Fraud Legacy

Legacy Group Case
The legacy group is defined by the Bangko Sentral ng Pilipinas as a “swindling syndicate” offering
Motorcycle Loan Program, Investments Loan Program, Double-your-money scheme, Hybrid year
schemes, and 3-year Buy-Back scheme. In December 2008, the Bangko Sentral ng Pilipinas (BSP) shut
down 13 rural banks under the Legacy Group of Companies for being insolvent and for engaging in
unsound practices. The Legacy group owner late Celso De Los Angeles Jr. was allegedly misused
depositors’ money to finance his extravagant lifestyle and to pay off government officials for protection.
The group performs dishonest acts through various schemes to siphon depositors’ funds into
corporations controlled by Delos Angeles but at the same time, hide the cash discrepancy in the banks’
financial books.
The group duped billions from its investors through its offered products such as the “Motorcycle
Loan Program” and “Investments Loan” program. These programs enticed “fake borrowers” to sign loan
documents in exchange for commissions. They made it appear that funds were withdrawn by the “fake
borrowers” but the proceeds are deposited to another account controlled by Delos Angeles. Another
scheme is the Double-your-money that is offered in three, five, and six-year terms, the group’s double-
your-money schemes promised a 100-percent yield through rural banks that were affiliated with the
Legacy Group. In this scheme, the deposits would yield 100 percent after three to six years. It was
offered in all rural banks affiliated with the Legacy Group. Next is the Hybrid years’ schemes. In the
hybrid five-year scheme, the group promised 20-percent per annum interest, where the first interest
was given directly to the depositor. Succeeding months would get them monthly payouts equivalent to a
20-percent interest per annum, and they would get back their principal deposit by the maturity of the
scheme. Additionally, is the 3-year Buy-Back scheme. In this scheme, the Legacy Group promised
depositors that their deposits will double in three years. Furthermore, investors will get 12-quarterly
post-dated checks that will earn them double the amount of their original investment. This particular
scheme was so popular that it went beyond Leyte, where it was started, to attract investors and
depositors from Samar and other areas. On January 5, 2009, the BSP filed 49 counts of falsification of
public documents against 16 officers, employees, and agents of several Legacy banks who allegedly
forged documents to support fictitious loans. The BSP said the “loans” were not applied for by real
borrowers but were siphoned off for the personal gain of bank officials. And on February 6, the BSP filed
116 counts of falsification of public documents against 18 officers, employees, and agents of four Legacy
banks. On Feb. 13, the Securities and Exchange Commission (SEC) filed criminal charges against De Los
Angeles and other officials of Legacy Consolidated Plans for offering and selling unregistered securities.
On February 26, the BSP filed a P1-billion estafa case against De Los Angeles and other company officials
in the Department of Justice for swindling the public and for siphoning off deposits from the bank. On
the same day, the SEC filed two more criminal charges against the Legacy founder for duping hundreds
of people with investment securities that were not registered with the corporate regulator.
The Legacy Group left behind a financial mess worth almost 30 billion pesos and at present, the
Philippine Deposit Insurance Corporation said it has already shelled out a total of P11 billion to
depositors. The owner Delos Angeles died in 2012, but his failing health prevented him from being
arraigned on many of the charges filed against him. Sadly, in the case of Legacy Group the owner and
the officials are the one personally committed the acts. However, I think some ways on how
organizations could have prevented the fraud is by making everyone within the organization to be aware
of the fraud risk policy including types of fraud and the consequences associated with them. Also,
honest employees who are not tempted to commit fraud will also be made aware of possible signs of
fraud or theft. Additionally, investors must also consider some things before investing. Learn about the
different types of investment fraud, including those found online and in social media. They must conduct
a thoroughly research before investing and check if these are registered.
References:
Fonbuena, C. (2009). How Legacy Group lured depositors. Retrieved on December 12,2020 from
https://news.abs-cbn.com/business/03/12/09/how-legacy-group-lured-depositors.
Inquirer net (2012). What Went Before: The closure of banks under Legacy Group. Retrieved on
December 12,2020 from https://newsinfo.inquirer.net/168787/what-went-before-the-closure-of-banks-
under-legacy-group#:~:text=The%20closure%20of%20the%20banks,and%20other%20Legacy%20bank
%20officials.
Adrian, M. (2019). Top 5 Biggest Financial Scams in The Philippines. Retrieved on December 12,2020
from https://www.imoney.ph/articles/top-biggest-financial-scams-philippines/.
Diaz, J. & Calica, A. (2009). Legacy pyramiding bared. Retrieved on December 12,2020 from
https://www.philstar.com/headlines/2009/02/03/436666/legacy-pyramiding-bared.

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Legacy Group Case

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