25 February 2019

SEC ISSUES CEASE AND DESIST ORDER AGAINST RELIGIOUS FIRM KAPA

The Securities and Exchange Commission (SEC) has ordered Kapa-Community

Ministry International, Inc. – an independent religious corporation – to stop soliciting
investments from the public without the necessary license and in a manner resembling
a Ponzi scheme.
The Commission on February 14 issued a cease and desist order against KAPA, which
also operates as KAPA Kabus Padatuon (Enrich the Poor), KAPA/ KAPPA (Kabus
Padutoon), KAPA-Co Convenience Store and General Merchandise, and KAPA
Worldwide Ministry, after finding substantial evidence that it has been offering and
selling securities in the form of investment contracts without the necessary license.

The order, which covers the religious firm’s partners, officers, directors, agents,
representatives and all other persons acting for and in their behalf, further directed
KAPA to cease from promoting its investment scheme through the internet and remove
promotional presentations online.

The SEC also barred KAPA, its affiliates and subsidiaries, including its directors and
officers, representatives and the persons acting for and in their behalf from disposing
of their remaining properties and other assets for the benefit of the investors.

Section 8 of Republic Act No. 8799 or The Securities Regulation Code stipulates 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 Commission."

KAPA is a registered corporation in the Philippines. However, its certificate of

incorporation dated March 3, 2017 explicitly stated that it is not authorized to undertake
business activities requiring a secondary license such as acting as broker or dealer in
securities, investment house and close-end or open-end investment company.

Despite its lack of authority to offer and sell securities, KAPA recruited and encouraged
members to "donate" any amount in exchange for a 30% monthly return, based on the
"Certificate of Membership with Deed of Donation" members received upon joining.

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Office of the Commission Secretary
S-309, 3F PICC Secretariat Building
Philippine International Convention Center (PICC) Complex
Pasay City
888-8141 ; 818-5478
An investigation by the National Bureau of Investigation in Caraga showed KAPA
amassed P7 million from hundreds of investors at some point. The religious firm mostly
targeted teachers in Bislig City, Surigao del Sur, according to complaints received by
the SEC Enforcement and Investor Protection Department (EIPD).

In October 3, 2018, the Commission advised the public that KAPA is registered as a
non-stock corporation and that it does not have a license to solicit investments.

The SEC continued receiving reports about the intensified recruitment and solicitation
activities of KAPA through social media. For instance, the company's president and
co-founder, Joel A. Apolinario, was featured in several videos posted on YouTube and
Facebook discussing the investment scheme and inviting the public to sign up.

Apolinario, better known as the pastor or minister of KAPA, had been charged with
syndicated estafa in relation to the investment scheme, but the case was dismissed
for lack of interest of the parties to pursue the complaint.

“The petitioner EIPD adduced sufficient evidence to support its allegations that KAPA
is engaged in offering for sale securities to the public through indiscriminate or random
offering online via videos promoting its investment scheme to potential investors
without prior registration,” read the cease and desist order.

The Commission also took note of the EIPD’s findings that the investment scheme of
KAPA has the characteristics of a Ponzi scheme as it promises an exorbitant rate of
return with little or no risk at all to investors.

Accordingly, the SEC invoked Section 64 of the Securities Regulation Code, which
empowers itto issue a cease and desist order without the necessity of a prior hearing
if the act or practice will operate as a fraud on investors or is otherwise likely to cause
grave or irreparable injury or prejudice to the investing public.

It noted: “The Commission is duty-bound to protect the interest of the investing public.
Thus, it is necessary that a Cease and Desist Order be issued to enjoin KAPA from
further offering and selling unregistered securities to the public. Otherwise, to allow
KAPA to continue soliciting investments and/or selling or offering for sale securities to
the public without the necessary license or permit will operate as a fraud on investors
or is likely to cause grave or irreparable injury or prejudice to the investing public.”

Those who have invested money or have been invited to join KAPA are encouraged
to report the matter to the Commission’s head office or extension offices. They may
also seek the assistance of the SEC- Davao City Extension Office at SDC Building,
Purok 13, Maa Road, Maa, Davao City; call (082) 298-2170 and (082) 298-1893; or
send an email at kjpestares@sec.gov.ph. In Cagayan de Oro City, they may visit the
Commission at the SEC Building, corner 14th and Tomasco Del Lara Street; call (088)
857-4325 and (088) 857-7225; or send an email at rvegypto@sec.gov.ph.

END

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Office of the Commission Secretary
S-309, 3F PICC Secretariat Building
Philippine International Convention Center (PICC) Complex
Pasay City
888-8141 ; 818-5478