A nation of scam artists

I received this e-mail from a reader about a company that is obviously a pyramiding scam. The SEC has tried to stop it but the Court of Appeals stopped SEC and while the case is under consideration over the past year, the company can go on its merry way. The principal targets of the company are the middle class wage earners and OFWs. Here is the e-mail.

I need your help to enlighten me about the business of one company whose operations, I believe, have shades of the classic pyramiding scheme, which the SEC has declared illegal. This company has been around for some time now and has been already exposed in countless newspaper articles. It even had previously been issued a cease-and-desist order by the SEC.

But guess what? It is still around and is going strong. Yesterday a friend of mine was relentlessly trying to convince me to join as an investor (they refuse to call it a recruit). The investment is a whopping $300 or P15,000! Of course he told me of how he has already recovered his investments and how it has been giving him a steady stream of income.

But it’s obvious that he was getting his monthly juices from the recruitment of new members and not from the sale of its products and services. He made mention of these products and services though, but only very briefly as an opening statement to introduce the company. Pasakalye lang.

He was obviously pushing for the recruitment scheme and this makes it so similar to the other pyramiding schemes that went before it like that of Prosperity.com and the G. Cosmos scam. He also claims that this company has already won the court case against the cease-and-desist order of the SEC and that the SEC has lifted the injunction and has already issued a letter of apology. Is this true? If not, then the SEC is obviously too slow in performing its duties while this company continues to exploit the situation by milking their recruits of their precious money.

To get to the bottom of the case, we e-mailed SEC Chairman Lilia Bautista and she asked one of the commission’s officials, Jose Tomas Syquia to respond. According to Mr. Syquia, SEC did issue a CDO against said company but are "unable to enforce it due to an injunction issued by the Court of Appeals (Division of Justice Eloy Bello.) The SEC, through the Office of the Solicitor General, has filed all necessary pleadings and motions for the early resolution of our motion for reconsideration, but the same is still pending, and it is almost a year since the injunction."

The SEC is helpless until the Appeals Court acts one way or another. Mr. Syquia wrote that "until the same is lifted or adverse judgment rendered against us, in which case, we can then proceed to the Supreme Court, the SEC cannot enforce its CDO less we be cited in contempt. This notwithstanding, we also referred the matter to the Department of Trade and Industry since pyramiding issues fall directly under their jurisdiction."

There you have it. Imagine that... one year and still pending. Can the justices imagine the kind of damage that injunction is doing? How many more clueless people will be victimized? Maybe the Supreme Court should look into why the Appeals Court justices are taking so long.

When money, lots of money and the judiciary are involved, we only have to remember the immortal words of the American Ambassador. And don’t forget that the Supreme Court has not yet resolved the complaint of a litigant who claimed to have bought a judgment from an Appeals Court justice but lost to a higher bidder.

In the meantime, Mr. Syquia points out that it is not fair to accuse the SEC of being slow to act. "In fact we took it upon ourselves to run after pyramiding companies as psuedo investment firms, and gave all necessary warnings to the public. Unfortunately, we cannot stop people from their own blindness or greed if they would still join such companies."

Tax scams

I had lunch with Spice Boys Rep. Jose Miguel Zubiri at Mythers last Thursday and he was disgusted about how P20 million in VAT that his two restaurants paid have apparently never reached the government’s coffers. From what he had been able to gather, some tax scam syndicate operating at UCPB managed to divert his payments without anyone from government knowing about it. Luckily, he asked the BIR to give him a printout of his restaurants’ VAT payments. That’s how he found out his payments were appropriated by white collar crooks. Maybe if more business establishments asked for their print out verification, more scams will be uncovered.

Working obviously in connivance with UCPB officials, the syndicate credited a number of fictitious accounts that are closed after the dastardly deeds have been accomplished. The fact that UCPB is partly a government bank (its directors are appointed by Malacañang), makes the crime all the more frustrating to taxpayers.

Kung ganun lang pala, bakit pa magbabayad ng taxes? If government is not interested enough to make sure the money gets to the National Treasury, why should harassed taxpayers bother paying at all?

The damning thing is, the scam’s modus operandi is not new at all. The first plunder judgment rendered by a court also involved a similar scam in a Quezon City branch of Landbank. The question is, how come the BIR has not devised a way of preventing this kind of scam from stealing our tax payments? Are BIR officials also involved? They have to be involved because it is the only plausible reason why this kind of scam is alive and well these many years.

Many years ago, maybe 20 years ago, I remember that over half a million pesos of tax money paid by Petron ended up in a scam account in the Paco branch of Pacific Bank whose manager eventually disappeared. Aside from Petron, I remember that Ford Philippines among others, was also victimized.

In that Pacific Bank scam, the manager is the son of the bank’s CEO. When the son disappeared by fleeing to the United States, the father was so brokenhearted at losing a son and tarnishing his otherwise illustrious banking career that he died shortly thereafter. But not before paying off the money involved out of his life savings. That’s a real tragedy.

But the important point here is that the bank assumed responsibility. That’s why we issue crossed checks and the banks stamp a guarantee that they know who is cashing that check. Otherwise, why bother issuing checks. UCPB will have to pay for the consequences of the criminal activities of its officers. Sadly however, the owners of UCPB are the poor abused coconut farmers. The people lose, whichever way the Zubiri case goes.

The Bureau of Internal Revenue and the National Bureau of Investigation must move fast and so must the judiciary. Otherwise, it would be that more difficult to convince taxpayers to give government its due. As I said, why pay taxes?

And to think we work at least four months of the year to pay our taxes! The thought is enough to make a grown man cry.

Fisherman

If you think these pyramiding scams are happening just here, think again. I found this joke on the web.

The Waltons invited their new neighbors the Spits over to dinner. During dinner Mr. Spit asked Mr. Walton what he did for a living. Four-year-old Brian Walton jumped in and said: "Daddy is a fisherman!"

To which Mrs. Walton replied "Brian why do say that. Your daddy sells investment papers for a multi-level marketing company."

"No Mom. Every time we visit dad at work and he hangs up the phone he laughs, rubs his hands together and says I just caught another fish."

(Boo Chanco’s e-mail address is [email protected])