The Securities and Exchange Commission-Davao Extension Office (SEC-DEO) has warned the public that some scammers at present are not only taking advantage of the vulnerability of those who are looking for investment vehicles, but have used all forms and means (including games and franchising programs) just to defraud the public.
“Illegal investment companies may have different business names, but the schemes employed are the same. The most common schemes used in the country are Ponzi and pyramiding schemes,” the extension office said.
A Ponzi scheme is used if there is a promise of guaranteed and extremely high returns of ‘investment’. “Profits” are derived from the capital of new recruits. Pyramiding, on the other hand, employs the selling of very expensive products, and focuses on receiving high commissions from recruitment of new members.
Lately, some entities have adopted the use of games and franchise investment programs for people to invest in with a promise of huge profits.
The SEC-DEO said the first consideration that an investment scheme is illegal is that the entities are taking in investments from the public without a secondary license from the Commission.
Aside from the absence of a secondary license, the extension office said the public must employ the use of Howey Test. Under this, there is an investment contract when there is an investment of money in a common enterprise with expectation of profits primarily from the efforts of others. Therefore, if there is an investment contract but the entity that is behind it does not have any legal personality to instigate it, the scheme is considered illegal.
Lately, the SEC flagged several entities for soliciting investments from the public.
Among these entities was the Masa Mart group – Masa Mart Business Center, Masa Mart Business Center, and Masa Mart Enterprise OPC – which lures investors through its subscription and gains program.
The program allows the investor to put in between P1,250 and P500,000 with promises of profits, dependent on the period of investments, with ranges between P2,746 up to about P11.6 billion. However, based on SEC documents, the group does not have any legal personality to solicit investments which it promised to expand its businesses.
JamsMart is offering investments to the public in its so-called “franchise investment program” where an investor shall earn a total guaranteed 300% return on investment in a year.
An investor may co-own an outlet by investing as low as Php75,000.00 for an equivalent of 5% shares. For every 5% shares, there is a monthly 7% interest amounting to Php5,250.00, a Php4,750.00 allocated monthly sales shares, and a Php4,750.00 fixed allocated dividend for a total annual return on investment of Php225,000.00:
On the other hand, an investor may opt to avail a 100% Franchising Agreement amounting to Php1,500,000.00 where such investor shall earn a monthly interest equivalent to 10% and a monthly percentage earnings equivalent to 15% totaling 300% return on investment annually.
Another entity that was identified was the Chiyuto Creative Wealth Documentation Facilitation Services which the SEC eventually issued a cease and desist order on February 1 and a revocation order yesterday, February 15.
Unlike other entities, this one has its Chiyuto Creative Wealth Documentation Facilitation Services, a scheme which promises an investor to double his or her money through a “roulette game.”
The promise is for the investor to invest between P1 to P1 million and profit from it in one day, 30 days or 45 days dependent on the outcome of the roulette. It also offers investors additional 5% commission and raffle prizes for referrals.
The third among these new schemes was that of the Royal O Financial Consultancy Services.
Similar to Chiyuto, Royal O also offers profit to investors through the use of illegal gambling activity: cockfighting, as well as other schemes. Based on its online presence, Royal O runs the Oro Magnet Cockpit Arena – E-Sabong, Plasmatech Medical Supply Trading; Genius Global Impact at Export Corp.
Just like Masa Mart, the Royal O claims it is a website for a co-ownership program where the money invested by the public would in turn be invested in the businesses of a certain Dra. Campos.
Under its scheme, an investor can choose to invest in either its Daily Program or Monthly Program where a guaranteed profit of 15% can be had in a week for 90 days, or 201% in investment returns in total, or 60% monthly in six months, or an equivalent of 360% in returns. Investors are also offered a direct bonus of 6% based on the investment of the ones they can recruit and another 0.5% up to 3% as Leveling Bonus of recruits up to the 10th level.
All four entities do not have any secondary licenses to solicit investments.
