Mike Defensor’s First Quadrant in pyramiding scheme — DTI

[qman]

TAKEN FROM DAILY TRIBUNE

By Ayen Infante
Tuesday, 01 25, 2005

Direct marketing firm First Quadrant Philippines Inc. (First Quadrant), partly-owned and managed by Julie Rose Tactacan Defensor, wife to President Arroyo's close political confidant and Environment Secretary Michael “Mike” Defensor, was formally charged yesterday by the Department of Trade and Industry (DTI) with engaging in pyramiding schemes.

Prior to Defensor's appointment as DENR secretary, he sat as the Housing czar. He also served as the political campaign spokesman of Mrs. Arroyo.

Apart from Defensor, the managing director and corporate secretary of the firm, other incorporators of First Quadrant include Mike Defensor's sister-in-law Rhodora Tactacan Tumpalan, Andison Chua, Carlos Tumpalan and Socrates Tumpalan.

Pyramiding is an illegal trade that promises huge returns by requiring investors to accumulate capital from recruits or so-called downlines. The pyramid collapses and leaves new investors without profit when the downline dries up.

Trade and Industry Undersecretary for Consumer Welfare Adrian Cristobal Jr. said after months of monitoring, the Anti-Pyramiding Task Force (APTF) found sufficient basis to formally charge First Quadrant and another Filipino firm, JC Martin Corp., of violating Article 53 of the Consumer Act.

Article 53 of the Consumer Act prohibits the use of chain distribution plans or pyramid sales schemes in the sale of consumer products.

“Some businesses claiming to be multi-level marketing companies are actually pyramiding in nature, using multi-level marketing or networking scheme to sell products or services, which is not illegal. But when the scheme is used in a way that income is generated primarily from recruiting others into the company instead of selling products, then it becomes pyramiding,” Cristobal explained.

On Dec. 28 2004, APTF Investigation/Evaluation Unit head and concurrent Special Prosecutor for Anti-Pyramiding cases lawyer Pedro Vicente Mendoza issued the formal charge to First Quadrant and JC Martin, summoning them to appear before the special hearing officer of the Bureau of Trade Regulation and Consumer Protection (BTRCP) for formal investigation of the charge against them.

Cristobal cited Section 5, Article III, of Executive Order (EO) 913, which strengthens the rule-making and adjudicatory powers of the Minister of Trade and Industry in order to further protect consumers.

It states that whenever the minister has verified that violations of “trade and industry laws” have been committed, he may motu propio charge the violators and thereafter proceed with a formal investigation independent of the corresponding criminal or civil action for the violations.

Two hearings have been conducted by the special hearing officer where First Quadrant and JC Martin were asked to give their position papers and comments on the DTI's findings.

“DTI is directing the two companies to remove from their business plans the earning options the task force finds to be pyramiding in nature” Mendoza said.

JC Martin has submitted its position paper while First Quadrant will submit its position paper on Feb. 2, 2005.

JC Martin's next hearing is on Jan. 25 (today) while First Quadrant is set on Feb. 11, 2005.

If found guilty, these companies could face administrative penalties including a cease and desist order; the acceptance of a voluntary assurance of compliance or discontinuance under such terms and conditions as may be imposed; the imposition of P500 to P150,000 in administrative fines plus not more than P1,000 for each day of continuing violation; the cancellation of any permit, license, authority or registration, which may have been granted by the DTI, or the suspension of the validity thereof which shall not exceed one year; the withholding of any permit, license, authority or registration which is being secured by the respondent from the department; assessment of damages; and censure.

Observers noted that in the case of Rose Balajadia of Multitel, there was no move on the part of DTI to conduct a probe of the pyramiding scam. Multitel was quickly tagged as a pyramid scam while Balajadia was arrested and jailed without bail.

The Defensors, are, however, are closely identified with Mrs. Arroyo, being a player at Edsa II.

