SEC issues cease and desist order vs. ALAMCCO, ALMAMICO for Ponzi-like scheme

The Securities and Exchange Commission (SEC) has ordered the Alabel Maasim Mining Corp. (ALMAMICO) and Alabel-Maasim Credit Cooperative (ALAMCCO) to stop collecting money from investors.

The Commission En Banc has issued a cease and desist order on June 4, 2019, directing Alabel Maasim and Alabel-Maasim Credit to stop “engaging in activities of selling and/or offering for sale of securities in the form of investment contracts,” the SEC said Wednesday.

It acknowledged that ALAMCCO was registered with the Cooperative Development Authority and ALMAMICO was registered as a stock corporation.

However, the commission pointed out that the companies lacked the necessary license to offer and sell investment contracts.

Securities may only be offered or sold to the public by an entity registered and approved by the commission, under Section 8.1 of the Republic Act No. 8799 or the Securities Regulation Code.

“ALMAMICO/ALAMCCO has engaged in the offering or selling of such securities to the general public sans the necessary license or permit as attested by the MSRD [Markets and Securities Regulation  Department] and the CFGD [Corporate Governance and Finance Department] of this Commission,” the order read.

ALAMCCO and ALMAMICO guarantee at least 35% in monthly returns to investors, according to the SEC.

The scheme employed by both ALAMCCO and ALMAMICO resembles a Ponzi scheme, according to the SEC.

It cited a Supreme Court ruling in 2015  in which organizers of a Ponzi scheme “often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk.”

It is a “gullibility scheme” where perpetrators focus on recruiting new members to meet the payments they promised to earlier-stage investors and “create the false appearance that investors are profiting from a legitimate business,” the SEC added.

The commission advised those who invested in the companies to contact the SEC field offices in Davao City and Cagayan de Oro City.

Last month, more than a thousand members of the ALAMCCO gathered in Alabel, Sarangani to urge the government to allow its continued operations.

“We’re not part of what they call the investment scheme because we are a cooperative,” said Atty. Umar Genita, legal counsel of the organization.

He claimed that ALAMCCO’s fund is being invested in different businesses that generate sufficient profits, thus allowing it to return a 35 percent monthly interest to its members.

President Rodrigo Duterte previously ordered authorities to launch a crackdown against “too good to be true” investment schemes.

The SEC noted the investment contracts also resemble a Ponzi scheme or an investment fraud where payments of new investors are utilized to meet the expected returns of existing members. —Dona Magsino/VDS, GMA News