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SEC goes after another suspected investment scam

DAVAO CITY—The Securities and Exchange Commission (SEC) clamped down on another suspected get-rich-quick scheme by a local business firm that didn’t have the necessary government license to operate on investment securities.

In its order dated December 31 last year, the SEC revoked the Certificate of Registration and/or Incorporation of Massdrop Marketing and Franchising OPC (Massdrop Marketing) and MDM Ventures Corp. (MDM Ventures). Both firms are headed by an Edgar Joseph Tan, a Renato A. Sismundo Jr., an Eduardo B. Mallari Jr. and a Roel B. Duya.

The SEC’s Enforcement and Investor Protection Department (EIPD) said it found Massdrop Marketing and MDM Ventures “to have violated Section 44 of the Revised Corporation Code of the Philippines in reclamation to Presidential Decree 902A for serious misrepresentation as to what the corporations can do to the great prejudice of or damage to the general public.”

It said Massdrop and MDM Ventures “enticed the public to invest online or through the Internet to become a member thereof with a minimum investment of P1,000 with a guaranteed monthly return of 20 percent for 90 days or for a total of 60-percent income in just three months.”

It said a member shall only need to invest, “wait, and earn without having to do anything.”

The SEC said both corporations have not registered any securities pursuant to the provisions of the Securities Regulation Code that would allow it to offer and sell securities to the public.

It said it issued an advisory against Massdrop Marketing on May 18 last year. But the regulator said the entity continued with its “investment-taking activities unabated through its owner, agents, representatives, enablers and influencers, this time through another entity, MDM Ventures, which was incorporated on June 2, 2021.”

The EIPD cited three cases why the investments offered by EJ Tan “through his affiliated entities constituted an investment contract.

First, there was an investment of money from the public. “Massdrop” and “MDM Ventures” actually received money from the public who were enticed to invest in their scheme.  Second, there was a common enterprise in the sense that respondent “Massdrop” and “MDM Ventures” pooled the money invested by its investors in a profit-making venture. Third, there was clearly an expectation of profits on the part of its investors who were attracted to join the scheme as they relied on the promise that their money would earn a monthly return of 20 percent in a total of 30 days or a total of approximately 160 percent for a minimum investment of P1,000.

 The EIPD also said there was expectation of profits derived primarily from the efforts of “Massdrop” and “MDM Ventures” and/or its directors, officers, agents or representatives.

“The schemes being offered by Massdrop Marketing and MDM Ventures are clearly in the nature of a Ponzi scheme where the profits or payouts shall be taken from incoming investors or additional pay-ins of existing members-investors, considering that it does not have any underlying legitimate business from where it could source its promised return on investments to its investors,” the EIPD added.

It warned Davao residents also to beware of the scam saying Massdrop Marketing and MDM Ventures also operate in the area. A post from its social media account indicated that the corporations have established offices in the following areas: Talisay, Cebu; Zambales; Laguna; Angono, Cainta and San Mateo, all in Rizal; General Trias, Cavite; Quezon City; and, Caloocan.

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