SEC warns vs 3 more alleged Ponzi firms

MANILA, Philippines – The Securities and Exchange Commission has issued cease and desist orders against three companies believed to be engaged in fraudulent investment schemes.

The three firms that were directed by the SEC to stop soliciting investments from the public were Success200 International Marketing Corp., Grandtime Automobile Inc. and Goldxtreme Trading Co.

In the case of Success200, the company claimed it could turn a P1,800 investment into P10,000 when a member has successfully recruited 15 individuals.  Each member must refer at least two people. Such referrals must then refer two additional people.

According to the SEC, Success200 is not authorized to issue securities to the public.

 “The paid up capital of Success200 is only P100,000 while the high-end level investment pay out is P200,000. In which case, it is difficult to sustain over a long period of time because Success200 needs a larger pool of later investors to continue paying the promised profits to early investors, the SEC noted.

“The idea behind this type of swindle is that the co-man collects his money from his second or third round of investors and then absconds before anyone else shows up to collect. Necessarily, these schemes only last weeks or months at most,” the SEC said.

For Grandtime Automobile. the SEC found out that the company, which is a driving school, promises a payout of P12,000 after the payment of a fixed “entry fee” of P1,200 when four other persons are recruited.

According to the SEC, Grandtime Automobile’s paid-up capital is only P312,500 while the total payout to an investor in one of its schemes is P1.39 million.

As for Goldxtreme, the trading invites people to join and invest an initial amount of P5,000.  The investor may exit when he or she has recruited the required number of individuals. “Goldxtreme’s business model is a classic “Ponzi scheme,” the SEC said.

“A Ponzi scheme is a type of investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Its organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk”, the SEC pointed out.

In many Ponzi schemes,  the perpetrators focus on attracting new money to make promised payments to earlier-stage investors to create the false appearance that investors are profiting from a legitimate business,” the SEC said.