The Securities and Exchange Commission (SEC) secured another win over investment scams after the Regional Trial Court in Batangas sentenced seven perpetrators to pay fines totaling P2.8 million and serve up to 20 years of jail time each, or a total imprisonment of 140 years for the group.
In a decision dated July 14, the Batangas City Regional Trial Court Branch 2 found officials of Lipa, Batangas-based investment scam One Dream Global Marketing, Inc., namely Arnel Gacer, Jobelle De Guzman, Judith Itoh, Marlon De Guzman, Louie De Guzman, Belinda De Guzman, and Jun De Guzman, guilty for violations of Sections 26.1 and 28.1, both in relation to Section 73, of Republic Act No. 8799, or the Securities Regulation Code (SRC).
The court likewise issued an alias warrant of arrest against accused Ariel De Guzman, Richard Ramos, Jay-ar De Guzman, and Joel De Guzman, who remain at large.
The cases stemmed from complaints filed by nine investors against One Dream for syndicated estafa with the Department of Justice on July 21, 2015. Two other investors filed complaints against the group with the SEC Enforcement and Investor Protection Department on August 3, 2015.
The complainant-investors accused the officers of One Dream of offering investments worth P888, with the promise of a P1,300 payout after four days, excluding a 10% tax. Investors were allowed to pay for up to 31 slots, or a total of P27,528, in exchange for P39,022.80 after four days. The group also supposedly promised freebies and a commission of P44 for every referral.
On July 11, 2015, then Lipa, Batangas Mayor Meynardo A. Sabili conducted a surprise inspection at One Dream’s office, where he found that the group had been illegally soliciting investments from the public. He then ordered One Dream to cease operations, as its business permit only allowed it to engage in the retailing and wholesaling of detergents.
The complainant-investors noted that they were not aware of One Dream being a seller of detergents; only that it had guaranteed high returns over a short period of time in exchange for investing.
Following the local government unit’s inspection, payouts from One Dream allegedly stopped, despite repeated demands from the complainant-investors. Mr. Arnel Gacer and the One Dream Management Team supposedly assured them that there was nothing to worry about. However, the group eventually could no longer be found at its principal office address or known residence.
The court ruled that it was “undisputed” that the accused through the company One Dream solicited investments from the public, enticing investors with the promised profit of 46.4% every four days, plus P44 for every referral.
“The investment scheme employed falls within the definition of ‘securities’ under the
SRC and that the same constitutes a ‘fraudulent transaction’ under Section 26 of the same law because it involves the purchase and sale of securities by the use of a scheme that is intended to defraud the investing public which is prohibited by Section
26,” the court held.
Section 3 of the SRC defines securities as “shares, participation or interests in a corporation or in a commercial enterprise or profit-making venture and evidenced by a certificate, contract, instrument, whether writer or electronic in character.”
Meanwhile, Section 26 states that it shall “be unlawful for any person, directly or indirectly, in connection with the purchase or sale of any securities to… [e]mploy any device, or scheme, or artifice to defraud.”
The court also noted that One Dream had no actual business operation other than the collection of money from investors, as the receipts it issued in the alleged sale transactions carried the markings “Product to follow,” “P.T.F.,” or “F.F.P.”
The court added: “It also turned out that One Dream had in fact no financial capacity to repay the loans as it had an authorized capital stock of only P1,000,000.00 and paid-up capital of only P100,000.00. Clearly the representations regarding its supposed financial capacity to meets its obligations to the private complainants were simply false.”
This is the second conviction secured by the SEC during the pandemic, with the first guilty verdict promulgated in the case against RJF Construction and Development Corporation on November 27, 2020.
As part of efforts to stamp out investment scams in the country, the SEC has already issued more than 60 advisories against groups and individuals for soliciting investments without the necessary license in 2022.
The SEC likewise issued cease and desist orders and revocation orders against entities engaging in fraudulent investments schemes, including AlphanetWorld Corporation and the Astrazion Group.
Currently, the Commission is actively prosecuting in courts 375 individuals in 56 cases for violations of the SRC, and in three cases for violations of Republic Act No. 10175, or the Cybercrime Prevention Act of 2012.