The Securities and Exchange Commission (SEC) has warned the public against an allegedly illegal investment scheme propagated by Scentko World Corp. and its parent firm, Brendahl Cruz Holdings Inc.
These entities supposedly promise a 400-percent return on their “buy and earn” program, involving perfume and other beauty products.
In an advisory posted on July 31, the SEC’s Enforcement and Investor Protection Department noted Scentko and Brendahl Cruz Holdings have not secured a secondary license to solicit investments from the public.
“In view thereof, the public is hereby advised to exercise caution in dealing with any individuals or group of persons soliciting investments or recruiting investors for and on behalf of Scentko and Brendahl Cruz Holdings,” the SEC said.
Under its investment scheme, Scentko entices the public to buy perfume and beauty products in exchange for “cash sales rewards” equivalent to 400 percent of the purchase price. For instance, a member is promised a return of P20,000 for simply buying a package worth P5,000.
A member may receive the promised return in about 30 days, without having to resell the products, depending on how soon Scentko can recruit new members. Accordingly, the company encourages its members to recruit.
Aside from the cash sales rewards, Scentko promises a referral fee equivalent to 10 percent of the amount invested by the new member.
Scentko and Brendahl are registered as corporations.
However, the issuance of a certificate of incorporation only grants an entity a juridical personality and does not constitute an authority to engage in activities requiring a secondary license from the SEC, such as selling and offering securities.
Under Section 8 of Republic Act No. 8799, or the Securities Regulation Code (SRC), securities such as investment contracts must not be sold or offered for sale or distribution without a registration statement duly filed with and approved by the SEC.
Section 28 of the SRC further states that no person shall engage in the business of buying or selling securities in the Philippines as a broker or dealer, or act as a salesman or an associated person of any broker or dealer unless registered with the SEC.
Those acting as salesmen, brokers or agents of Scentko and Brendahl Cruz Holdings may be prosecuted and held criminally liable. They may face a maximum fine of P5 million or imprisonment of 21 years or both.
The SEC has already flagged at least 42 illegal investment schemes so far this year.