The Securities and Exchange Commission (SEC) has filed charges against NovaTech Ltd. and its founders, Cynthia and Eddy Petion. The charges allege a $650 million crypto fraud involving over 200,000 investors worldwide. NovaTech’s alleged pyramid scheme was registered in St. Vincent and the Grenadines.
It has been reported that Cynthia Petion described herself as the “Reverend CEO” as she marketed the opportunity to members of the Haitian community in the US.
The SEC says it has also charged Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley for their roles in promoting NovaTech to investors. NovaTech claimed funds raised would be used to invest in crypt and Forex markets.
The SEC’s complaint says the majority of funds raised were used to make payments to other investors in a Ponzi-like ploy, and only a fraction of the funds were used for trading.
The Petions are also said to have used the money for themselves.
Eventually, NovaTech collapsed, leaving investors holding the bag.
Eric Werner, Director of the SEC’s Fort Worth Regional Office, said:
“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’s complaint alleges that NovaTech’s top promoters were paid significant commissions for the investors they recruited. When they became aware of red flags about NovaTech, including regulatory actions taken against it by U.S. and Canadian regulators, they continued recruiting investors and downplayed the red flags.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida, charges NovaTech, the Petions, Zizi, Dunbar, Corbett, and Sampson with violating the antifraud provisions of the federal securities laws and all of the defendants with registration violations.
The complaint seeks permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties.
Without admitting or denying the allegations, Zizi has agreed to partially settle the SEC’s charges by consenting to a $100,000 civil penalty and to be permanently enjoined from future violations of the charged provisions, with the amount of other monetary remedies to be determined at a later date. The partial settlement is subject to court approval.
