DOJ charges ‘Ponzi scam’ leaders

MANILA, Philippines — The Department of Justice (DOJ) has issued a resolution to slap criminal charges against Organico Agribusiness Ventures Corp. — tagged by the Securities and Exchange Commission (SEC) as a Ponzi scammer  — for illegal solicitation of investments from the public.

Affirming the findings of the SEC, the DOJ found probable cause to charge Organico, its president and chair Cerrone Roial Posas, and officers Marve Subere Posas, Renato Subong, Anthony Butaslac, and Karen Maasin for violations of the Securities Regulation Code (SRC), in relation to the Cybercrime Prevention Act of 2012.

“(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,” said the DOJ resolution dated Sept. 3.

“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,” it added.A Ponzi scheme is an investment program that offers impossibly high returns and pays investors using the money contributed by other investors. This is a fraudulent transaction prohibited under the SRC.

The DOJ also recommended the filing of charges against Kathleen Hortesano, Rochelle Camacho and Annielyn Hilotin, identified as agents of Organico.

No license

The SEC, together with the Philippine National Police-Criminal Investigation and Detection Group (PNP-CIDG), filed a criminal complaint against Organico at the DOJ back in 2019, noting that this entity was luring people to invest without the necessary license.

The scheme involved the sale of piglets for P3,600 each, with promised returns of P7,000 after three months. The company also engaged in crowdfunding activities through the internet, calling for investors to buy at least 10 shares worth P1,800 each, with a promised payout of P450 every 15 days or P2,700 in three months.

The SEC said this involved the offering 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 prohibits the sale or distribution of securities without a registration statement duly filed with and approved by the SEC.

Organico will also be charged for violation of Section 26.3 of the SRC, which deems it unlawful for any person to operate fraud or deceit in connection with the purchase or sale of any securities.

Section 28 of the SRC further states that no person may 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 SEC.

Wider audience online

“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.

“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) issued an advisory on Organico as early as May 21, 2018, to warn the public about its illegal activities.

The SEC 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 coaccused Organico officers had 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