MANILA, Philippines – The Securities and Exchange Commission (SEC) has issued a cease and desist order (CDO) against EmGgoldex, an apparent Dubai-based firm that recruits investors to buy gold online with the promise of hefty bonuses for referring friends and acquaintances.
SEC also filed on Friday, November 6, two cases before the Department of Justice against related entities EmGoldex, Global Intergold (GIG), and Prosperous Infinite Philippines Holdings, Corporation (PIPHC).
The companies are accused of violating Section 8 and 28 of the Securities and Regulation Code (SRC), for selling or offering for sale or distribution unregistered securities to the public and without a license, respectively.
Each violation of the SRC is punishable, upon conviction, with a fine of not more than P5 million ($106,484.92) or imprisonment of 7 to 21 years, or both.
The entity which allegedly employed the Ponzi scheme was EmGoldex, but after the SEC issued the advisory against it, it renamed itself to GIG. PIPHC was also incorporated sometime in August 2015 to aid and assist GIG investors who were unable to obtain a return on their investment.
The filing of the cases and the issuance of a CDO by the SEC are results of months of investigation.
SEC had also previously issued advisories and disclaimers against EmGoldex. In mid-February, the corporate regulator issued an advisory for investors to exercise self-restraint in putting their hard-earned money into EmGoldex.
The selling and marketing of unregistered securities by EmGoldex, GIG, and PIPHC are largely done online. "Crimes committed in cyberspace and through the use of Information and Communication Technologies (ICT) carry a higher penalty as provided under the Cybercrime Prevention Act of 2012," SEC said.
Based on the SEC investigation, EmGoldex has been inviting Facebook netizens to invest in its “Pinoy Style Patak-Patak" scheme which promises huge returns for their investment.
Under the scheme, an investor that will put up P1,000 ($21.30) is promised to earn profits from P5,000 ($106.50) to P10,000 ($212.99), while a placement of P35,000 ($745.48) will yield P180,000 ($3,833.54) to P360,000 ($7,668.25).
To date, EmGoldex has been banned in other countries based on international media reports. (READ: Not all that glitters is gold)
PNP officials, OFWs scammed
With the help of the Department of the Interior and Local Government, Philippine National Police (PNP), and the National Bureau of Investigation (NBI), the SEC was able to gather evidence, including the affidavits of two victims who are active PNP officials.
"One of the two PNP officials invested in EmGoldex in desperation after his house burned down early this year," SEC noted.
EmGoldex has recruited at least 95 investors who made an estimated P2,718,400 ($57,899.65) cash investment. The estimated return loss is at least P11 million ($234,391.64).
"These entities operate a classic Ponzi scheme of getting cash investments and giving high return payouts through [recruiting people]. As more people are recruited into the scheme, it eventually reaches a point wherein it can no longer sustain its payouts, and payments will stop, thereby leaving investors penniless," said Lalaine Monserate, assistant director of the SEC’s Enforcement and Investor Protection Department (EIPD).
Thus, SEC challenged the following suspects to face the public and be accountable for their actions.
The commission also warned the public against the upcoming event scheduled by such entities at the SMX Convention Center on Sunday, November 8, 5 pm, with an estimated 2,000 people attending.
Overseas Filipino workers (OFWs) are also cautioned against EmGoldex and its allied entities, as many of the former have already fallen for this scam, SEC Chairperson Teresita J. Herbosa said in a statement.
"SEC’s primary mission is to protect Filipino investors, including OFWs that fall victim to these investments scams," said Herbosa. She stressed that the commission is ready to receive and assist victims, including OFWs, with their affidavits. – Rappler.com