In a resolution on September 3, state prosecutors found probable cause to charge Organico, its president and chairman Cerrone Roial Posas, and officers Marve Subere Posas, Renato Subong, Anthony Butaslac, and Karen Maasin.
This is for violations of Sections 8, 26.3, and 28 of the Securities Regulation Code (SRC), in relation to Section 6 of the Cybercrime Prevention Act of 2012.
The justice department also recommended the filing of charges against Kathleen Hortesano, Rochelle Camacho, and Annielyn O. Hilotin for acting as agents of Organico, offering and selling unauthorized securities to the public.
“(T)he business operations carried out by respondent Organico is in the form of a Ponzi scheme whereby purported returns to existing investors are culled from funds contributed by new investors,” the DOJ resolution read.
It added that, “It is not an investment strategy but a gullibility scheme and which only works as long as there is an increasing number of new investors joining.”
The SEC, together with the Philippine National Police-Criminal Investigation and Detection Group (PNP-CIDG), filed a criminal complaint against Organico before the DOJ on September 10, 2019, for luring the public to invest in the company without the necessary license from the Commission.
Organico’s investment scheme involved the sale of a piglet for P3,600 each, with promised returns of P7,000 after three months.
The company also engaged in crowdfunding activities through the internet where an investor should buy at least 10 shares worth P1,800 each, for a payout of P450 every 15 days or P2,700 in three months.
The SEC said Organico’s scheme involved the sale and offering for sale of securities in the form of investment contracts, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others.
Section 8 of 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.
Meanwhile, Section 26.3 of the SRC states that it shall be unlawful for any person, directly or indirectly, in connection with the purchase or sale of any securities, to engage in any act, transaction, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
Section 28 further adds that no person shall engage in the business of buying or selling securities in the country 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 Commission.
“The records also consistently show that respondents constantly made use of the Internet, through Facebook and Facebook Messenger applications, to further disseminate information regarding their fraudulent scheme,” the DOJ resolution read.
It noted that, “By posting their offers of investments in their Facebook page and various group chats, they successfully reached a wider audience and was able to tempt or lure more victims to invest in their Ponzi scheme.” Prior to the complaint, the SEC Enforcement and Investor Protection Department (EIPD) has issued an advisory on Organico as early as May 21, 2018 to warn the public about its illegal activities.
The Commission then issued a cease and desist order against the company on May 28, 2019 and revoked its corporate registration on May 31, 2019.
In addition, the EIPD noted that Posas and his other co-accused Organico officers have a standing warrant of arrest issued by Judge Mario Duaves of the Davao Regional Trial Court Branch 15 for five counts of syndicated estafa.
Operatives of the PNP-CIDG in Cebu City have since arrested Organico’s teller, Katherin Posas Diao, on the strength of the arrest warrant.
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