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The Department of Justice (DOJ) will file criminal charges against Modesto Cardano Market Cap Tr3ding Services OPC and its key officials for the illegal solicitation of investments from the public, the Securities and Exchange Commission (SEC) stated in a press release.
The indictment follows a complaint filed by the regulator, which flagged the company for offering unregistered securities.
Key Details
Charges and Violations
In a resolution dated November 19, state prosecutors found prima facie evidence to hold the company liable for violating Section 8 of Republic Act (RA) No. 8799, or the Securities Regulation Code (SRC), in relation to Section 6 of RA No. 10175, or the Cybercrime Prevention Act of 2012.
Implication of Sole Stockholder
The DOJ also implicated the company’s sole stockholder, director, and president, Modesto Clidoro Miravalles, along with nominees Tonio Miravalles and Karissa Alviar. They face charges for violating Sections 8 and 28 of the SRC, coupled with the cybercrime penalty enhancements.
- Section 8 of the SRC prohibits the sale or offering of securities without a registration statement filed with and approved by the SEC.
- Section 28 mandates that all individuals engaged in the business of buying or selling securities must be registered with the Commission.
- Section 6 of the Cybercrime Prevention Act increases the penalty by one degree for crimes committed using information and communications technologies.
The Investment Scheme
According to the SEC Enforcement and Investor Protection Department (EIPD), monitoring of Modesto OPC commenced in March 2024, following the firm’s failure to submit hard copies of its articles of incorporation.
Investigations revealed that the company was actively offering investments to the public via social media. The scheme involved various “compensation profit and expert plans” that promised guaranteed monthly returns of 10 percent.
“The certifications issued by the… SEC show that respondent [Modesto OPC] is not a registered issuer of securities. It is not licensed or authorized to publicly offer or sell securities nor does it have any pending application for registration of securities,” the DOJ resolution stated.
Prosecutors classified the solicitation as an issuance of investment contracts, which requires prior registration with the SEC.
Broader Crackdown on Unauthorized Schemes
The DOJ’s move against Modesto OPC is part of a continued crackdown on unauthorized investment entities in the Philippines.
- The SEC has recently issued strict warnings against similar schemes soliciting funds without the necessary licenses.
- In recent months, the Commission has advised the public against dealing with LS KBS, a group that promises high daily returns under the guise of “humanitarian” trading, and Valtoro, which has been flagged for offering unauthorized cryptocurrency investment packages.
- Like Modesto OPC, these entities were identified as lacking the required secondary licenses to legally sell securities to the public.
This article is published on BitPinas: DOJ Indicts ‘Modesto Cardano’ Trading Firm for Illegal Investment Solicitation
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