Founder Joel Apolinario. (Kapa website)

Philippine government closes largest investment scam

The Securities and Exchange Commission (SEC) froze all bank accounts and assets of  Kapa Community Ministry International (Kapa) on June 4, 2019 over allegations that it operated the largest investment scam in recent Philippine history.


Kapa Ministry merges religion and social media and claims it has helped millions of Filipinos grow their money. It promised Filipinos that after a one-time donation, they will be receiving 30% of the amount for life.

President Rodrigo Duterte ordered the shutdown following a meeting with his friend Pastor Apollo Quiboloy on June 8. SEC has denied that it was influenced by Quiboloy in its decision to go after Kapwa Ministry.

Duterte said the activities of these companies were clearly a form of “syndicated estafa.”

Several investment scams have sprouted in Southern Mindanao and have reportedly branched out to as far as Luzon in recent days. These include Kapa, headed by Joel Apolinario, which promises a 30% “love gift” each month.

Some schemes, such as the Tagum City-based Rigen Marketing, Jogle, and Ever Arm, even promise a return of up to 500%.

Despite the red flags, its investors supported Kapa and called the government “anti-poor” for ordering the shutdown of the supposed religious organization.

Pastor Joel Apolinario, the organization’s leader, claims they have as many as 5 million investors, making it one of the largest scams in Philippine history.

The SEC said none have come forward to complain, but they have witnesses to help them for the case build-up.

According to a Rappler report, Apolinario is based in Bislig City, Surigao del Sur and started the organization there in 2015. Since then, it had branched out to most of the regions.

To be a member of Kapa, investors fill out a small form and donate at least P10,000 up to at most P2 million.

The contract states that the donation shall be used to achieve Kapa’s mission for the “propagation of the religious faith, establishment of livelihood programs for the benefits of its members.”

SEC chairman Emilio Aquino made the statement a few days after President Rodrigo Duterte appeared in a televised interview with Quiboloy, a long-time friend of his, and ordered the shutdown of Kapa.

“Hindi po totoo yun kasi considering yung mga proseso of getting the freeze order, arrest warrant, we were already securing that even before and then inexecute lang nagkataon nitong Monday,” he told radio DZMM.

Aquino said they have asked the Court of Appeals to freeze the bank accounts and assets of Kapa.

He earlier said the SEC will “pursue criminal charges against the officials and defenders of Kapa.”

The SEC said Kapa promised billions of pesos to its members, but the group’s assets cannot back up such claims.

The group accepted investments, which it dubbed as “donations” of no less than P10,000 from each of its members and in return promised a monthly interest rate of 30 percent, dubbed as “blessings” by the group.

In comparison, the top performing mutual fund in the country only yielded returns of 9 percent for a whole year.

The SEC said this could be considered to be among the biggest investment scams in the Philippines since it has already gotten no less than P50 billion from its members.


File from SEC

According to the Civil Code of the Philippines, a donation is a voluntary transfer of possession without any consideration and is considered a gift.

However, Kapa promises the donated money will grow 30% per month and for life. In a year, a person who “donated” P10,000 will receive P36,000 in a year, which is a 360% return.

Compared to typical investments, mutual funds grow between 5% to a little over 9%. Government securities like T-bills and T-bonds yield at most over 6%.

The SEC said that the investment-taking activity of Kapa constituted a Ponzi scheme, an investment program that offers impossibly high returns and pays investors out of the capital contributed by later investors.

Aquino said the investment scheme is simply unsustainable. To illustrate, Kapa will need P15 billion a month to pay 5 million members, who have contributed at least P10,000 each.

Early members defend Kapa and attest that they have earned cash. The problem, however, is that the money they earned came from other people.

Without recruiting new members or soliciting more investments from the public, the pooled funds will not last beyond 3 months.


Table from SEC

Kapa’s financials

Apolinario claims that Kapa has been operating for 6 years now and boasts of a diverse portfolio of businesses to sustain its promises to investors.

However, the SEC said that majority of the businesses are newly registered sole proprietorships. Moreover, some corporations which are allegedly acquired by Kapa do not have financial capabilities to generate the necessary funds to sustain the high returns.

“These are basically startups because these companies are new and there is no way it could have generated billions. And if they really did, the country’s top corporations could not even earn that big,” Aquino said.