Six loan companies are the subject of a criminal complaint from the SEC Philippines

The Securities and Exchange Commission (SEC) continues to bring more lending companies who failed to disclose their online lending platforms (OLPs) to the Commission and employed abusive debt collection practices before the Department of Justice, amid the rising complaints against abusive lenders in the country.

The SEC Enforcement and Investor Protection Department on June 20 filed a criminal complaint against FESL lending Investor Corporation (FESL Lending), FESL Business Process Outsourcing Services (FESL BPO), Realm Shifters Business Process Outsourcing Services (Realm Shifters), U-Peso.ph Lending Corporation (U-Peso), Philippine Microdot Financing Corporation (Microdot), and Armorak Lending, Inc. (Armorak) for violations of Republic Act (RA) No. 9474, or the Lending Company Regulation Act of 2007 (LCRA), RA No. 11765 or the Financial Products and Services Consumers Protection Act (FCPA), and the SEC FCPA Implementing Rules and Regulations (IRR).

Specifically, the EIPD charged the six corporations for violation of Section 12(1), 12(2)(a), and 12(3)(a) of the LRCA, Section 8(d) of the FCPA, and Rule 8 Sections 4.2(B), 4.4(A), 4.4(C), 4.4(D), and 4.4(H) of the SEC FCPA IRR.

The Commission implicated Gwen Lemuel Zamora, incorporator, director, and corporate secretary of FESL Lending, as well as the registered owner of FESL BPO, and Jennifer Mangubat Salvador, the registered owner of Realm Shifters.

Also implicated in the complaint were other beneficial owners, incorporators, employees, and officials including Juliet Torres, Ruffa Salahag Pizaña, Jian Liu, Annalyn Llanderal, Hu Yahai, Margarita Bermillo Sanchez, Joyce Anne Rioflorido Pergis, Eve Rosalea Vanwin Elicanal Raymundo, Keyzel Ann Amarillo Arellano, Mary Joy Juayong Dorate, Mark Vincent Rolle Acula, Rhea Salon Saloma, Jinliang He, Bo Tao, Meynard Lacson Parayno, Lian Chen Feliciano Bulang, Charity Ezequiel Pimentel, Nancy Saw, McKaye Nakpil, Miao Min, Zhang Jing, Mark Darwin A. Camara, Niersen C. Custodio, Germaine Hazel M. Bayugo, Heidi B. Lanting, and Richard King A. Revina.

Other corporations, such as Fancing PTE. LTD., ScoreOne Technology PTE. LTD., Richie Rise PTE. LTD., and Sharemax Investment, Inc., were implicated also for their respective connections to the respondent companies.

The case stemmed from a joint operation between the SEC Task Force on Online Lending Application (TF-OLA) and the Philippine National Police Anti-Cybercrime Group (PNP-ACG), following several complaints against several SEC-registered OLPs, particularly Loanmoto, Lendpeso, Weloan, and Applecash.

A search warrant was executed on May 16 which resulted in the arrest of eight managerial employees from Realm Shifters. It also revealed that FESL BPO and Realm Shifters operated as third-party collecting agents for several OLPs and companies such as U-Peso, Microdot, and Armorak.

The FCPA prohibits the use of unfair and abusive debt collection practices by lending corporations against borrowers.

A plain-view inspection of the desktop monitors confirmed both organizations’ suspicions that the respondent managerial employees were sending threatening messages to the OLPs’ borrowers and the borrowers’ contacts which is a clear violation of the FCPA.

Moreover, the digital forensic examiners found that the employees were using both the SEC-registered OLPs and those not registered with the Commission, namely Lalapeso, Happy Peso, Junny Loan, Easy Loan, Duckloan, and Cashcash. Lalapeso was subsequently revealed to be a part of FESL Lending. With the unregistered OLPs working within the premises of Realm Shifters and FESL Lending, both companies were prosecuted for violation of the LCRA.

The LCRA provides that no corporation can act as lending company without authority to operate from the SEC.

In line with this, SEC Memorandum Circular No. 19, Series of 2019, or the Disclosure Requirements on Advertisements of Financing Companies and Lending Companies and Reporting of Online Lending Platforms, requires lending and financing companies to disclose all their operating OLPs to the Commission.

FESL Lending failed to register Lalapeso as one of its OLPs and has knowingly misrepresented to the Commission that it did not operate the said OLP, according to the complaint.

“FESL BPO, Gwen Lemuel S. Zamora, Realm Shifters, and Jennifer Mangubat Salvador are engaged in the business of a lending company without a validly subsisting authority from the SEC in violation of Section 12(1) of the LCRA when they operated a loan processing and collecting business through the use of Online Lending Applications,” the complaint read.

“As attested to by Digital Forensic Examiners and arresting officers from PNP-ACG, and personally witnessed by members of the SEC-EIPD team, the collecting specialists of respondents employed threats, harassment, and intimidation in collecting the debts from delinquent borrowers.