First Quadrant claimed to have earned the 2002 National Consumers Choice Award for Top Multi-Level Marketing Company of the Year, and achieving the same award in 2003. On its first year of operation, the firm attracted over 80,000 members.

The company's manufacturing arm, the D. Tactacan Shoe Manufacturing, is said to be a member of the Philippine Footwear Federation Inc. and was named among the Who's Who in the Philippines / National Consumer Excellence Awards given by the National Consumer Affairs Foundation in 2002 as the Best Shoe Manufacturer.

First Quadrant co-owns and manages D. Tactacan Shoe Manufacturing, DTSF Leather Supply, DOYEE Shoes, New Shoes Philippines Inc. and Newport Fashion Circle Corp. First Quadrant supplies and manufacture shoes for the following brands: Oleg Cassini, Lady Rustan's, SM Elegance, Milani, Styletto, Chateu Bourghesi and Rebecca Taylor (New York).

Owners of JC Martin include Ruby Basco, Ma. Teresa Castro, Ramon Dizon, Ma. Anna Enciso and Antonio Vicente.

================================================== ========

[kiper]

patay tayo jan..

luge ang business..hirap na magrecruit nyan..!!

hmm..susunod kaya ang mga bagong players?

or sila may pakana nyan?

[mazdamazda]

“Some businesses claiming to be multi-level marketing companies are actually pyramiding in nature, using multi-level marketing or networking scheme to sell products or services, which is not illegal. But when the scheme is used in a way that income is generated primarily from recruiting others into the company instead of selling products, then it becomes pyramiding,” Cristobal explained.

the problem is that they are focusing more on "recruiting" people rather than selling their product line.

there are lots of legit MLM companies out there. hope that this doesn't affect them.

[KelSeat]

Haha... i know things would catch up with First Quadrant sooner or later.
Here is their scheme.

You earn money upon RECRUITMENT of new people and your "network's" subsequent recruitment. The main hitch is that you should recruit people who will sell leather goods carried by First Quadrant. Entry into the network would require you to pay a certain amount.!!!

Unfortunately, discount is the only benefit for the member and selling this would be their money making scheme. The network does not generate revenue for the products sold.

It is a disappointment, however, to see the faces of top government officials in broadsheets, including Pres GMA, congratulating 1st Quadrant signalling high level connections.

Our government is truly hopeless, from the traffic enforcer who cannot even lift a finger against erring bus and jeepney driver to the irregular business activities.

[mazdamazda]

well it goes to show that "corruption" doesn't just apply to government officials but also to private citizens / business owners.

[baiskee]

patay tayo jan..

luge ang business..hirap na magrecruit nyan..!!

hmm..susunod kaya ang mga bagong players?

or sila may pakana nyan?

:lol: yari! si daniel razon lang padrino natin. nyahaha

[silhouette]

the question is, why after 5 years of operation? tapos sasabihin nila "after months of monitoring, the Anti-Pyramiding Task Force (APTF) found sufficient basis to formally charge First Quadrant and another Filipino firm, JC Martin Corp., of violating Article 53 of the Consumer Act".
ganyan ba talaga kabagal... :mad:
...or baka naman hindi na naaambunan ang mga tinamaan ng lintik!

[stinkaboy]

goodthing hindi ako nag pa member :D

[wowiesy]

dati meron din ako nakilala sa isang retreat (na very attractive lady mind you) na nag re recruit sa akin sa jc martin... laki na daw kita nya after just a few weeks joining... niyaya ba naman ako lumabas.. akala ko date.. eh di sige sama ako... tapos yun pala puputaktehin lang ako ng offer regarding jc martin... kaka turn off... kahit anong ganda nya... kita naman na pyramiding lang to.... di ko na uli sinipot... sayang.. ganda pa naman talaga nung kakilala ko na yun... ano na kaya nangyari dun...

[nugundam93]

wowiesy: ginamit lang pala niya ganda niya to try to recruit you. :D

buti na lang pala pinilit ng folks ko yung sis ko to back out of FQ...

fq talaga sila sa FQ. hahahaha.