MFT Group Cries Foul Over Bank Freeze Order: ‘We Respectfully Disagree’
On Tuesday, news spread that the Court of Appeals had ordered the freezing of the bank, investment, and insurance accounts of the MFT Group of Companies, Inc., the embattled firm led by businesswoman Maria Francesca “Mica” Tan. The resolution, which was promulgated on May 13, also ordered an inquiry into the said accounts, saying that there was “probable cause” that the group’s assets were related to an unlawful activity.
But the camp of the MFT Group has cried foul over the order, saying that it disagrees that the order has any basis.
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The decision was the result of a petition by the Anti Money Laundering Council (AMLC) to freeze the accounts of the MFT Group 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.
“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.
The freeze and bank inquiry orders were issued after the Securities and Exchange Commission (SEC) filed a criminal complaint last April against the MFT Group over what it deemed were illegal investment-taking activities. The SEC also made permanent a cease-and-desist order against MFT Group and its officers and directors, effectively ordering them to stop all activities related to the illegal solicitation of investments from the public.
According to the SEC, the MFT Group promised guaranteed returns ranging from 12 percent to 18 percent of the amount they invested, which was considered as interest income. The scheme was perpetuated through the issuance of post-dated checks reflecting a one percent to 1.5 percent 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,” the SEC said.
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 MFT Group of Companies responds
In a statement sent to Esquire Philippines, the MFT Group of Companies’ representative Star Elamparo said that while the company will abide by the resolution of the Court of Appeals, it says it respectfully disagrees that it has any basis.
“The Petition suffered from a crucial evidentiary gap that should have prevented the Court from issuing a freeze order because AMLC failed to establish how each of the accounts are materially linked to the alleged unlawful activity of selling unregistered securities,” Elamparo said.
The company has insisted that it has never engaged in securities transactions in violation of the Revised Securities Act.
“Moreover, all that the AMLC did was list down the bank accounts of the respondents in the case, list down the covered transaction reports (CTRs), and then jumped to the conclusion that the number of transactions could have most likely been sourced from the alleged illegal transactions,” Elamparo added. “Not an iota of proof was presented to establish any link between the supposedly solicited investments and any of bank accounts.”
In defense of the company, Elamparo said that “the MFT Group is a holding company, managing its investments in a portfolio of different companies and a variety of business activities. It maintains legitimate business operations which entail the payment of obligations to third persons, such as their suppliers, service providers, and even their employees who are likewise unjustly affected by the unwarranted freezing of bank accounts.”
Elamparo further argued that, following the AMLC’s logic, “then all transactions occurring in all bank accounts involving someone accused of a predicate crime are presumptively proceeds of an unlawful activity.
“This shotgun approach could never have been the intention of the law, otherwise, the legislators would have done away with the phrase “in any way related” to an unlawful activity. That phrase was included in the law precisely because a nexus needs to be established, at least preliminarily, between the transaction and unlawful activity.”
Because the resolution of the Court of Appeals is not yet final, the MFT Group said it is hopeful that it can still be reversed on appeal.
