SEC Charges NovaTech with $650 Million Crypto Ponzi Scheme Defrauding Over 200,000 Investors

• The U.S. Securities and Exchange Commission (SEC) has initiated legal actions against NovaTech Ltd. and its principals, Cynthia and Eddy Petion, for allegedly orchestrating a crypto fraud.
• This fraud purportedly affected over 200,000 investors, many from the Haitian-American community, highlighting the far-reaching impact of the scheme.
• Eric Werner, Director of the SEC’s Fort Worth Regional Office, remarked that the fraudulent activities led to substantial financial losses, demonstrating the SEC’s commitment to pursuing not only the scheme’s primary architects but also their promoters.

The SEC brings charges against NovaTech Ltd., alleging a crypto fraud worth over $650 million, underscoring the significant financial impact on thousands of investors globally.

SEC Alleges $650 Million Crypto Ponzi Scheme

The SEC’s recent complaint accuses NovaTech and its principals of operating a fraudulent scheme that raised more than $650 million in crypto assets from 2019 to 2023. The Petions marketed NovaTech as a multi-level marketing (MLM) and crypto asset investment program, promising investors that their capital would generate profits from day one in the cryptocurrency and foreign exchange markets. However, the SEC’s allegations suggest that the bulk of investor funds were misappropriated to pay existing investors and cover commissions for promoters, rather than being invested as promised.

Misuse of Investor Funds and Personal Gains

Instead of fulfilling their promises to investors, NovaTech allegedly diverted a significant portion of the raised funds for personal use by the Petions. As the scheme unraveled, many investors were unable to withdraw their money, facing considerable financial hardships. This pattern of using new investors’ funds to pay off earlier investors, typical of a Ponzi scheme, highlights the deceptive practices employed by NovaTech’s leadership.

Crackdown on NovaTech Promoters

In addition to the charges against the Petions, the SEC has also charged six top promoters of NovaTech—Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley. These individuals are accused of recruiting a wide network of investors, often ignoring vital warning signs regarding the company’s operations, such as previous regulatory actions taken by U.S. and Canadian authorities.

Enforcement and Legal Consequences

The SEC’s actions seek to impose lasting legal consequences on all involved parties. The complaint includes requests for permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties. Notably, Zizi has already agreed to a partial settlement without admitting or denying the charges. He consented to pay a $100,000 civil penalty and agreed to be barred from future violations of the Securities Act. The resolution of further monetary penalties against Zizi will be determined in court.

Conclusion

The SEC’s charges against NovaTech Ltd. and its promoters illustrate the commission’s ongoing efforts to protect investors from fraudulent schemes and hold accountable those who perpetrate and promote such deceptions. As this case progresses, investors are reminded of the importance of due diligence and skepticism when faced with investment opportunities that promise unusually high returns.