Ponzis exploit snail-paced justice

Ponzis exploit snail-paced justice | Daily Tribune

The slow pace of justice in the country often favors criminals, including those in business who exploit the system to amass huge amounts of hard-earned money.

It took the Securities and Exchange Commission (SEC) three years to secure a final court ruling to shut down a Ponzi scheme that had been enticing Filipinos to invest with promises of quick riches.

Last 14 January, the Court of Appeals (CA) upheld the SEC’s cease and desist order (CDO) against AlphanetWorld Corp., operating as NWorld, for soliciting public investments without a license.

The CA’s 8th Division found the SEC had followed due process in issuing the CDO, as NWorld was offering investments without registering or obtaining the required licenses from the SEC.

“The scheme used by NWorld clearly constitutes an investment contract, a security under RA No. 8799,” the CA ruled. “It must be registered with the SEC before being sold to the public to protect investors from fraudulent securities.”

The SEC first issued the CDO on 23 February 2022, ordering NWorld and its representatives to immediately stop soliciting investments without approval.

On 19 July 2022, the SEC denied NWorld’s motion to lift the order, making the CDO permanent.

The SEC investigation revealed that NWorld was selling investment packages ranging from P4,750 to P19,000, with promised returns of up to P127,000 per month.

Investors were enticed with bonuses such as discounted rates, referral bonuses, and sales match bonuses, as well as the chance to earn up to P25,000 through NWorld’s “XX Cash” program.

NWorld’s offerings qualify as securities under Section 3 of Republic Act (RA) 8799, the Securities Regulation Code (SRC), which prohibits the sale of securities without proper registration.

In July 2022, the SEC also canceled NWorld’s corporate registration after discovering fraudulent practices, including the use of an invalid Tax Identification Number in its Articles of Incorporation.

SEC made permanent the order stopping AlphanetWorld from soliciting investments from the public.

In a resolution dated 19 July 2022, the Commission en banc denied for lack of merit AlphanetWorld’s motion to lift the February 23 cease and desist order (CDO) issued against the company for its unauthorized solicitation, offer and/or sale of securities.

In its motion to lift the CDO, AlphanetWorld argued that the purchase of its products and packages are plain sales transactions, in contrast to the SEC Enforcement and Investor Protection Department’s finding that it has engaged in the sale of securities.

“[T]he Commission holds that the act of NWorld in selling/offering unregistered securities operates as a fraud to the public which, if unrestrained, will likely cause grave or irreparable injury or prejudice to the investing public,” the order read.

Pyramid scam changes name

In the interim, however, NWorld has morphed into a company named Superbreakthrough Enterprises Corp.

Both NWorld and Superbreakthrough have as president Juluis Allan Nolasco.

In December 2023, the SEC issued a cease and desist order against Superbreakthrough for illegally soliciting investments from the public.

In an order dated 5 December 2023, the Commission En Banc directed Superbreakthrough Enterprises, which has been doing business under the name 1UP Time, to immediately cease and desist from further engaging in the unlawful solicitation, offer, and/or sale of securities in the form of investment contracts without the necessary license from the SEC.

Thus, the CA upholding the SEC order on NWorld does not necessarily mean that the con artist behind the company has been stopped since he can stall the regulator in its CDO over the new company which may take another three years to resolve.