The Securities and Exchange Commission (SEC) has ordered the closing down of two entities for allegedly engaging in fraudulent investment schemes.
Both issued on May 28, the separate cease and desist orders against Fast Track Worldwide, Inc. and JOCALS688 Beauty and Wellness Products Trading, Inc.directed them to stop soliciting investments or engaging in similar activities.
The orders also stopped the two entities “from transacting any business involving funds in its depository banks, and from transferring, disposing, or conveying in any manner all related assets to forestall grave damage and prejudice to all concerned and to ensure the preservation of the assets for the benefit of the investors, the SEC press release said/
Covered by the orders were their “operators, partners, directors, officers, salespersons, agents, representatives, promoters, and all persons, conduit entities and subsidiaries claiming and acting for and on their behalf.”
The orders came about after probers of the agency found out that these entities were engaged in offering securities through contracts even without the needed registration.
Their action, the agency said, violated Section 8 of Republic Act No. 8799, or The Securities Regulation Code, which prohibits any entity from engaging in securities without the approval of the agency.
Based on the result of investigation, the agency identified that those behind the setting up of
Fast Track were by Rey Aldwin Bautista Valeriano, James Rhyan Espinosa Guillera, Clive Christopher Cortez Llora, Jeneil Santos Aguilar, and Jay Piscadero Gregorio and that entity was engaged “in direct selling of goods and merchandises to consumers.”
However, its certificate of incorporation “”expressly prohibited the corporation from soliciting, accepting or taking investments/ placements from the public or issuing investment contracts.”
However, the SEC Enforcement and Investor Protection Department (EIPD) probers found out that the entity was offering investment packages bundled with health, lifestyle, and nutrition products for P1,499 to P49,999. As a result of their investments, investors were promised with guaranteed returns of as much as P3 million a year, and bonuses if they could recruit more investors.
The agency said this scheme “constituted the sale and/or offer of securities in the form of investment contracts, whereby a person invests money in a common enterprise and is led to expect profits primarily from the efforts of others, according to the SEC.”
By doing so, the entity should have secured a secondary license as its action constituted the selling of securities based on the Securities Regulation Code.
“[I]t is clear that Fast Track is not authorized to sell and/or offer the ‘Investment Packages’ to the public because they are securities in the form of investment contracts, and Fast Track does not have the requisite license from the Commission,” the SEC noted.
“This undoubtedly warrants the issuance of a cease and desist order because the act of Fast Track in selling/ offering unregistered securities operates as a fraud to the public which, if unrestrained, will likely cause grave or irreparable injury or prejudice to the investing public,” it added.
Registered on October 9, 2019, JOCALS688 was to engage in in the sale, distribution, marketing and trading of goods, commodities and merchandise such as beauty and wellness products, coffee, juice and herbal products.
Headquartered in Zamboanga del Sur, the company’s incorporators included Joshua A. Calderon, Echochen M. Calderon, Noemie C. Ponce, Hanz R. Paler and Nino S. Agad-ad.
Just like Fast Track, the certificate of incorporation of JOCALS688 stated that it “shall not solicit, accept or take investments/ placements from the public neither shall it issue investment contracts.”
The investigators, however, discovered that it lured members to deposit between PP10,000 to earn P13,000 after a month and for them to become members they needed to buy a package of products for P3,800.
Although they could earn by selling the products, their biggest income would come if they could recruit more people to join the entity, a move that would require it to secure a secondary license.
“Thus, in the absence of a secondary license, JOCALS688 should be restrained from offering or selling securities in the form of investment contracts,” the SEC concluded.
The investigators also discovered that while its capitalization was only about P1 million, it promised investors a guaranteed monthly income of a third of what they deposited.
“Clearly, JOCALS688’s business model and capitalization cannot sustain the promised returns of investment, especially if no new investors will come in,” the SEC noted.
“Pay-outs for investors are financed from investments of new recruits/ investors. This is a fraudulent scheme which will likely cause grave or irreparable injury or prejudice to the investing public,” it added.
The agency earlier issued similar orders against CROWD1 Asia Pacific, Inc., Lion City Finance Group, Inc. and Payasian Pte. Ltd. Corporation for engaging in unauthorized investment schemes.
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