Tan, founder and president of listed gaming firm BW Resources Corp, was indicted before the Pasig Regional Trial Court by the Department of Justice (DOJ) for alleged price manipulation over an eight-month period last year.
The BW scandal is one of the four charges in the ongoing impeachment trial of President Estrada who was accused of pressuring then Securities and Exchange Commission (SEC) chairman Perfecto Yasay Jr. to exonerate Tan.
The DOJ charged Tan with allegedly engaging in a manipulative device to squeeze the market for the stock price of BW shares to float and two counts of non-disclosure of beneficial ownership in the gaming firm.
Also charged with Tan were BW stockholder Jimmy Juan, for violation of a disclosure rule, and Eduardo "Moonie" Lim Jr., for violation of the broker-director rule, he being an official of both BW and Belson Securities Inc.
The panel of prosecutors, headed by Assistant Chief State Prosecutor Nilo Mariano, recommended a P120,000 bail for Tan and P40,000 bail each for Juan and Lim.
If found guilty, the respondents face maximum prison terms of 21 years for each violation.
State prosecutors said the three businessmen colluded to cause artificial stock sales that caused the price of BW shares to soar by more than 5,000 percent from March to October last year.
The stock plummeted the day after BW officials announced that Macau casino mogul Stanley Ho had taken a minority stake and had been elected chairman of the board.
The rise and fall of BW share prices caused heavy losses to several individuals and corporations and led to a confidence crisis in the local capital market that almost collapsed the Philippine Stock Exchange (PSE).
At one point, the PSE mulled suspending trading in the bourse but was overruled by the country’s economic managers Finance Secretary Jose Pardo and Bangko Sentral ng Pilipinas (BSP) Governor Rafael Buenaventura.
Tan was earlier exonerated by the Dagupan City Regional Trial Court in a P5-million damage suit filed by BW stockholder James Dy, who claimed to have lost a substantial amount in the country’s worst stock market scandal.
In filing the indictment, the prosecution panel, composed of Mariano, and prosecutors Gregorio Arizala, Susan Dacanay and Ma. Emilia Victorio, junked respondents’ defense that they can no longer be held liable for stock manipulation because the Revised Securities Act had already been repealed by the Securities Act of 2000.
"The argument is untenable," the prosecutors said. "Consequently the new repealing law did not relieve the respondents (Tan, Juan and Lim) of any criminal liability which they might have committed under the old law."
However, the prosecutors cleared 37 individuals, 11 brokers and two investment houses for insufficient evidence.
The individuals cleared were Carmelo Santiago, Eduardo Lim Sr. Ramon Lee, Leoncio Lim, Hermogenes Laddaran, Mario G.F. Juan, Lilia Gonzales, Christine Jao, May Ann Yu, Lili Lim, Merlita Ng, Susan Pe, Patrick Chua, Jose Ong, Anthony Sy, Carlos Ching, Amelyn Yao, Rosemarie So, Paul Gotianse, Vicente Co, Angel Tan, Ross Yuson, Antonio Tee, Nelson Chua, Roberto Co, Jacob Assad, Mario Juan, Lucio Co, Janette Que, Henry Go, Sy Kiam Hiong, David Narvasa, Jerry Ocier, Andrew Sy, Carlos Sy, Oliver Sy and Edgardo Ti.
The brokers that were cleared were Aurora Securities Inc, Securities 2000 Inc, PNB Securities Inc, Mark Securities Corp, Belson Securities Inc., A.T. de Castro Securities Corp., PCCI Securities Brokers Corp., Larrgo Securities Inc, Wealth Securities Inc, Asiatec Equities Inc, Mandarin Securities Corp. and investment houses Hock Lee Lay International and New Dynasty International.