The Securities and Exchange Commission (SEC) has revoked the corporate registrations of ScentkoWorld Corporation and Brendahl Cruz Holdings, Inc. for illegally soliciting investments from the public through a “buy and earn” program.

The SEC Enforcement and Investor Protection Department (EIPD) found that the companies affiliated with Brendahl Cruz have been publicly offering and selling securities without the necessary secondary license from the Commission.

“In doing so, ScentkoWorld and Brendahl Cruz Holdings committed an ultra vires act under Section 44 of Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines,” said the SEC.

The company’s activities also constituted serious misrepresentation as to what it can do, to the great prejudice of or damage to the general public, a ground for the revocation of a corporation’s certificate of registration under Presidential Decree No. 902-A.

The Commission has warned the public against investing in ScentkoWorld and Brendahl Cruz Holdings as early as July 31, 2019 through an advisory. A cease and desist order was then issued against the companies on September 24, 2019.

ScentkoWorld and Brendahl Cruz Holdings have been enticing the public to buy perfume and beauty products in exchange for up to 400 percent in returns within 30 days.

For instance, an investor who buys a package worth P5,000 can earn up to P20,000 in a month’s time, regardless of whether they were able to sell the products or not.

Instead, the promised return will depend on how soon the companies can recruit new members. Members can also earn by recruiting more people into the program.

ScentkoWorld’s and Brendahl Cruz Holdings’ investment scheme involves securities, particularly an investment contract, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others, according to the EIPD.

As a form of security, investment contracts must be registered with the SEC before they can be sold or offered within the Philippines, pursuant to Section 8 of Republic Act No. 8799, or the Securities Regulation Code (SRC).

Records of the Commission reveal that, while ScentkoWorld and Brendahl Cruz Holdings are registered as corporations, they have not registered any securities pursuant to the provisions of the SRC.

Further, both companies have not employed licensed capital market professionals for the sale of securities.

The EIPD noted that the investment-taking activities of ScentkoWorld and Brendahl Cruz Holdings are “within the context of a Ponzi scheme, as there was nothing that would indicate that there is a lawful business activity from which to generate the supposed income to be distributed to their member-investors.” “The investment scheme of Mr. Cruz through ScentkoWorld Corporation and Brendahl Cruz Holdings, Inc. also operates to defraud investors as it deceives the investing public by making it appear that they have the authority to deal in securities. This also amounts to serious misrepresentation as to what they can do or are doing to the damage and prejudice of the investing public,” the SEC said.

In its order, the SEC said that, “Wherefore, for violation of Section 44 of the Revised Corporation Code of the Philippines (R.A. 11232) in relation to Sections 8.1 and 28.1 of the Securities Regulation Code and Section 6 (i)(2) of P.D. 902-A, the corporate registrations or Certificates of Incorporation/Registration of ScentkoWorld Corporation and Brendahl Cruz Holdings, Inc., are hereby REVOKED,” the order read.