Commissioner of PHL SEC warns public on affinity frauds

Posted on April 28, 2017   // 0 Comments  

affinity-frauds

Image Courtesy of PSK CPA

CHICAGO — Affinity frauds are rampant not only in the Philippines but also in Filipino-American communities abroad.

The frauds are reportedly perpetrated by church leaders and among senior citizens, and these are  “difficult to detect because the victims often try to work things out within the group when something goes wrong rather than notify the authorities. And often, by the time the authorities step in, it is too late as the money is gone.”

Emilio Benito Aquino, new commissioner of the Philippine Securities Exchange Commission (SEC), cited as an example the case of fraudsters in the Philippines using Facebook. “They  invited (6,000 investor) mutual friends and co-workers at Our Lady of Lourdes International Medical Center in Olongapo City to invest in a scheme that promised big profits as long as the investors recruit other potential investors.”

Aquino was the special guest of honor and speaker last April 12 during the “Ika-24 Pagkikita sa Konsulado” (24th town hall meeting at the Consulate) in the Rizal Center at 1332 W. Irving Park Road in Chicago’s north side. 

The free-admission program entitled, “Investing For Your Future: How to Invest Wisely and Avoid Investment Scams,” was held in partnership with Philippine Consulate General headed by Consul General Generoso D. G. Calonge, Regional Director David Glockner of the United States Securities and Exchange Commission in Chicago, the Filipino American Council of Greater Chicago (FACC) represented by its new Executive Director Elaine Lehman, the Filipino American Lawyers Association (FALA) of Chicago, Tanya Solov (director of the Illinois  Securities Department) and Shawn O’Neill, associate district director at Financial Industry Regulatory Authority.

Aquino warned people against taking tempting offers to triple the return of investments (ROIs) from a “pay-in” of P650 (US$13) with a payout of P1950 (US$39). The catch is that each investor is required to recruit two more investors.”

Aquino said this is a clear pattern of pyramid scheme, which eventually collapses when the investor can no longer recruit new investor.

quino said the pyramid scheme pulled by an entity called Affinity Investment Group is

just one of the 181 enforcement cases cited by the Philippine SEC in its recent annual report for 2015. Of these cases, 102 involved illegal sale or offering of unregistered investment securities that are mostly affinity fraud and Ponzi schemes.

Ponzi scheme is also a fraudulent scheme through which an investor or scammer collects investment money from a new investor. The scammer uses the money he collected from the new investor to pay the returns to an old investor. Unlike pyramid, in the Ponzi scheme, when the investor can no longer attract new investor and many investors would attempt to get their money out during economic crises, the scammer would not pay the old investors and walk away rich.

Commissioner Aquino also lauded the US SEC for filing charges and freezing assets of operators of a worldwide pyramid scheme targeting Asian and Latino communities in the U.S. and abroad in 2014.

One of the five Philippine SEC commissioners but the only commissioner appointed by President Duterte, Aquino had just attended a two-week international program called the International Institute for Securities Market Growth and Development in the U.S. SEC headquarters in Washington, D.C. to promote “effective securities regulation worldwide.”


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Joseph is a former reporter of the Manila Bulletin, former president of the Rizal-Metro Manila Reporters Association and former president of the Chicago chapter of the National Press Club of the Philippines. A native of Sorsogon, Philippines, he and his family now live in Chicago. A prolific reporter, Lariosa writes a column and news stories for the Filipino Star News and other Filipino community newspapers in the US as well as for GMA News and the Manila Bulletin.