The Securities and Exchange Commission (SEC) has issued cease and desist orders against Fast Track Worldwide, Inc. and JOCALS688 Beauty and Wellness Products Trading, Inc. to stem their fraudulent investment schemes.
In separate orders issued on May 28, the Commission ordered Fast Track and JOCALS688 to immediately cease and desist, under pain of contempt, from soliciting investments from the public or engaging in similar activities.
The SEC further prohibited Fast Track and JOCALS688 from transacting any business involving funds in its depository banks, and from transferring, disposing, or conveying in any manner all related assets to forestall grave damage and prejudice to all concerned and to ensure the preservation of the assets for the benefit of the investors.
The cease and desist orders cover the corporations’ operators, partners, directors, officers, salespersons, agents, representatives, promoters, and all persons, conduit entities and subsidiaries claiming and acting for and on its behalf.
The SEC ordered Fast Track and JOCALS688 to stop their operations after finding that the two corporations have engaged in the sale and/or offering of securities in the form of investment contracts without prior registration and the corresponding permit.
Section 8 of Republic Act No. 8799, or The Securities Regulation Code, 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 Commission.
In the case of SEC vs. CJH Development Corp., the Supreme Court ruled that the act of selling unregistered securities would necessarily operate as a fraud on investors as it deceives the investing public by making it appear that the company has authority to deal on such securities.
Under Section 64 of the Securities Regulation Code, the SEC may issue a cease and desist order without the necessity of a prior hearing if, in its judgment, an act or practice, unless restrained, will operate as a fraud on investors or is otherwise likely to cause grave or irreparable injury or prejudice to the investing public.
Prior to issuing the cease and desist orders, the SEC have advised the public to avoid or stop placing their hard-earned money in Fast Track and JOCALS688.
Fast Track was incorporated by Rey Aldwin Bautista Valeriano, James Rhyan Espinosa Guillera, Clive Christopher Cortez Llora, Jeneil Santos Aguilar, and Jay Piscadero Gregorio on February 18, 2019 primarily “to engage in direct selling of goods and merchandises to consumers.”
The certificate of incorporation issued to Fast Track expressly prohibited the corporation from soliciting, accepting or taking investments/ placements from the public or issuing investment contracts.
However, evidence gathered by the SEC Enforcement and Investor Protection Department (EIPD) revealed that Fast Track actually offered investment packages bundled with health, lifestyle, and nutrition products for P1,499 to P49,999.
Investors were guaranteed with returns as much as P3 million a year, as well as commissions and bonuses when they recruit more people to invest in the company.
The scheme constituted the sale and/or offer of securities in the form of investment contracts, whereby a person invests money in a common enterprise and is led to expect profits primarily from the efforts of others, according to the SEC.
Accordingly, Fast Track must have registered the scheme with and secured a secondary license to offer securities for sale from the Commission, in accordance with The Securities Regulation Code.
“[I]t is clear that Fast Track is not authorized to sell and/or offer the ‘Investment Packages’ to the public because they are securities in the form of investment contracts, and Fast Track does not have the requisite license from the Commission,” the SEC noted.
“This undoubtedly warrants the issuance of a cease and desist order because the act of Fast Track 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.”
JOCALS688 similarly registered as a corporation on October 9, 2019 to engage in the sale, distribution, marketing and trading of goods, commodities and merchandise such as beauty and wellness products, coffee, juice and herbal products.
The company headquartered in Zamboanga del Sur named Joshua A. Calderon, Echochen M. Calderon, Noemie C. Ponce, Hanz R. Paler and Nino S. Agad-ad as directors in its articles of incorporation.
As in the case of Fast Track, the certificate of incorporation issued to JOCALS688 provided that the corporation “shall not solicit, accept or take investments/ placements from the public neither shall it issue investment contracts.”
The EIPD, however, found that JOCALS688 enticed members to deposit a minimum of P10,000 to earn P13,000 after a month. Alternatively, one could become a member by purchasing a package of products for P3,800.
Members could earn by selling the products. However, they could supposedly receive bigger returns by simply recruiting more people into the scheme.
The SEC found the scheme to have satisfied all the elements of an investment contract. In this light, JOCALS688 must have filed a registration statement with the Commission and applied for a secondary license.
“Thus, in the absence of a secondary license, JOCALS688 should be restrained from offering or selling securities in the form of investment contracts,” the SEC concluded.
The Commission also pointed out that the capitalization of JOCALS688 only amounted to P1 million while it promised investors a guaranteed 37% monthly income.
“Clearly, JOCALS688’s business model and capitalization cannot sustain the promised returns of investment, especially if no new investors will come in,” the SEC noted.
“Pay-outs for investors are financed from investments of new recruits/ investors. This is a fraudulent scheme which will likely cause grave or irreparable injury or prejudice to the investing public.”
The SEC earlier issued similar cease and desist orders against CROWD1 Asia Pacific, Inc., Lion City Finance Group, Inc. and Payasian Pte. Ltd. Corporation for engaging in unauthorized investment schemes.