SEC orders ALMAMICO, ALAMCCO to stop Ponzi-like investment scheme

Robie de Guzman   •   July 3, 2019   •   3077

MANILA, Philippines – The Securities and Exchange Commission (SEC) on Wednesday ordered Alabel Maasim Mining (ALMAMICO) Corp., Alabel-Maasim Credit Cooperative (ALAMCCO) to stop soliciting money through the Ponzi scheme and without the necessary license.

The SEC said a cease and desist order was issued by the Commission En Banc on June 4, directing ALMAMICO and ALAMCCO to stop engaging in offering and selling to the public securities in the form of investment contracts without the necessary license from the agency.

The said entities operate largely in Sarangani, General Santos and Koronadal Cities, enticing members to invest their money in exchange for a 35 percent monthly return which is supposedly compounded when investors lock in their investments for a year.

According to the SEC, the scheme satisfies the elements of an investment contract, including the placement of money, the money invested is placed in a common enterprise, expectation of profits, and the generation of expected profits from the entrepreneurial and managerial efforts of others.

“ALMAMICO and ALAMCCO were also found to have engaged in public offering of securities when they indiscriminately or randomly promoted their investment schemes through videos posted online,” the agency said in a news release.

The SEC said that under Section 8.1 of Republic Act No. 8799, or the Securities Regulation Code, “securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Commission.”

The commission also noted that aside from operating without license, the investment scheme of ALMAMICO and ALAMCCO also resembles a Ponzi scheme, which is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new members.

The SEC has ordered the group’s officials and partners to stop promoting the scheme, and immediately delete the promotional videos from the internet.

Those who have invested in the said companies are also advised to contact the SEC offices in Davao City and Cagayan de Oro City.

President Rodrigo Duterte had previously ordered agencies to launch a crackdown on companies that offer ‘too good to be true’ investment schemes.

Last May, hundreds of ALAMCCO members gathered in Sarangani to protest against the government crackdown, insisting that their investment scheme is not a scam.

SEC halts operations of 11 online lending apps

Robie de Guzman   •   September 23, 2019

MANILA, Philippines – The Securities and Exchange Commission (SEC) on Monday ordered 11 online lending applications to stop its operations following complaints about unreasonable, and abusive lending and collection practices.

The order, issued by SEC on Sept. 20, covers the following:

  • Cash Whale
  • Cash 100
  • Cashafin
  • CashFlyer
  • CashMaya
  • Cashope
  • Cashwarm
  • Cashwow
  • Creditpeso
  • ET Easy Loan
  • Peso2Go

The SEC said that based on the findings of its Corporate Governance and Finance Department, the said online lending applications were run by unlicensed operators.

Based on investigation, the commission’s Enforcement and Investor Protection Department (EIPD) also found that these lending applications employ abusive collection practices that subject users to public humiliation and ridicule, high-interest rates, unreasonable terms and conditions, misrepresentations as to non-collection of charges and fees, and violation of their right to privacy, among others.

Probe results showed the unauthorized lenders managed to access personal information kept in a borrower’s mobile phone, such as the contact numbers, Facebook accounts, and email addresses.

The unauthorized lenders then used such information to exact prompt payment.

In many cases, the unauthorized lenders would send a text message to the borrower’s contacts to inform them about the borrower’s indebtedness and supposed refusal to pay the amount due.

In other cases, the borrower would be threatened of legal action or public shaming on social media if payment is not made.

“The rude, high-pressure methods of collection, misrepresentations, and unreasonable terms and conditions imposed by said online lending operators and their agents and representatives exemplify such practices that as a matter of policy, the State seeks to prevent,” the commission said.

The SEC also ordered the said online lending operators to cease from offering and advertising their business online and to remove promotional presentations from the internet.

“The SEC enjoined the owners and operators of the online lending applications, their agents, representatives and promoters, the owners of their hosting sites and all persons acting for and on their behalf to immediately cease and desist under pain of contempt from engaging in, promoting and facilitating unauthorized lending activities,” the agency said.

The regulatory body also directed all persons and entities carrying out, abetting or promoting lending business or similar activities without the requisite license “to immediately cease and desist from engaging in such lending activities until they have incorporated and have secured the requisite certificate of authority to operate as lending or financing companies.”

“Section 4 of Republic Act No. 9474, or the Lending Company Regulation Act of 2007, requires that a lending company be established only as a corporation. It further provides that ‘no lending company shall conduct business unless granted an authority to operate by the SEC,’” it said.

The agency warned that anyone engaging in the lending business without a valid subsisting authority to operate from the SEC may face penalties, including fines up to P50,000 or imprisonment of six months to 10 years or both, under the Lending Company Regulation Act.

The SEC earlier issued a cease and desist order against 19 online lending applications, namely Instant Pera, QuickPera, Lendmo Philippines, Binixo, CashBus, Cashcat, Cashuttle, Crazy Loan, Flash Cash, Happy2Peso, Hatulong, MeLoan, MoneyTree Quick Loan, Pera Express, Pera4u, Peramart, PesoLending, QuickPeso and Umbrella.

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Beware of false claims: BSP denies approving KAPA investment scheme

Robie de Guzman   •   August 28, 2019

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) on Wednesday denied claims it has approved the investment scheme of Kapa-Community Ministry International, Inc. (KAPA).

“The BSP advises the public that it has not released any statement or any issuance concerning the Kapa-Community Ministry International, Inc. (KAPA) or any of its affiliates,” the central bank said in a statement.

