The SM Group of Companies has denied any involvement in the operations of SMFund.com and sminvestment.com, both of which are allegedly engaged in Internet-based quick money or Ponzi schemes.

In a notice to the public, SM Investments Corp. (SMIC), the listed investment holding firm of retail tycoon Henry Sy, said it is not in any way connected with the websites SMFund.com, sminvestment.com and any other website seeking solicitations online. 

“Neither did the SM Group of Companies sponsor or endorse any investment scheme contained in the websites with the domain names “SMFund.com and “sminvestment.com, the company said. 

“Accordingly, the SM Group of Companies is not responsible for the contents of the SMFund.com or sminvestment.com websites and it shall not be liable, directly or indirectly, for any damage caused or claimed to be caused by the use of or reliance on any such contents,the company further said.

SMFund is among the companies that are being investigated by the Securities and Exchange Commission (SEC) for engaging in illegal solicitation activities over the Internet. SMfund reportedly charges a minimum investment of in exchange for higher returns. 

Others on the SEC’s watchlist include        the Internet-based FrancSwiss, Swiss Cash, Universal Forex System, Global America, Private Forex Trade Inc. and Deutschefrancs. 

These companies are not registered with the SEC and not authorized to solicit investments from the public, the SEC advisory said. Hubert Guevara, head of the SEC’s Compliance and Enforcement Department,  said preliminary figures show that around 10,000 to 50,000 investors had been duped by these online scams, with total investments of at least P230 million.

Guevara said he also received reports that a new company, Studiotraffic, is being set up to engage in similar online investment scheme.

The group behind this had reportedly been pinned down by Malaysian authorities and is said to be moving their operations here.

Guevara said they are now coordinating with the National Bureau of Investigation to determine what course of action to take against these companies for violation of the Securities Regulation Code. 

These firms could also be charged for qualified estafa, he added.  A Ponzi scheme, named after an Italian immigrant to the US Charles Ponzi, is a fraudulent investment operation that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from net revenues generated by any real business.

The system is doomed to collapse because there are little or no underlying earnings from the money received by the promoter. However, the scheme is often interrupted by legal authorities before it collapses, because a Ponzi scheme is suspected and/or because the promoter is selling unregistered securities.

The following are some of the features of an Internet-based Ponzi investment scheme:  no SEC registration; investments should be made in foreign currency, preferably in US dollars; uses a binary network to earn commissions; no paper trail, promises little or no financial risk, assures pay-off of investments in a short time; uses high-pressure methods to convince investors to reinvest their earnings and unknown principal office, address, founders, directors or officers.

Guevara explained that this investment scheme ordinarily collapses as fast as they are created while leaving many investors unable to recoup their investments. Guevara has advised the public to immediately report to the SEC any offer of investment made by persons who represent these entities or other entities using similar modus operandi to ensure that appropriate enforcement can be taken.  

Ponzi became notorious for using the technique after emigrating from Italy to the United States in 1903. He was not the first to invent such a scheme, but his operation took in such a large amount of money that it was the first to become known throughout the United States.