SEC files criminal complaint versus MFT Group, Foundry Ventures

THE Securities and Exchange Commission (SEC) has filed a criminal complaint against Maria Francesca Tan (MFT) Group of Companies, Inc. and Foundry Ventures I, Inc. for allegedly engaging in illegal investment activities.

The complaint was filed with the Department of Justice (DoJ) on April 5, citing violations of Sections 8, 26, and 28 of Republic Act No. 8799, also known as The Securities Regulation Code (SRC), in relation to Section 6 of Republic Act No. 10175, the Cybercrime Prevention Act, the SEC said in a statement over the weekend.

The SEC also charged MFT Group and Foundry Ventures with violations of Section 54.1 in relation to Section 54.2 of the SRC and Section 177 of Republic Act No. 11232, the Revised Corporation Code, and SRC Rule 68, in connection with material misrepresentations in their audited financial statements (AFS).

“The filing of the criminal case stemmed from complaints submitted by several investors who participated in the investment scheme of the MFT Group, which later transitioned to Foundry Ventures,” the SEC said.

 “The MFT Group allegedly promised guaranteed returns ranging from 12% to 18% of the amount they invested, which was considered as interest income. The scheme was perpetuated through the issuance of postdated checks reflecting a 1% to 1.5% monthly interest to interested investors, who were given either a promissory note or borrower-lender agreement, as proof of their investment,” the SEC added.

The SEC said that Isla Lipana & Co. was also implicated in the complaint, as it served as the independent auditor of the MFT Group and Foundry Ventures for the fiscal years 2018 to 2021.

“In relation to the misrepresentations in the MFT Group’s FS, the SEC found that Isla Lipana colluded with the MFT Group in their fraudulent activities by making it appear that the financial statements of the company were fairly presented despite inconsistencies and inaccuracies in the AFS,” the SEC said.

“Isla Lipana issued an unqualified opinion for the years 2020 and 2021, indicating that the AFS of the MFT Group are fairly presented in all material respects and in accordance with the identified financial reporting framework,” it added.

The commission previously issued a cease-and-desist order against MFT Group and Foundry Ventures. The order was made permanent on April 1.

“We welcome the opportunity to clear our names and are hopeful that the DoJ will exonerate us. From the very beginning, we were never shown a copy of the alleged complaints and it is only now that the SEC produced the alleged complaints for the DoJ,” MFT Group said in a statement.

“Consequently,  we have confirmed that the complaints were spearheaded by personalities we have previously identified as the ones responsible for an online smear campaign and who have ulterior motives to fabricate charges. These are the same personalities we have previously sued for damages,” it added.

Also sought for comment, Isla Lipana said: “We received a copy of the complaint on 19 April 2024.”

“‘Maria Francesca Tan (MFT) Group of Companies, Inc.’ is our audit client. While the name of the company we audit bears ‘Group of Companies,’ we are auditing that company as a stand-alone entity and we are not the auditors of any other company within the group, or the group in general,” it added. 

“The last report we have issued for the standalone company was for the year ended 31 December 2021. We have not yet issued our report for the calendar years 2022 and 2023 pending completion of our audit procedures. We shall fully cooperate with the pending investigation,” it also said. — Revin Mikhael Ochave