CEBU – The Securities and Exchange Commission (SEC) Cebu extension office, this week, has cautioned the public against investing their hard-earned money in Organico and ADA Farm, which have offices in the island. Organico claims that their main office is in Ormoc City here in Leyte.
However, this has already been debunked in a dialog between LGU-Ormoc officials led by Mayor Richard Gomez and Organico management led by Roial Cerron. It was learned that Organico does not have a business permit to operate in Ormoc City since its inception two years ago, contrary to claims that they were denied “renewal”.
Mayor Gomez told Organico representatives to comply with the requirements in running their business, to include a secondary license from SEC that they are allowed to sell investments. That way, they can be given a business permit but Organico chose to close their office.
Investment and promotions officer Joel Mendoza has also been sent to Cebu to gather information on what are the so-called “investment firms” that have been flagged by SEC, as there have been recent noise about them, including that of “Kapa”.
The EV Mail also has information that the Criminal Investigation and Detection Group (CIDG) has applied search warrants against the offices of these investing firms all over the country, and could be effecting seizures over the week after President Rodrigo Duterte warned the public against them. Most Ponzi operators, it was noted, originate from Mindanao.
Meanwhile, the Ormoc City Police Office led by Col. Armel Gongona has also started embarking on a massive information campaign against Ponzi or pyramiding schemes. The police are going out in the barangays to caution residents from it, handling out pamphlets as educational materials.
SEC Cebu says …
Sunstar Cebu, in a June 7 report published in its online version, quotes lawyer Alma Estrada-Dalena, SEC Cebu Securities Counsel I, as saying Ada Farm Agri Ventures is not registered with the commission and Organico Agribusiness Ventures Corp. does not have a secondary license to accept investments.
“We received a lot of inquiries about the legitimacy of Organico and one about Ada Farm. There were a lot of complaints against us on why they were given a certification of incorporation and the answer to that is because the Articles of Incorporation they submitted to the office were right. We wouldn’t know if they are lying and their goal is to scam the people,” the lawyer is further quoted in the report.
The two companies claim to be selling “chicks” and “piglets” to cover the call for investments. Ada, it was noted, started to bloom in Ormoc City in October 2018. Organico, on the other hand, started selling “piglets” in Ormoc sometime in 2016.
This May 31, 2019, the SEC issued an advisory against Ada Farm saying they entice clients to invest by purchasing a minimum of 10 chicks worth Php 500 with a guaranteed profit of 80 percent in 60 days.
“The public is hereby informed that Ada Farm is not registered with the Commission as a corporation or partnership and is NOT authorized to offer, solicit, sell or distribute any investment/securities. Such activities require a Secondary License from the Commission and the securities or investment product should likewise be registered with the SEC before they can be offered or sold to the public,” the advisory read.
Organico, on the other hand, is SEC registered but doesn’t have authorization to take investments.
It was learned from a reliable source that the SEC has already probed Organico’s operations in 2018 yet and found out that they are actually selling investments, instead of engaging in farming and agri-ventures. However, since the SEC lacks prosecutorial power, they only issued an advisory for the public against investing in it.
In a May 21, 2018 advisory, the commission said that Organico “is engaged in soliciting investment wherein an investor must invest in at least 10 shares, with one share costing Php 1,800. For every share, an investor gets Php 450 every 15 days or a total of Php 2,700 in three months.”
“Allegedly, the money invested will be used to fund the company’s diverse businesses, which include organic farming, organic poultry, organic piggery, restaurant serving organic food, telemarketing, music studio and construction and eventually, an organic meat shop. Another investment scheme is the 90-day investment, where for every Php 3,600 invested, one piglet is raised and sold after three months and the investor gets his money back with profit for a total of Php 7,000,” the statement added.
Organico, however, was able to get a SEC registration for it as a corporation, but not the needed secondary license to sell investment.
SEC Cebu views the selling of investments as a violation. For violating the law, the Sunstar report again quotes Dalena as saying they can recommend to the Department of Justice (DOJ) to file complaints against companies offering questionable investment schemes if there are complainants.
