Legacy Group Scandal

Nature of the Business

Legacy Group of Companies is founded and owned by the politician- businessman Celso de
los Angeles. He successfully acquires Scholarship Plans Philippines, Inc. (SPPI) and Legacy
Plans, Inc (LPI) to form the Legacy Group in 1997. De Los Angeles then becomes its chairman
and president. Legacy Group acquires Rural Bank of Parañaque (also known as Banco
Paranaque) and its five branches in Metro Manila. The group also acquires Rural Bank of
Bisayas Minglanilla (now Bank of East Asia) and Rural Bank of Carben, both in Cebu, and
First Interstate Bank in Leyte. Legacy Group also acquires Pilipino Rural Bank in Cebu, Rural
Bank of DARBCI in South Cotabato, Center Rural Bank in Muntinlupa, and Philippine
Countryside Rural Bank in Cebu. De Los Angeles acquires Consolidated Plans Inc and merges
it with Legacy Scholarship Pension Plans, Inc to form Legacy Consolidated Plans, Inc.
LCPI The Securities and Exchange Commission (SEC) grants a permit to Legacy Group,
allowing it to sell one billion worth of pension securities, a type of pre-need plan products.
The Legacy Group ranks 18th in the list of pre-need companies with the highest gross sales
in 1999 and ranks 9th in terms of gross sales and 2nd in terms of growth in the pre-need
industryin 2001. De Los Angeles admits and states 10 companies under the Legacy Group,
these are the Legacy Consolidated Assets Holdings Inc., Legacy Consolidated Plans Inc.,
Scholarship Plan Phils. Inc., Legacy Card Inc.,One Realty Corp., Galaxy Realty and Holdings
Inc., Legacy Motors Inc., Shining Armour Property Inc., Fusion Capital Corp., Conventional
Realty Corp.

What happened?
The BSP describes the Legacy Group as a “swindling syndicate.” The late owner, Celso delos
Angeles, allegedly misused depositors’ money leading to the collapse of 12 rural banks and
3 pre-need firms. He siphoned depositors’ money to finance his extravagant lifestyle and to
pay off government officials for protection.
As a lender, the group used the schemes “Motorcyle Loan Program” and “Investments Loan”
program to entice “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They made it appear that funds were withdrawn by the “fake borrowers” but the proceeds
were actually deposited to another account controlled by Delos Angeles.
To attract depositors into the bank, the group offered the following :
Double your money in three years
Double your money in five years
Double your money in six years
Hybrid five years
Hybrid six years
3-Year-Buy-Back
In the double your money schemes, the deposits would yield 100 percent after three to six
years. It was offered in all rural banks affiliated with the Legacy Group.
The “hybrid five years” scheme, offered 20 percent per annum interest. The initial 20 percent
was given upfront to the depositor. Then they were given monthly interests equivalent to 20
percent interest per annum. On the fifth year, they get back their principal deposit.
For the “3-Year-Buy-Back” scheme”. deposits will double in three years and then the
investors will receive 12 quarterly post dated checks as payment of the investment in an
amount that is double the amount of the original investment. So attractive was the scheme
that their bank in Leyte was able to attract depositors even outside the Samar and Leyte
areas.
As of September 30, 2008, the bank was able to accumulate P467 million in total deposits.
But in reality, the bank was already operating at negative net worth of P239 million. When it
closed on Dec. 12, 2008, the bank only had about P1 million cash on hand.
As of October 2010, the Philippine Deposit Insurance Corporation said it has already shelled
out a total of P11 billion to depositors.
Who are the people involved?
Named respondents were: Celso delos Angeles, Chairman of the Legacy Group of Companies;
Carolina G. Hiñola, Chief executive Officer of Legacy Consolidated Plans Inc. (LCPI); Ms.
Namnama D. Pasetes, Chief Finance officer of LCPI; Atty. Christine Antenor Cruz-Limpin,
Member of the Executive Committee of the Legacy Group of Companies; Atty. Norman
Tiongson, Member of the Executive Committee of Legacy Group of Companies; and Ms. Lydia
A. Villanueva, assistant of respondent Pasetes in LCPI for the misappropriation of P70
million intended as capital infusion of Rural Bank of DARBCI, Inc. which is based in General
Santos City.

Named respondents were: Mr. Celso delos Angeles; Mr. Alexis S. Petralba; Ms. Namnama D.
Pasetes; Ms. Carolina G. Hiñola; Mr. Roy Hilario; Mr. Virgilio A. Odejar; Atty. Christine Antenor
Cruz-Limpin; Atty. Norman Tiongson; Atty. Victoria “Binky” Noel; Mr. Arnel Sulquiano; Mr.
Ronaldo Alix; Mr. Mike Basangan; Mr. Rommel L. San Pedro; Mr. Francisco Uy Lim;
Ms.Josephine M. Guevarra; Mr. Levy K. Trijo; Ms. Sofia M. Aleli; and Jane Does.The case
involves at least P487 million of solicited funds received in trust from depositors/investors
of First Interstate Bank (Rural Bank of Kananga, Leyte) that respondents have willfully,
unlawfully and fraudulently misappropriated. FIB which was based in Kananga had branches
in Palo, Maasin, Hilongos, Carigara and Baybay, all in Leyte.
Resolution
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 banks, which had a combined P14.03 billion in insured deposits in 132,642 bank
accounts, were placed under the receivership of Philippine Deposit Insurance Corp. (PDIC).

On 26 February 2008, the BSP’s filed with the DoJ its first case of syndicated estafa against
Celso G. delos Angeles, Jr., and other officers of the Legacy Group and affiliated companies
involving P1 billion (one billion pesos) siphoned from the Rural Bank of DARBCI, a rural bank
with offices in General Santos City and Cebu City. While records as of 30 September 2008
indicated that RB DARBCI had P830 million in deposits raised from the public, its cash
position was less than P1 million (one million pesos ) as of the same date.
On 6 March 2009, the Bangko Sentral ng Pilipinas filed with the Department of Justice its
second case of syndicated estafa against Celso G. delos Angeles, Jr., and other officers of the
Legacy Group and affiliated companies. The case involves at least P487 million of solicited
funds received in trust from depositors/investors of First Interstate Bank (Rural Bank of
Kananga, Leyte) that respondents have willfully, unlawfully and fraudulently
misappropriated. FIB which was based in Kananga had branches in Palo, Maasin, Hilongos,
Carigara and Baybay, all in Leyte.
On 24 March 2009, the Bangko Sentral ng Pilipinas filed with the Department of Justice its
third case of syndicated estafa against Celso G. delos Angeles, Jr. and other officers of the
Legacy Group for fraudulently siphoning off P500 million worth of deposits and investments
from the Rural Bank of Bais Inc. which is based in Negros Oriental.
On April 20,2009, the Bangko Sentral ng Pilipinas filed with the Department of Justice this
week its 4th case of syndicated estafa against Celso G. delos Angeles, Jr. and other officers of
the Legacy Group for the misappropriation of P70 million intended as capital infusion of
Rural Bank of DARBCI, Inc. which is based in General Santos City.
On 6 February 2009, the Bangko Sentral ng Pilipinas (BSP) filed with the DoJ cases for 116
counts of falsification of public and commercial documents plus 2 counts of false statements
against 18 officers, employees, and agents of four (4) rural banks belonging to the Legacy
Group.
On 5 January 2009 the BSP filed criminal charges against 16 officers, employees and agents
for 49 counts of falsification of public and commercial documents, plus one case each of false
reporting and false statement.