The Securities and Exchange Commission (SEC) said over the weekend it filed a criminal complaint against the MFT Group with the Department of Justice (DoJ) for alleged unauthorized solicitation of investments.
It said in a statement it filed a case against MFT Group and Foundry Ventures, along with its top executives, for alleged violation of Sections 8, 26 and 28 of Republic Act No. 8799, or The Securities Regulation Code (SRC).
The SEC also implicated in the complaint Isla Lipana & Co., which served as the independent auditor of the MFT Group for the fiscal years 2018 to 2021.
The MFT Group, in its website, claims that it primarily invests in real estate, healthcare, food and beverage, financial services and others. It earlier asked the SEC to lift a cease-and-desist order issued against the company.
The SEC said the criminal case stemmed from complaints submitted by several investors who participated in the alleged investment scheme of the MFT Group, which later transitioned to Foundry Ventures.
The MFT Group allegedly promised guaranteed returns ranging from 12 percent to 18 percent of the amount they invested, which was considered as interest income. The scheme was continued through the issuance of post-dated checks reflecting a 1-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, the SEC said.
“The instruments executed by MFT Group and Foundry Ventures are clearly investment contracts considering that the scheme, the transactions, as well as the attendant circumstances show that elements provided under SRC Rule 26.3.5 are all present [which are also the elements under the Howey Test],” the complaint read.
The corporate regulator also noted that the unauthorized investment-taking activities of MFT Group and Foundry Ventures were similar to a Ponzi scheme, as their success and viability are anchored on the additional investments of existing investors and/or the investments of new investors.