Are individuals legally liable for promoting or facilitating investments in online schemes that turn out to be fraudulent?
In the Philippines, the rise of online investment schemes has led to legal concerns regarding the liability of individuals who promote or facilitate such investments, particularly when these schemes turn out to be fraudulent. Understanding the legal framework and potential consequences is essential for anyone involved in these activities.
Securities Regulation Code (SRC)
Under the Securities Regulation Code (Republic Act No. 8799), any investment scheme offered to the public that involves the sale of securities must be registered with the Securities and Exchange Commission (SEC). The law defines securities broadly, including any investment where money is pooled with the expectation of earning profits primarily from the efforts of others.
Individuals who promote, offer, or sell these securities without proper registration can be held liable for violating the SRC. The penalties for such violations can include fines, imprisonment, or both, depending on the severity of the offense. Additionally, the SEC has the authority to issue cease-and-desist orders against unregistered investment activities and to prosecute violators.
Anti-Cybercrime Law
The Cybercrime Prevention Act of 2012 (Republic Act No. 10175) also comes into play in cases involving online investment schemes. This law criminalizes acts of online fraud, which includes schemes where individuals use the internet to deceive others into making investments based on false promises of high returns.
Persons involved in such activities, even if indirectly (such as by promoting or facilitating the scheme), can be charged with cybercrime offenses. The penalties for these offenses can be severe, with imprisonment ranging from six years to twelve years, as well as fines.
Civil Liability
Apart from criminal liability, individuals who promote or facilitate fraudulent investment schemes may also face civil liability. Investors who suffer financial losses due to their involvement in such schemes can file civil suits for damages. In these cases, the court may order the person responsible to return the invested amount, along with interest and other damages that may be awarded.
Potential Defenses
In situations where individuals claim they were unaware of the fraudulent nature of the investment scheme, the law may consider their intent and the extent of their involvement. However, ignorance of the law is generally not an excuse, especially if the individual played a significant role in promoting or facilitating the investment.
Conclusion
Individuals who promote or facilitate investments in online schemes that turn out to be fraudulent can face serious legal consequences in the Philippines, including criminal charges, civil liability, and penalties under the Securities Regulation Code and the Anti-Cybercrime Law. It is crucial to exercise caution and conduct thorough due diligence before engaging in or promoting any investment opportunities, especially those conducted online.