Investors were misled into putting their money into unregistered and fraudulent investments after the Department of Justice (DOJ) indicted the Maria Franceska Tan (MFT) Group of Companies and Foundry Ventures I, Inc. for unauthorized solicitation of investments from the public.

The DOJ acted on a complaint filed by the Securities and Exchange Commission (SEC), which received multiple reports from investors who were promised returns of 12 to 18 percent on their placements.

In a resolution dated 26 May but only made available to the press on Thursday, state prosecutors found prima facie evidence with reasonable certainty of conviction to charge MFT Group and Foundry Ventures for violating Sections 8, 26, and 28 of Republic Act No. 8799, or the Securities Regulation Code (SRC).

“Undoubtedly, the transaction between the aforementioned respondents and the complainant-investors and the public is in the form of an investment contract falling within the purview of the term 'securities' as defined by law,” the resolution read.

“For failure to register the same before offering them to the public, respondents MFT Group of Companies and The Foundry, through its incorporators/directors/officers, can be held liable for violation of Section 8 of the SRC,” it added.

The DOJ said the firms used promissory notes and borrower-lender agreements in the form of a memorandum of agreement, with 12 post-dated checks issued to investors, 11 of which showed 1 to 1.5 percent monthly interest, while the last reflected both interest and principal.

The DOJ also said the scheme was “similar to a Ponzi scheme, a type of investment fraud that relies on the funds contributed by new investors to pay the purported returns to existing investors.”

It also found that MFT Group had committed misrepresentations in its audited financial statements from 2018 to 2021, declaring dividend income that “either had no basis, or did not correspond to the dividends declared and the retained earnings by its subsidiaries.”

The auditors, Isla Lipana & Co. (PwC Philippines), along with Geraldine Hammond-Apostol and Ruth F. Blasco, were found to have “aided and colluded” with MFT Group by validating the dividend revenue and contributing to the misrepresentations.

“These misrepresentations are used by respondent MFT Group, through the Board of Directors, as a device, scheme or artifice in making it appear that the company is profitable, and in luring investors, thereby defrauding them that their investments are legitimate, in violation of Section 26 of the SRC,” the resolution read.

“They deliberately misled and defrauded the public by persistently issuing unregistered securities and/or debt instruments,” it added.

Charged along with MFT CEO Maria Francesca Tan were officers Florita Tan, Enrique Eduardo Tan, Charles Edward Tan, Christian Konstantin “CK” Agbayani, Roxanne “Roxy” Agbayani, Luis Gabriel R. Cancio Jr., Noel M. Olan, Joselito “JR” Hernandez, Christian Olan, Tito Cosejo Jr., and many others involved in the company’s operations.

The SEC issued a cease and desist order against MFT Group in January 2024 and made it permanent in April.