THE Securities and Exchange Commission (SEC) has revoked the certificates of incorporation of ScentKoWorld Corp. and Brendahl Cruz Holdings, Inc. for illegally selling securities to the public.
In its revocation order, the SEC found the two companies to have been promising the public a 400% return for investing in their “buy and earn” programs.
“Under its investment scheme, ScentKoWorld entices the public to buy perfume and beauty products in exchange for ‘cash sales rewards’ equivalent to 400% of the purchase price. Hence, their member was promised a return of P20,000 for simply buying a package worth P5,000,” the SEC said.
“Also, their members may receive the promised return in about 30 days, without having to resell the products, depending on how soon ScentKoWorld can recruit new members. Accordingly, the company encourages its members to recruit others as well. And lastly, ScentKoWorld promises a referral fee equivalent to 10% of the amount invested by the new member,” it added.
The SEC said the investment scheme has the characteristics of an investment contract, which must first be registered with the commission before it is offered and sold or distributed to the public.
The regulator found that ScentKoWorld and Brendahl Cruz Holdings have not registered any securities that would allow them to offer or sell securities to the public and that they are not licensed capital market professionals such as, among others, securities brokers.
In 2019, a cease-and-desist order was issued by the commission against entities affiliated with Brendahl Cruz, including ScentKoWorld and Brendahl Cruz Holdings.
“The said corporations did not pay attention thereto, and in fact, continued their investment-taking activities,” the SEC said.
“The department was able to prove that the entities involved therein were engaged in illegal activities of soliciting investments from the public without the requisite secondary license, and worse, the investment-taking activities are within the context of a Ponzi Scheme as there was nothing that would indicate that there is a lawful business activity from which to generate the supposed income to be distributed to their member-investors,” it added.
In 2018, ScentKoWorld registered with the commission with its primary purpose stated as “to engage in wholesale trading of goods and merchandise, provided that the corporation shall not solicit, accept or take investments and placements from the public neither shall it issue investment contracts.”
Meanwhile, Brendahl Cruz Holdings registered with the commission in 2019. It stated its primary purpose was to “acquire by purchase, exchange, assignment or otherwise, and sell, assign, transfer, exchange, lease, let, develop, mortgage, pledge, deal, in and with and otherwise operate, enjoy, and dispose of, all properties of every kind and description and wherever situated and to the extent permitted by law, including but not limited to real estate, whether improve or unimproved, and any interest or rights therein, as well as buildings, tenements, warehouses, factories, edifices and structures and other improvements, and shares of capital stock or other securities, among others.”
The SEC warned the public not to invest or stop investing in any investment scheme being offered by the two companies.
“Those who act as salesmen, brokers, dealers or agents in selling or convincing people to invest in [said entities] including soliciting investments or recruiting investors through the internet may be held criminally liable,” the commission said.
Violators may also face a penalty of a maximum fine of P5 million or imprisonment of up to 21 years. — Luisa Maria Jacinta C. Jocson