SEC charges NovaTech founders, promoters with $650 million crypto fraud

The US Securities and Exchange Commission (SEC) has filed charges against NovaTech Ltd., its founders, and several people who promoted the firm for orchestrating a fraudulent scheme that victimized over 200,000 investors worldwide.

The regulator’s complaint alleges that NovaTech — founded by Cynthia Petion and Eddy Petion —  posed as a legitimate multi-level marketing company and raised over $650 million in a pyramid scheme that primarily targeted the Haitian-American community, among others.

The charges filed in the US District Court for the Southern District of Florida include violations of federal securities laws’ antifraud and registration provisions.

SEC charges

According to the SEC’s complaint, NovaTech operated from 2019 through 2023, promising investors that their funds would be invested in crypto and foreign exchange markets.

The Petions assured investors that they would see profits from the outset, with Cynthia Petion famously stating:

“In this program, you are in profit from day one, because again you have access to that capital.”

However, the SEC alleged that instead of investing the majority of the funds, the Petions used them to pay existing investors and promoters while siphoning millions for their personal use.

The complaint also highlighted that when NovaTech eventually collapsed, most investors were unable to withdraw their investments, resulting in significant financial losses.

Promoters implicated

The SEC also charged several top NovaTech promoters, including Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley, with recruiting new investors.

Despite becoming aware of regulatory actions taken against NovaTech by US and Canadian authorities, these promoters continued to recruit investors and downplayed the significance of these red flags.

According to the SEC:

“NovaTech and the Petions caused untold losses to tens of thousands of victims around the world. As we allege, MLM schemes of this size require promoters to fuel them, and today’s action demonstrates that we will hold accountable not just the principal architects of these massive schemes but also promoters who spread their fraud by unlawfully soliciting victims.”

The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties against all defendants.

One of the promoters, Zizi, has agreed to partially settle the charges, consenting to a $100,000 civil penalty and permanent injunctions, with additional monetary penalties to be determined later.