ariellalisan.org – Homeward Bound

HOMEWARD BOUND is doing a bit of public service just before the year ends.

A certain Bitster, left a comment on my post about the Pre-Need Code of 2008. It was a lengthy comment and I realize that it is a legitimate issue. I am not updated with these stuff but it got my interest as I really hate it when some influential people take advantage of the ordinary ones.
Here is the comment, verbatim:

There has been a lot of publicity in the Press about these Rural Banks of Legacy Group, going on Public Holiday and being put under ‘Receivership’ by the BSP.

There is a lot less publicity regarding Legacy Consolidated Plans Inc., an SEC Licensed Pre-Needs Dealer.

Many invested into a 3 Year Pension Plan (Classique A) via lump sum payment up front. The ‘Maturity Value’ was Double the Pension Plan ‘Contract Value’.

So provided this was run properly and 51% paid of the PPC value for all Pension Plans sold, was paid into such Trust Fund, it should have given some safeguards, to a percentage of the funds ‘invested’.

The ‘twist’ to this particular investment, being a “Buy Back” Agreement, signed by the Owner of the Pension Plan as the 1st Party, and Legacy Card Inc. as the 2nd Party.

I guess all the investors were too ‘greedy’ to ask detailed questions as to “why does Legacy Card, want to buy this Pension Plan, and how can they afford to pay the ‘Installments’. Basically the “Deed of Assignment”, promised 10% of the Maturity Value up front. That’s like 20% Advanced Interest, meaning you only pay 80% of the PPC Contact Value as Nett payment. The 90 % Balance being paid via 12 x Quarterly Post Dated Checks (PDC’s).
So your Return is 2.25 x Nett Investment. Php80K Nett (min), gave 12 x Php15K over 36 Months = Php180K.
That’s a ROI = 1.25, which over the 3 Year Term = 41.67%pa APR.

I guess that is why some investors put in Php2M, Php6M or even Php11M – because they were greedy.

Not as greedy as the Legacy Group however, since despite not having presented the required Financial Statements to the SEC, still got given License to continue selling these Pre-Need Pension Plans in 2008.

In August 2007, they announced that the PNBB Plan would be withdrawn, and it was, on 3rd September. But is was re-introduced in October 2007, just a month later.

In August 2008, they again announced this PNBB product was to be withdrawn.

There was a ‘clamour’ of new placements from ‘greedy’ investors wanting 41.67%pa APR return on their funds. Knowing such investment, did not have PDIC cover, only the Rules and Regulations of the ‘SEC’, governing Pre-Need Corporations and the Plans being offered.

There was also ‘BP 22? anti-bouncing check law, to give some protection to those ‘installments’ in return for selling such Pre-Need Pension Plans to Legacy Card Inc.

So Legacy Consolidated Plans Inc. and some 10 other Companies within they Group have filed for dissolution with the SEC apparently. They claim they are insolvent? So what happened to the ‘Php15.3 Billion’ in Assets, as of 2006. Presumably should have been even higher in 2008?

We are forming Groups to join together and ask the NBI to investigate if a criminal act was committed by the Legacy Group. The Lawyers appointed by Legacy, have said much of the Assets have gone. The Trust Fund does not have the funds it is supposed to. They expect the Plan holders to sit back and accept what ever they get from the liquidator.

The ‘SEC’lacked the ‘muscle’ and ‘teeth’(and willpower it seems) to refuse License renewals until the finances presented, audited and investigated. How can the Trust Fund not have the 51% minimum of PPC Value payments mandated by the SEC? Yet the SEC, kept renewing their License!

Legacy Investors (Visayas) Group

For more information, you might want to take a look at this forum thread.