SEC Files Lawsuit Against NovaTech Promoters: Alleged $650 Million Crypto Ponzi Scheme
Date: 2024-08-13 Author: Oliver Abernathy Categories: BUSINESS
The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against NovaTech and eight of its promoters, accusing them of running a large-scale crypto Ponzi scheme. According to the SEC, the company defrauded investors around the world out of about $650 million over four years. The lawsuit comes two months after New York Attorney General Letitia James filed a similar case against NovaTech and its founders.
The SEC’s lawsuit alleges that NovaTech targeted specific groups, particularly Haitian Creole-speaking church members, both in the U.S. and abroad. The company used WhatsApp groups and events to promote its schemes, attracting more than 200,000 people to invest between June 2019 and May 2023, when the scheme collapsed.
NovaTech was founded by a married couple from the United States, Cynthia and Eddie Petion, who are believed to now live in Panama. Other accused promoters include Martin Zizi, James Corbett, Corrie Sampson, Dapilinu Dunbar, John Garafano, and Marsha Hadley, all named in the SEC complaint. In her promotional materials and on social media, Cynthia Petion referred to herself as the “Reverend CEO” and claimed that NovaTech was inspired by a “vision” she allegedly had from God.
NovaTech investors were promised that their funds would be pooled and invested in cryptocurrency and forex trading, with the expected returns of 2-3% per week. However, according to the SEC, only a small portion of the funds raised were actually invested, and those few investments resulted in significant trading losses. Instead, the commission alleges that NovaTech operated as a Ponzi scheme, paying out profits to old investors with new money. Millions of dollars were also reportedly transferred to the personal accounts of the Petions and their employees.
NovaTech’s collapse began in October 2022, when investors began experiencing severe delays when attempting to withdraw funds. Soon after, a number of U.S. and Canadian government regulators issued cease-and-desist orders to the company. In May 2023, the Petions shut down NovaTech and took its website offline, leaving the remaining investors without access to their funds.
The SEC accuses NovaTech and its founders of violating anti-fraud and registration provisions of the federal securities laws. The promoters are also charged with violating anti-fraud, securities and broker registration provisions. The SEC is seeking permanent injunctive relief, disgorgement of the proceeds with interest, and civil penalties.
One of the defendants, Martin Zizi, has already agreed to a partial settlement. Without admitting or denying guilt, Zizi agreed to pay a civil penalty of $100,000 and permanently forbid future violations of the securities laws. The settlement must be approved by a judge.
