The Securities and Exchange Commission (SEC) has issued a cease and desist order against Building Our Success Stories Network Inc., or BOSS Network, to prevent it from luring investors into a fraudulent investment scheme posing as a multi-level marketing program.
In an order issued on June 18, the SEC directed BOSS Network to stop selling securities until the registration statement is filed with the agency. The agency also ordered the company to refrain from transacting any business involving funds in its banks. The company’s business, which the agency said resembles the Ponzi scheme, is promoted in social networking sites as a multilevel marketing program for personal care products.
“It is clear that BOSS Network is soliciting investments from the public in the guise of operating a multi-level marketing business, with a promise of guaranteed high return of investment,” the SEC said.
The cease and desist order covers the corporation’s directors and officers, namely Rommel Q. Tabaniag, Raquel G. Argote, Ramon C. Tabaniag, Jojie O. Servan and Ailyn Marigh F. Lim, as well as its salesmen and other representatives.
The order also extends to 101Upper Class Corp., which operates the unauthorized investment scheme called BOSS Ultimate Program (BOSS UP) in collaboration with BOSS Network.
The SEC issued the cease and desist order after finding BOSS Network to have solicited investments from the public. Under the scheme, BOSS Network offers packages priced from P1,500 to P382,500. The starting package includes two perfume bottles and two bars of whitening soap, while the top-tier bundle comprises 510 units for each product.
The packages come with Universal Bonus Pool shares that entitle member-investors to earn P2,250 to P707,625 in addition to bonuses they are promised for recruiting more people into the scheme.
Member-investors also earn points from buying the packages offered and from recruiting people. The points supposedly correspond to incentives such as all-expenses-paid trips abroad, as well as luxury timepieces and cars.
The scheme constitutes the sale and offer of securities in the form of investment contracts, the SEC said.
BOSS Network registered as a corporation in March 2018 primarily “to engage in direct selling of goods and merchandise to consumers.” However, its certificate of incorporation provided that “the corporation shall not solicit, accept or take investments/placements from the public neither shall it issue investment contracts.” The SEC’s Enforcement and Investor Protection Department found that two of BOSS Network’s incorporators submitted and used invalid tax identification numbers.
The SEC said BOSS Network’s business model resembles that of a Ponzi scheme, an investment fraud where the returns to existing investors are sourced from the contribution of new investors.
The articles of incorporation of BOSS Network reveals the corporation’s capitalization amounted to only P1.5 million, while member-investors are guaranteed monthly returns ranging from 50 percent to 87 percent of the amount invested.
“Payouts for investors are financed from investments of new recruits or investors. This is a fraudulent scheme which will likely cause grave or irreparable injury or prejudice to the investing public,” the SEC said.
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