SEC sues another pre-need firm

MANILA, Philippines – The Securities and Exchange Commission (SEC) has filed charges against the incorporators and officers of pre-need firm Capitol Plans Inc. for alleged vio-lation of securities law.

In a 15-page complaint filed with the Department of Justice (DOJ) last Tuesday, Capitol and its 12 former and current owners and officers were accused of violating provisions of Revised Securities Act when it illegally sold and issued two life plans from 1989 to 2000 when it was only allowed to sell and issue just one life plan by SEC.

Named respondents were Capitol’s former chairman and chief executive officer Alonzo Ancheta, president and chief operations officer Rolando Ancheta, vice president Victor Dela Dingco Jr., and directors Anita Rilloraza, Celia Angeles, Daniel Yu, and Roberto Chua Tan.

Also included in the list of respondents were the firm’s new chairman and CEO Eduardo Madrid, president Wilfredo Quitiongco, vice president Leslie Tan, treasurer Ma. Cecilia Abreu and corporate secretary Bonifacio Tavera Jr.

Among the allegations against Capitol were failure to settle claims of plan holders, failure to comply with its commitment to the Commission to submit a schedule of payments to plan holders, failure to respond to several show cause orders, and failure to submit its latest actuarial valuation report and inform the SEC of the closure of its main office.

The alleged scheme was discovered in Dec. 2000 when Capitol applied for renewal of its dealer’s license with the SEC.

The application was denied because Capitol did not meet the legal minimum paid-up capital of P36 million then required for a two-type plan pre-need company under an SEC circular in 1997.

This legal minimum paid up capital of P36 million was further increased to P50 million.

On Jan.13, 2003, Ancheta and Madrid signed a Memorandum of Understanding stipulating that Madrid would infuse additional capital in the form of real property worth not less than P40 million in order to meet the then legal minimum paid-up capital of P50 million.

Pursuant to the MOU, a new set of management group took over control of Capitol’s operations with Joseph Hammond as company president.

Hammond was later succeeded by Martha Grace Amberong.

On January 2006, the SEC’s Non-Traditional Instruments and Securities Department endorsed through a memorandum to the CED for investigation the violations of Capitol on SEC rules.

The CED uncovered that Capitol sold and issued at least two types of life plans Life Plans and Bayanihan Life Plan Program from 1989 to 2000.

“It should be noted that the permit to offer or sell worth 10 million life plans issued to respondent Capitol did not indicate the specific type of plan that was covered by the said permit. It simply stated that Capitol is authorized to sell life plans. But certainly such permit should pertain only to one type of life plan,” the SEC said in its complaint.