100% healthy, home team, away team, etc. Once you have all the facts place a bet!
People who land in the market with fake schemes makes everything look so genuine that the public cannot help but believe in them. Such master plans accumulated millions of pesos completely draining the naive public. They perfectly did their homework which helped them in fooling the people. The way they so neatly do their presentations, paperworks, seminars, demonstrations...etc, are unbelievable. I think the government or some experienced organisations should come up with some solutions so that the public can differentiate between the fake and the real one. Online scams are also still continuing, until some type of precaution comes up all we can do is to do lot of research on the particular organisations and then invest.
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I heard about De los Angeles years ago when he was head of National Home Mortgage. My contacts who deal with that GFI told me the guy was corrupt. They exposed his shady deals and eventually Angeles was kicked out of that company. Florida family health insurance quotes
cy group, like Legacy Card or Legacy Motors, will buy back the plan and convert it into a deposit-like instrument with very attractive terms. For a P1-million investm messenger bag manufacturer,
I agree with you. You have given to us with such an large collection of information. Great work you have done by sharing them to all
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the last part of an editorial reads: “Why is it that nobody has been arrested in connection with the kidnappings?”
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An early warning system would protect more investors. Immunity from suits would allow BSP examiners to act more speedily and forcefully.
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The real high tech Identity thieves will attempt to hack into databases where credit cards are stored. Other high tech thieves use Ginault Watches
and other devices to steal your pin number at ATMs.
Possibly the most popular high tech scams involve e-mails. These E-Mail Identity thieves will send you an e-mail pretending to be a Bank, Credit Union. Online Stock trading company and ask you to click on a link and verify your account. Never click on a link in an E_mail and enter credit card or any other personal information. Call your bank, Credit union or other financial institution and tell them you received such an E-mail
Other Popular E-mail Scams pretend to be collecting charitable donations. Again call the charity direct or do a Google search for their web site and give that way. Never click on a link in an E_mail and enter credit card or any other personal information.
Still another E-mail Scam pretends to be popular online companies like PayPal, Stormpay, eBay or many others and again request you click on a link and enter your bank account or credit card information. Never click on a link in an E_mail and enter credit card or any other personal information.
You shouldn't fear the scamers. You shouldn't be afraid to purchase online or do online bill pay. You just need to be sure to take the necessary precautions to protect yourself.
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Wow, you must always watch your back when in business... these scams are all over the place. Husky Breeders