SEC Flags Down Two Unlicensed Investment ‘Ponzi’ Schemes

SEC Flags Down Two Unlicensed Investment ‘Ponzi’ Schemes

Time Stamp: September 27, 2023 4:00 AM
SEC Flags Down Two Unlicensed Investment ‘Ponzi’ Schemes PlatoBlockchain Data Intelligence. Vertical Search. Ai.
  • As part of its war against fraudulent investment schemes, the SEC issued a public advisory against online platform Amelia Mall Online and business stall Eatcited Pasalubong Center.
  • Amelia Mall’s scheme is called Tasking and Recharging, which offers tasks to its users in exchange for monetary rewards. This scheme possesses the characteristics of a Ponzi scheme. 
  • Though DTI registered, Eatcited Pasalubong Center offers investment contracts that promise a return of up to 10% monthly. This scheme requires licenses from the SEC and the entity is found to be unregistered.

Continuing its battle against illegal entities enticing the public to invest, the Securities and Exchange Commission (SEC) has issued a public advisory against two entities that allegedly offer unregistered securities. 

SEC vs. Amelia Mall: A Deceptive Website

Amelia Mall Online, also known as AriaMall or Amelia Mall Philippines, is a social media platform that offers its users a part-time job by placing orders online with the promise of receiving a commission, which can only be withdrawn upon payment of what they call a “Tax Charge.”

According to the SEC, this kind of scheme is called “Tasking and Recharging,” where the public is invited to purported online jobs by performing certain tasks for a promise of receiving monetary rewards; and once the tasks are completed, the investor will be given another task to perform for the same promise. Offering this kind of security requires proper registration from the Commission. 

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However, Amelia Mall showed proof that “AMELIA-MALL PHILIPPINES INC” has secured a Certificate of Registration from the regulatory agency, which the SEC tagged as fake.

“The records of the Commission do not show the registration of AMELIA-MALL PHILIPPINES INC., as a corporation, partnership, or One Person Corporation (OPC). Hence, the copy of the abovementioned Certificate of Registration of AMELIA-MALL PHILIPPINES INC., is BOGUS or FAKE,” the SEC explained, adding that the entity does not even have a secondary license or authority to solicit investments or offer securities.

Moreover, the Commission also emphasized that a Tasking and Recharging scheme possesses characteristics of a Ponzi scheme, where the investment of the new investors serves as the profit of the older investors. A Ponzi scheme is an unregistrable security because of its fraudulent and unsustainable nature. 

SEC vs. Eatcited Pasalubong Center: A Food, Not Investment, Business

Based on SEC’s investigation, Eatcited Pasalubong Center is a stall located at Quezon Avenue Street, San Diego Zone 2, Tayabas, Quezon, that offers local delicacies for tourists. It is registered with the Department of Trade and Industry as a sole proprietorship.

However, the regulatory agency also found out that the stall is offering its Facebook followers to invest in its food product services (wholesale and retail) business when it posted that it is looking for partners/silent investors for a short or long-term contract with the possibility of earning money up to 120% for a period of twelve months.

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The scheme is allegedly accepting a minimum investment of ₱20,000 with a guaranteed 5% monthly return and a maximum amount ₱500,000 with a guaranteed monthly return of 10%.

“Emphasis must be made on the arrangements in EATCITED PASALUBONG CENTER’s business activity as it clearly falls within the purview of an investment contract, whose essential elements are: (1) they offer the would be investors to enter into a six 6-12 month contracts, enticing each investor to earn up to 120% for a period of 1 year; (2) the money invested is placed in a common commercial undertaking and the investor in return expects to receive profits; and (3) the investor expects to earn money through the efforts of others as he/she simply needs only to invest money,” the SEC explained. 

Consequently, the Securities Regulation Code requires offering and selling of securities like this must be duly registered with the Commission and that the entity and its agents should have the appropriate registration. In this case, Eatcited Pasalubong Center is not registered as a corporation and does not hold the proper licenses to offer investment contracts. 

And like Amelia Mall Online, the SEC also tagged Eatcited Pasalubong Center’s scheme as a Ponzi scheme. 

Consequences of a Ponzi Scheme

Since the two entities mentioned above possess characteristics of Ponzi scheme, the regulatory agency warned the public to stop investing in them and avoid engaging others to invest in them. 

Under the Republic Act 11765, or the Financial Products and Services Consumer 

Protection Act (FCPA), offering “Investment fraud,” defined as any form of deceptive solicitation of investments from the public, which includes Ponzi Schemes, is prohibited in the country. 

Thus, those who act as salesmen, brokers, dealers or agents, representatives, promoters, uplines, recruiters, influencers, endorsers, and enablers of these two entities in selling or convincing people to invest in the investment scheme being offered by the said entity including soliciting investments or recruiting investors through the internet may be held criminally liable under Section 11 of the FCPA and under Section 28 of the SRC and both penalized separately with a maximum fine of ₱5,000,000, or imprisonment of 21 years, or both, pursuant to Section 73 of the SRC.

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Lastly, the SEC also pledged that those who were involved and are part of these entities will be reported to the Bureau of Internal Revenue so that the appropriate penalties and taxes can be assessed.

“Should you have any information regarding the operation of the subject entity, please send your reports at email at epd@sec.gov.ph or you may visit the Commission’s Enforcement and Investor Protection Department (EIPD) located at the 9/F, The SEC Headquarters, 7907 Makati Avenue, Salcedo Village, Brgy. Bel-Air, Makati City,” the regulatory agency concluded. 

This article is published on BitPinas: SEC Flags Down Two Unlicensed Investment ‘Ponzi’ Schemes

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