SEC takes down another ‘investment scam’  in joint operation with PNP-CIDG, PAOCC

The Securities and Exchange Commission (SEC) has busted the illegal investment solicitation activities of Procap International, Inc., in a joint operation with other law enforcement agencies.

The Philippine National Police’s Criminal Investigation and Detection Group (PNP-CIDG), along with the SEC and the Presidential Anti-Organized Crime Commission (PAOCC), conducted an entrapment operation during an event organized by Procap in a hotel in Makati City on October 15.

The entrapment operation led to the arrest of 20 individuals, including the directors, incorporators, employees and agents of Procap. Eight of the arrested individuals were foreigners.

The PNP-CIDG carried out the entrapment operation, in coordination with the SEC and PAOCC, after receiving information that Procap engaged in illegal offering, solicitation, and selling of securities in the form of investment contracts without any secondary license from the SEC.

Operating under the slogan “win once daily for the rest of your life,” Procap, also known as Procap Insurance, offers and sells securities in form of investment contracts to prospective investors in the guise of gaming packages from P73,000 to P4.3 million, that will entitle investors or “players” to play seven rounds of its prediction game, with returns ranging from 6%-42% per month with referral incentives for recruiting additional players.

According to Procap, by following its formula, players will not incur any loss even if they get 7 successive wrong predictions through its capital protection insurance where players can enjoy fresh 7 rounds to play its game and so forth.

Section 8 of Republic Act No. 8799, or the Securities Regulation Code (SRC), 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 SEC.

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

Meanwhile, Section 26 of the SRC penalizes persons who, directly or indirectly, in connection with the purchase or sale of any securities, employ any device, scheme, or artifice to defraud; obtain money or property by means of any untrue statement of a material fact of any omission to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or engage in any act, transaction, practice or course of business which operates or would operate as a fraud or deceit upon any person.

Section 11of Republic Act No. 11765, or the Financial Products and Services Consumer Protection Act (FCPA), further penalizes persons who commit investment fraud, which include the offering or selling of investment schemes to the public without a license or permit from the SEC.

Any person found violating any of the provisions of the SRC shall suffer a fine of as much as P5 million, or imprisonment of up to 21 years, or both. In addition, a person found guilty of committing investment fraud under the FCPA shall suffer administrative sanctions, including a fine of up to P10 million for each instance of investment fraud plus P10,000 for each day of continuing violation.