EDITOR’S NOTE: Officials in the Philippines not only are using securities laws in the EmGoldEx prosecution, but also a relatively new law against cybercrime in that nation. This potentially could stiffen penalties. As noted below, EmGoldEx also caused trouble in the United States.
UPDATED 10:43 A.M. ET U.S.A. EmGoldEx was a Ponzi scheme that morphed into entities known as Global Intergold (GIG) and Prosperous Infinite Philippines Holdings, Corp. (PIPHC), the Securities and Exchange Commission of the Philippines is alleging.
Among the victim-investors and recruiters were two “officials” of the Philippines National Police, the SEC said. One of the individuals allegedly joined “in desperation after his house burned down early this year.”
The allegations appeared today, in advance of an EmGoldEx-related event scheduled for Sunday at the SMX Convention Center at 5 p.m. Officials issued a warning about the event, saying that 2,000 people were expected to attend.
“Suspects” identified by the SEC include Kevin Miranda, Ryan Manuit, Charles Juiz Padilla, Rabel Ymas, John Rafael Calicdan and Paul Alviar. Their places of residence were not listed.
Lalaine Monserate, assistant director of the SEC’s Enforcement and Investor Protection Department, said the entities operated “a classic Ponzi scheme of getting cash investments and giving high return payouts [through] the recruitment of people. As more people are recruited into the scheme, it eventually reaches a point wherein it can no longer sustain its payouts, and payments will stop thereby leaving investors penniless.”
In October 2014, the Massachusetts Securities Division civilly charged four alleged promoters of EmGoldEx operating in that state.
As for EmGoldEx operations in the Philippines, officials there have issued a cease-and-desist order and made a criminal referral to the nation’s Department of Justice. Among the allegations are selling or offering for sale or distribution unregistered securities to the public and and doing so without a license.
Each violation of the [Securities and Regulation Code] is punishable, upon conviction, with a fine of not more than Php 5 Million or imprisonment of 7-21 years, or both,” the SEC said.
Officials are treating the matter not only as a securities fraud, but also as a cybercrime, the SEC noted.
“The selling and marketing of unregistered securities by EmGoldex, GIG, and PIPHC are largely done online,” the SEC said. “Crimes committed in cyberspace and through the use of Information and Communication Technologies (ICT) carry a higher penalty as provided under the Cybercrime Prevention Act of 2012.”
From the SEC (italics added):
Originally, the entity which employed the Ponzi scheme was EmGoldex. However, in response to SEC’s Advisories warning investors against EmGoldex, the original entity renamed itself to GIG. PIPHC was then incorporated sometime on August 2015 to aid and assist GIG investors who were unable to obtain a return on their investment. Currently, EmGoldex is already banned in other countries based on international media reports.
Read the statement of the Securities and Exchange Commission of the Philippines on the EmGoldEx and relatd matters.