“We can recommend to DOJ to file this case and the DOJ will be the one to take care of it,” she said. “We are a regulatory body but we don’t have judicial powers. However, we can recommend possible cases to DOJ.”
Dalena cited the Aman Futures pyramid scam where investors from Pagadian City, Visayas and other parts of Mindanao lost Php 12 billion.
Dalena said Aman Futures was statistically bound to collapse.
“It was pyramiding. Look at Kapa. Why did they come here? Because they already recruited almost everyone in Mindanao to continue paying their members or giving them ‘blessings’ so they have to move to another place. Eventually, if they manage to recruit the whole Philippines, it’s bound to fall,” she said.
Kapa Community Ministry International Inc. (Kapa) is an independent religious corporation based in Bislig, Surigao del Norte, which has branched out to various areas in the Visayas, including Compostela, Cebu.
It is allegedly involved in unauthorized financial investment schemes that promise 30-percent monthly returns, prompting the region’s top police official to warn policemen not to engage with Kapa.
Dalena said they don’t want anyone to fall prey to investment scams, so they are strengthening their information drive.
Ponzi schemes or pyramiding is not new to Ormoc City and Leyte residents. In the ‘90s, many residents including the affluent and learned, fell victim to a pyramiding scheme called “Power Homes”, which also originated from a political family in Surigao.
Then, there was Celso delos Angeles and his too-good-to-be-true investment schemes using the Rural Bank of Kananga, Inc. for front.
However, most investors of Organico and ADA are not perturbed with the advisories. They argue they are still receiving payouts. And it was a “good scam”. Some admit to knowing it was a pyramiding but says, as long as they know they are still on top, are confident they can recoup their investments.
The SEC has also issued recent advisories against other investment scams, especially those using social media as online marketing tools. They are MGA Business Enterprises, Coophub Multimedia Services, Jogle Innovative Marketing, Global Dream Zion, Grappler, Sherpan, BCT Marketing/BCT Motorcycle and Car Trading, RTM/RTM Pharmacy and General Merchandise, Diamond Marketing, Fusion Marketing, FMarket, Cirfund, Vibearn, Onepro, BCC/BCC Cosmetics Trading, Unlishop Compensation Plan Marketing, VUCC, Bitrain, TCOIN, Crowd Royals, Nermie Marketing/Nermie Health and Beauty Products Trading. One of this is also ADA Farm Agri-Venture.
What’s Ponzi scheme?
According to Investopedia, “a Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for early investors by acquiring new investors. This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers. Both Ponzi schemes and pyramid schemes eventually bottom out when the flood of new investors dries up and there isn’t enough money to go around. At that point, the schemes unravel.”
“The Ponzi scheme is named after a swindler named Charles Ponzi, who orchestrated the first one in 1919. The postal service, at that time, had developed international reply coupons that allowed a sender to pre-purchase postage and include it in their correspondence. The receiver would take the coupon to a local post office and exchange it for the priority airmail postage stamps needed to send a reply.
The constant fluctuation of postage prices meant that it was common for stamps to be more expensive in one country than another. Ponzi hired agents to purchase cheap international reply coupons in other countries and send them to him. He would then exchange those coupons for stamps that were more expensive than the coupon was originally purchased for. The stamps were then sold at a profit.
This type of exchange is known as an arbitrage, which is not an illegal practice. But Ponzi became greedy and expanded his efforts.
Under the heading of his company, Securities Exchange Company, he promised returns of 50% in 45 days or 100% in 90 days. Due to his success in the postage stamp scheme, investors were immediately attracted. Instead of actually investing the money, Ponzi just redistributed it and told the investors they made a profit. The scheme lasted until August of 1920, when The Boston Post began investigating the Securities Exchange Company. As a result of the newspaper’s investigation, Ponzi was arrested by federal authorities on August 12, 1920, and charged with several counts of mail fraud.”
Those operating Ponzi schemes usually bedazzle their initial investors with a small investment cost and high returns. As word spreads, they start asking for bigger investments and re-investments. When the source of big investments dry up, this is the time the schemers bail out, amassing millions, which they run off. The investors are left with an empty bag, and oftentimes, no proof of their “investments”. In the case of Kapa, the investors have “deed of donations”.