Manila, Philippines

SEC permanent cease-and-desist vs Kapa – Identify scheme red flags

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#AskGeri – KAPA “Investments”

Just last week, I received a question (via Rich Money Hacks Facebook page) from an avid reader who’s also a concerned citizen to his friends. He was asking whether I was familiar with Kapa Investments, offering 30% compounded monthly returns (yup, you read it right, not per annum but 30% monthly returns!). He was concerned for his friend who “invested” money in it.

Unfortunately I was not aware of it back then, if I was, [sarcasm alert], I could have invested my whole life savings in it and quit my job the next day. Sadly, there are still those who fall into this trap. Seriously though, upon hearing the staggering rate of return, I already became suspicious, without even researching about it. As follows are screenshots of our discussions:

kapa investment chat ask geri
#AskGeri FB Chat About Kapa Investments
kapa investment scam

#AskGeri FB Chat About Kapa Investments
#AskGeri FB Chat About Kapa Investments

A quick Google search while having above conversation already yielded some red flags on the supposed KAPA investment scheme .

i-Google mo beybi!

And just this morning, barely a week after our conversation, Inquirer once again reported that the SEC has made permanent their cease-and-desist order (CDO) against Kapa-Community Ministry. Talk about timing.

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Ponzi Scheme / Pyramiding

According to the article, SEC issued the cease-and-desist order (CDO) as the group is engaged in Ponzi scheme / pyramiding, disguised as so-called investments.

A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers.

– Investopedia

Since the money does not actually grow through legitimate investments and businesses, but rather through the fresh capital only from new investors, the practice is not sustainable. There will come a point where the returns to be paid out is too big, that the capital from new recruits will not be sufficient. Which makes the scheme and pyramid fall apart and crumble in the long run.


  • Goes by the name Kapa, Kapa-Community Ministry International Inc
  • Religious corporation soliciting investments ala Ponzi scheme (locally we also call it pyramiding)
  • They offer and sell investments without the license to do so
  • Cease-and-desist order (CDO) means stop right now (thank you very much), and don’t restart any operations and solicitation of investments
  • The CDO also applies to Kapa Kabus Padatuon (Enrich the Poor), Kapa Co-convenience Store and General Merchandise, and Kapa Wordwide Ministry
  • Yes, KAPA is SEC-registered last May 2017 but its incorporation and license from SEC did not allow them to act as broker or dealer in securities, investment house and close-end or open-end investment company (these functions require a secondary license from SEC)
  • They also have a website which supposedly shows their many activities and money-making ventures – — kinda convincing if you take it at face value.

Here’s the article from Inquirer: SEC makes permanent cease-and-desist order vs KAPA


Study First Before You Invest

Yes, we do encourage every Juan to make their money work harder for them through investing. But we also remind every Juan to study the investment first, before risking their money. Likewise, before risking Juan’s money, he should be able to cover the basics first, which we call – W.I.S.E.R. P. – in the #10 Steps to a Richer Life. A quick Google of the investment can also show you what the internet thinks about such investment.

investments meeting

Identify Red Flags and Scams

Inquirer says Kapa has already amassed P7-million from unsuspecting individuals who just want to grow their money. And every year, we hear of people being victimized by the same scheme but different name. Here are some ways to help Juan identify if a potential investment is actually a scam:

First, if it’s too good to be true, it probably is just that, too-good-to-be-true. Look, is 30% p.a. difficult to achieve? Yes, even in stocks and managed funds, this is very difficult, and these are already high risk high reward investments. Maybe in some businesses, this can be achieved. But that’s per annum, per year. Now, what more 30% compounded per month. How will one do that? Sounds like next to impossible.

Next, match the projected return with the plan on how to achieve it. Ask. Research. They did say how? Where will they invest the money to generate those staggering returns? Realistically, does it look like it can earn 30% per month net of operational expenses? Guaranteed? There are no guaranteed returns in investments (unless it’s sum assured in insurance), so if the return is guaranteed, Juan should think more than twice.

afraid to be rich

Third, presence of a website and SEC registration are not enough to make the company legitimate and solicit money from the public. Anyone can create a website and any corporation can get a basic SEC certification. If no website, the more you should worry. Well the website should contain their activities, show their licenses etc, show the people behind the group, their address, contact details, and more importantly, explain clearly how they will invest your money. Likewise, do not take what they say in the website and social media at face value. Look for independent sources which can verify or counter their claims.

Meanwhile, the SEC certification should not only show that they are a registered corporation, but moreover, show that they have been granted secondary licenses, which allows them to solicit investments from the public.

Juan might say, “But my friends got paid and it’s been almost one year of consistent returns!”

Well, good for them. Time to bail out while they still can.

Yes of course, the early birds will get paid. Patikim. That’s how they will entice newcomers to join – through word of mouth of friends, testimonials etc. That’s how they will grow their following and investment capital, by showing proof that indeed, the 30% monthly return is true. True for now. Question is, for how long? Once they gain enough popularity, once the fresh capital is not enough to payoff the returns, the payouts will just suddenly stop. And the operators will vanish, with every Juan’s hard earned money.

Especially with the news, there will be less new investors who will put in money (hopefully none at all!) while old investors might decide to pull out. This will severely hamper the cash flow management and balancing act of the operators, which will lead to the eventual collapse of the scheme.

If you gained money from Kapa and other ponzi, good for you but don’t re-invest it with them. And don’t do it again! Be more careful next time.

If you have money still invested in Kapa and other ponzi, withdraw it a.s.a.p., if you still can. Don’t put in additional money.

If you don’t have exposure with Kapa, buti ka pa¸ ibang investment na lang para maging milyonaryo ka.

Stay away. Risk management first, before profits.

Learn more ways to grow your money, the legitimate, patient but realistic way. Download our #10Steps to a Richer Life now and learn why WISER PINOY = RICHER PINOY.

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