It also stressed that KAPA is not a BSP-supervised entity.

“This clarification is being issued in view of reports, particularly, on social media, falsely claiming that the BSP has issued a statement purportedly approving KAPA’s investment scheme or questioning delays on its approval by the Securities and Exchange Commission (SEC),” the BSP said.

The SEC earlier renewed its warning and urged the public to exercise caution and discernment amid false claims allegedly made by KAPA on social media about securing necessary licenses to resume its operations.

READ: SEC warns public against KAPA’s false claims

KAPA also claimed to have filed an application for a secondary license to sell and offer for sale securities.

“SEC has already issued a cease and desist order against KAPA in February 2019 and an order of revocation of its certification of incorporation in April 2019 after KAPA was found to have been soliciting investments from the public without the necessary license, and that its investment scheme qualifies as a fraud and a Ponzi scheme,” the central bank said.

SEC records show that KAPA registered as an independent religious organization in March 2017 indicating its headquarters in Bislig City, Surigao del Sur.

Under its scheme, KAPA enticed the public to “donate” P10,000 in exchange for a 30% monthly “blessing” or “love gift” for life, without having to do anything other than shell out money and wait for the promised payout.

But based on the SEC’s investigation, KAPA promised its members billions of pesos in returns but its assets cannot back up such claims.

The SEC previously issued an advisory against Kapa for unauthorized soliciting of investments.   

Section 8 of Republic Act No. 8799, or the Securities Regulation Code, provides that “securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Commission.”

Section 26 of the Code further prohibits fraudulent transactions, including Ponzi schemes where investors are lured with impossibly high returns and paid using money contributed by other investors

Section 28 further states that no person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered with the SEC.

In light of this, the SEC said those acting as salesman, broker or agent may be prosecuted and held criminally liable. They may also face a maximum fine of P5 million or imprisonment of 21 years or both, pursuant to Section 73 of the Securities Regulation Code.

Last June, the SEC filed criminal complaints against KAPA, its founder and other officials involved in the scheme.

In the same month, the Court of Appeals (CA) ordered the freezing of several bank accounts and other assets linked to Kapa upon the petition of the SEC and the Anti-Money Laundering Council.

SEC warns public against KAPA’s false claims

Robie de Guzman   •   August 28, 2019

MANILA, Philippines – The Securities and Exchange Commission is urging the public to exercise more caution and discernment amid disinformation campaigns being launched by investment scammers.

In a statement, the SEC particularly noted the false claims by Kapa-Community Ministry International (KAPA) on social media. Supposedly, the group was poised to secure the necessary licenses to resume its operations.

The commission said that recently, KAPA falsely claimed that the Bangko Sentral ng Pilipinas (BSP) released a statement purportedly approving its investment scheme and questioning delays on the part of the SEC.

The Central Bank has refuted such claim in a statement.

KAPA also falsely claimed that it already filed with the SEC an application for a secondary license to sell and offer for sale securities to the public.

But the commission said it has not received any application for a secondary license from KAPA, as verified by the SEC Company Registration and Monitoring Department (CRMD).

“Besides, KAPA does not have a juridical personality to make such application,” it said.

On April 3, the SEC revoked KAPA’s certificate of incorporation for serious misrepresentation of what it could do or was doing to the great prejudice of or damage to the general public.

“KAPA, formerly registered with the SEC as a nonstock corporation, had solicited investments from the public without securing a secondary license first. Worse, the group had employed a Ponzi scheme,” the commission said.

Under its scheme, the SEC said KAPA enticed the public to “donate” P10,000 in exchange for a 30% monthly “blessing” or “love gift” for life, without having to do anything other than shell out money and wait for the promised payout.

Section 8 of Republic Act No. 8799, or the Securities Regulation Code, provides that “securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Commission.”

Section 26 of the same Code further prohibits fraudulent transactions, including Ponzi schemes where investors are lured with impossibly high returns and paid using money contributed by other investors

Section 28 further states that no person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman, or an associated person of any broker or dealer unless registered with the SEC.

In this light, the SEC said that those acting as salesman, broker or agent may be prosecuted and held criminally liable. They may also face a maximum fine of P5 million or imprisonment of 21 years or both, under the Securities Regulation Code.

On June 18, the commission filed a criminal complaint against KAPA, its founder and president Joel A. Apolinario, trustee Margie A. Danao, corporate secretary Reyna L. Apolinario and other promoters of the investment scam.

“We enjoin the investing public to be more discerning with and critical of any promises and persuasions made by fraudsters,” SEC Chairperson Emilio B. Aquino said.

“When presented an investment opportunity, take time to verify the legitimacy of the company, especially their authority to solicit investments from the public, and to understand how the promised returns will be generated and delivered.”

The commission advised those who have invested money in KAPA to file complaints with the SEC Enforcement and Investor Protection Department at Secretariat Building, PICC Complex, Roxas Boulevard, Pasay City with telephone numbers (02) 818-6337 and (02) 818-5324.

Affected investors may also visit the SEC Davao City Extension Office at SDC Building, Purok 13, Maa Road, Maa, Davao City; call (082) 298-2170 and (082) 298- 1893; or email kjpestares@sec.gov.ph. In Cagayan de Oro City, they may visit the Commission at SEC Building, corner 14th and Tomasco Del Lara Street; call (088) 857-4325 and (088) 857-7225; or email rvegypto@sec.gov.ph.

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