The Philippine Deposit Insurance Corporation (PDIC) recently filed a syndicated estafa case against the former President and four former directors of the closed GMA Rural Bank (GMA RB) of Cavite for misappropriating, converting and diverting P748 million of the Bank’s funds through loan releases to various linked corporations. Also charged were five directors/officers of the borrowing corporations who are children of the President of GMA RB.

The Department of Justice (DOJ) Task Force on Financial Fraud is currently conducting a preliminary investigation on PDIC’s complaint.

Accused were Mr. Banlee C. Choa, former President, Chief Executive Officer and Chairman of GMA RB; Ma. Corazon OT. Choa, former GMA RB Director and director and stockholder of various Choa corporations; and the other directors and stockholders of the said corporations namely: Cherry Lyn C. Madarang, Carson T. Choa, Carter T. Choa, Carvin T. Choa, Carlo T. Choa; and Celine T. Choa.

The complaint of PDIC and the attached affidavits of witnesses describe how the accused created and maintained an office with books separate from GMA RB in effect, operating a shadow bank whose transactions were unrecorded and fraudulent. This separate office was used to siphon off the deposits from the bank.

GMA RB was ordered closed in February 2011 by the Monetary Board and was placed under receivership of the PDIC. The PDIC reported that it had paid deposit insurance payments totaling to P532.7 million as of January 2012.

The PDIC also reported that it had filed before the DOJ Special Panel for Legacy Cases and the Task Force on Financial Fraud a total of 83 complaints for large scale estafa, syndicated estafa and unsafe and unsound banking practices against a number of closed banks’ owners, officers and personnel. Of this total, 35 were already decided by the DOJ and have been transmitted to various courts for trial and decision.

PDIC continues to pursue cases against errant bank owners, officers and employees in order to strengthen the deposit insurance coverage system, maintain faith and confidence in the country’s banking system, and protect it from illegal schemes and machinations.

The Philippine Deposit Insurance Corporation (PDIC) was established on June 22, 1963 by Republic Act 3591 to provide depositor protection and help maintain stability in the financial system by providing permanent and continuing deposit insurance. Effective June 1, 2009, the maximum deposit insurance coverage is P500,000 per depositor. All deposit accounts by a depositor in a closed bank maintained in the same right and capacity shall be added together. A joint account shall be insured separately from any individually-owned deposit account.

PDIC news/press releases and other information are available at the website, www.pdic.gov.ph.