Vicente Vicen te Men Menil, il, Jr Jr.. and his wif wife, e, Ad Adria rian, n, wer were e the pro propri prieto etors rs of ABM App Applia liance nce and 1989,, they, through ushers and sales executives, began soliciting Upholstery. In July In July 1989 investents fro the general public in !urigao "ity and its neighboring towns. #hey assur ass ured ed wo would uld$be $be inv invest estors ors tha thatt the their ir on oney ey wo would uld be ul ultip tiplie lied d ten ten$fo $fold ld af after ter %& calendar days. 'ach investor ay invest a axiu aount of (%,))) for which they were assured a return of (%),))). #he ushers and sales executives were given a %)* Augus gustt 19 1989 89,, the co co is issi sion on fr fro o th the e to tota tall a aou ount nts s re rei itt tted ed.. !o !oe eti tie e in Au perpetrators incorporated ABM +evelopent "enter, Inc. -ABM/, apparently to clothe their operations with legitiacy. At around the sae tie, the accused told his sales execu ex ecutiv tives es tha thatt all inv invest esten ents ts wo would uld onl only y hav have e re retur turns ns of %0 %01 1 whi which ch inv invest estors ors wil willl receive after %& wor2ing days. As such, if a person gave (%)), his investent will receive only (1)). As illions of pesos began pouring in, delays in the payents started, then by !epteber %343, payents eventually stopped. "ases were 5led against the accused, who were arrested in +avao "ity. 6hat the accused actually o7ered to the public was a -(on8i !chee, an unsustainable investent progra that o7ers extravagantly high returns and pays these returns to early investors out of the capital contributed by later investors. #he "ourt described the wor2ings of the -(on8i !chee in an earlier case0 “Named aft “Named after er Cha Charles rles Po Ponzi nzi who pro promot moted ed the sch scheme eme in the 19 1920’ 20’s, s, the ori origin ginal al scheme involved the issuance of onds which o!ered "0# interest in $" da%s or a 100# pro&t if held for 90 da%s' (asicall% (asicall%,, Ponzi used the mone% he received from later investors to pa% e)travagant rates of return to earl% investors, there% inducing more inve in vest stor ors s to pl plac ace e th thei eirr mo mone ne% % wi with th hi him m in th the e fa fals lse e ho hope pe of re real aliz izing ing th this is sa same me e)tr e) trav avag agan antt ra rate te of re retu turn rn th them emse selv lves es'' *h *his is wa was s th the e ve ver% r% sc sche heme me pr prac acti tice ced d % the Panata +oundation' +oundation' owever, the Ponzi scheme wor-s onl% as long as there is an ever.increasing numer of new investors /oining the scheme' *o pa% o! the "0# onds Ponzi had to come up with one.and.a.half times increase with each round' *o pa% 100# pro&t, he had to doule the numer of investors at each stage, and this is the reason wh% a Ponzi scheme is a sche sc heme me an and d no nott an in inve vest stme ment nt st stra rate teg% g%'' *h *he e pr prog ogre ress ssio ion n it de depe pend nds s up upon on is unsust uns ustain ainal ale' e' *he pat patter tern n of inc increa rease se in the num numer er of par partic ticipa ipants nts in the s%s s%stem tem e)plains how it is ale to succeed in the short run and, at the same time, wh% it must fail in the long run' *his game is dicult to sustain over a long period of time ecause to continue pa%ing the promised pro&ts to earl% investors, the operator needs an ever larger pool of later investors' *he idea ehind this t%pe of swindle is that the conman’ collects his mone% from his second or third round of investors and then asconds efore an%one else shows up to collect' Necessaril%, these schemes onl% last wee-s, or months at most' As pa part rt of hi his s de defe fens nse, e, th the e ac accu cuse sed d ar argu gued ed th that at se seve vera rall in inve vest stor ors s we were re pa paid id th the e corresponding correspond ing returns on their investents. #his is uneritorious, according to the !", as the payent of returns to early investors is an integral part of the illegal (on8i schee. #he fact that early investors were paid the returns on their investents induced ore peop pe ople le to pa part rtic icip ipat ate e in th the e il ille lega gall sc sche hee e wi with th th the e ho hope pe of re real ali8 i8in ing g th the e sa sae e extravagant rate of return. In fact, after word of these payents spread li2e wild5re, the aount aou nt of inves investent tents s rece received ived by accu accused$a sed$appella ppellant nt ballo ballooned oned fro fro thous thousands ands of pesos to several illions of pesos. #he acccused were convicted for estafa but not large scale sca le est estafa afa under (+ %49 %493, 3, as the there re was no sho showin wing g tha thatt it wa was s co coit itted ted by a syndicate/. A syndicate is de5ned in the sae law as -consisting of 5ve or ore persons
fored with the intention of carrying out the unlawful or illegal act, transaction, enterprise or schee.
