In an order served yesterday, the Commission en banc also rejected the company’s settlement offer of P200,000 and instead slapped it an administrative fine totaling P57.18 million.
The SEC had issued a cease-and-decist order (CDO) on July 26, 2001 against G. Cosmos, a Japan-based firm engaged mainly in advertising, to stop its operations involving the illegal sale of contracts for its mail order business.
G. Cosmos is chaired by the controversial Genta Ogami, whose group also led the buyout of Unitrust Development Bank last year. Just last week, however, the bank suffered a bank run and had to close down due to internal management conflict and the perceived anomalies of its new owners.
Ogami himself was not spared the negative publicity as reports floated that he has a pending criminal case in Japan involving the pyramiding scheme and has been using the Philippines as his new base for his illegal operations.
G. Cosmos was registered with the SEC on Aug. 8, 1999 primarily to undertake advertising campaign plans under its so-called G. Systems created by Ogami himself. The company, which is headquartered at the Madrigal Business Park in Muntinlupa, is 30-percent owned by Japanese nationals Ogami and Takahiro Yokoi, while its local incorporations include Anselma Calima, Dolores Cuneta and Wilfredo Cuneta of Las Piñas.
Under the G. Systems, the company collects money for advertising from the average consumer for its mail order sales business. The money collected is used to conduct mail order sales in Japan through newspaper, television or magazine ads and profits are paid directly to the people who have paid for the advertising costs.
Anyone interested to enroll and earn from the G. Systems must first register as a member by paying a membership fee which is renewed yearly. The company offers a five-percent incentive commission to members who can recruit new members to the system which will be deducted from the net profit/dividend earned by the new recruit.
In its CDO, the SEC said G. Cosmos violates Sec. 8.1 of the Securities Regulation Code which states that securities, including investment contracts, shall not be sold or offered for sale on distribution within the Philippines without a registration statement duly filed with and approved by the Commission.
On Oct. 9, 2001, G. Cosmos officials wrote the SEC that it would no longer engage in entry activity and remit the returns due to its members, thereon only operating as a normal advertising firm.
"The case against G. Cosmos will be deemed closed and terminated only upon full compliance with this order and the payment of a fine of P57.18 million by respondent corporation within 15 days from receipt of this order for previous violations," the SEC said.