CA: MFT Group Bank Accounts, Other Assets Frozen Over Illegal Investment Activities

​The Court of Appeals (CA) has ordered the freezing of the bank, investment, and insurance accounts of Maria Francesca Tan (MFT) Group of Companies, Inc., as well as a bank inquiry into such accounts, upon finding probable cause that the group’s assets were related to an unlawful activity. 

In a resolution promulgated on May 13, the appellate court granted the petition of the Anti-Money Laundering Council (AMLC) for the freezing of the MFT Group’s bank, securities and insurance accounts for a period of 20 days.

The freeze order covers a total of 138 bank accounts, four securities accounts, and four insurance accounts bearing the names of the MFT Group, Foundry Ventures I, Inc., Mondial Medical Technologies, Maria Francesca D. Tan, Christian Konstantin, Roxanne G. Agbayani, Enrique Eduardo D. Tan, Charles Edward D. Tan, and Luis Gabriel R. Cancio, Jr., among other officials, across several banking and financial institutions.

The freeze order covers a total of 138 bank accounts, four securities accounts, and four insurance accounts bearing the names of the MFT Group, Foundry Ventures I, Inc., Mondial Medical Technologies, Maria Francesca D. Tan, Christian Konstantin, Roxanne G. Agbayani, Enrique Eduardo D. Tan, Charles Edward D. Tan, and Luis Gabriel R. Cancio, Jr., among other officials, across several banking and financial institutions.

Fraudulent practices and other violations under Republic Act No. 8799, or The Securities Regulation Code (SRC) are among the predicate offenses of money laundering, as provided under the 2018 Implementing Rules and Regulations of the AMLA. 

“We find that there exists probable cause that the subject bank, securities, and insurance accounts may be related to violations of Section 8.1, Sections 26.1, 26.3, and Section 28.1 of the SRC, listed as an unlawful activity under Section 3(I)(33) of the AMLA, as amended,” the CA held.

In a separate resolution promulgated on May 17, the CA also granted the ex parte application of the AMLC for a bank inquiry order, authorizing the Council to inquire into or examine the bank, securities, and insurance accounts of the group within a period of 120 days.

Under Section 11 of the AMLA and Rule 11 of the 2018 IRR, the CA, upon ex parte application, may order that the AMLC be allowed to inquire into or examine any particular deposit or investment, including related accounts, with any banking institution or non-bank financial institution after a determination that there is probable cause that the same are in any way related to an unlawful activity as defined under the same law.

“Indeed, there is probable cause that the subject bank, securities, and insurance accounts stated herein may be related to violations of Section 8.1, Sections 26.1 and 26.3, and Section 28.1 of the Securities Regulation Code, listed as an unlawful activity under Section 3(i)(33) of the AMLA, as amended,” the CA held.

The freeze and bank inquiry orders were issued after the MFT Group was found to be soliciting investments from the public without the necessary licenses from the Securities and Exchange Commission (SEC).

The MFT Group promised guaranteed returns ranging from 12% to 18% of the amount they invested, which was considered as interest income. The scheme was perpetuated through the issuance of post-dated checks reflecting a 1% to 1.5% monthly interest to interested investors, who were given either a promissory note or borrower-lender agreement, as proof of their investment.

Section 8 of the SRC provides that securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the SEC.

Meanwhile, Section 26.3 of the SRC states that it shall be unlawful for any person, directly or indirectly, in connection with the purchase or sale of any securities, to engage in any act, transaction, practice, or course of business which operates or would operate as a fraud or deceit upon any person.

Section 28 further adds that no person shall engage in the business of buying or selling securities in the country as a broker or dealer, or act as a salesman or an associated person of any broker or dealer unless registered as such with the Commission.

Prior to the issuance of the freeze and bank inquiry orders, the SEC filed a criminal complaint against MFT Group and Foundry Ventures for its unauthorized investment scheme, as well as misrepresentations in the groups’ financial statements. The SEC likewise made permanent a cease and desist order against MFT Group and its officers and directors, enjoining them to stop all activities related to the illegal solicitation of investments from the public.