THE Securities and Exchange Commission (SEC) on Sunday said that it had lodged criminal charges against MFT Group of Companies Inc., led by businesswoman Maria Franchesca Tan, over alleged illegal investment-taking activities.

The SEC lodged the complaint before the Department of Justice (DoJ) last April 5 after it found that the firm had committed multiple violations of the Securities Regulation Code in relation to the Cybercrime Prevention Act of 2012.

"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 agency said in a statement.

The group allegedly solicited investments from the public and promised guaranteed returns of 12 to 18 percent of the amount they invested as "interest income," the corporate regulator explained.

"The scheme was perpetuated through the issuance of post-dated checks reflecting a 1 percent to 1.5 percent monthly interest to interested investors, who were given either a promissory note or borrower-lender agreement as proof of their investment," it said.

"[T]he unauthorized investment-taking activities... partake of the nature of a Ponzi scheme, since their success and viability are anchored on the additional investments of existing investors and/or the investments of new investors."

The filing of criminal charges came after the SEC issued a cease-and-desist order (CDO) in January directing all MFT Group executives to stop their unregistered investment solicitation activities, which was eventually upheld on April 1.

MFT Group later on transitioned to Foundry Ventures following the issuance of the CDO against it, the regulator noted.

The SEC said it also found the group and its officers and directors liable for 17 counts of misrepresentation in audited financial statements (AFS) filed from 2018 to 2021 by "reflecting dividend income, which has no basis."

"Based on the financial review conducted, no such amount reflected in the AFS of the subject company would correspond to the monies invested by the investors in either equity or liabilities of the company," the commission said.

"This clearly indicates that the monies received through the representations of the MFT Group of Companies were not recognized in the company's books."'

The group also declared dividend revenues from its subsidiaries from 2018 to 2021 "without basis," the SEC said, noting that the subsidiaries did not issue dividends due to insufficiency of retained earnings.

Accounting firm Isla Lipana & Co., which acted as the independent auditor of the MFT Group from 2018 to 2021, was also implicated in the complaint.

According to the SEC, Isla Lipana "colluded" with the company's scheme by "making it appear that the financial statements ... were fairly presented despite inconsistencies and inaccuracies in the AFS."

In a statement on Sunday, the MFT Group and Foundry Ventures maintained that they "never engaged in securities transactions in violation of the Revised Securities Act."

"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 has produced the alleged complaints for the DoJ," the MFT Group's statement read.

"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."

The group said it continued to believe in the country's judicial system "despite the fact we feel we have not so far been afforded due process."

"We trust that the DoJ will be impartial and honor our basic right to be heard through the preliminary investigation process," it implored.

"[W]e continue to reach out to the SEC for matters that can still be rectified. We have always adhered to the law and pray that we will ultimately be vindicated."

While MFT Group of Companies was the audit client, Isla Lipana clarified that the company was being audited as a "standalone entity" and that it was not acting as an auditor for any other company "within the group, or the group in general."

"The last report we have issued for the standalone company was for the year ended December 31, 2021," the auditing firm said in a separate statement.