$650 Million Crypto Scam: SEC Targets NovaTech and Leadership

The Securities and Exchange Commission has launched a significant legal action against Cynthia and Eddy Petion, the masterminds behind NovaTech Ltd., a fraudulent crypto investment platform. The Petions, along with a network of high-level promoters, are accused of orchestrating a multi-level marketing (MLM) scheme that defrauded over 200,000 investors worldwide, siphoning off more than $650 million in crypto assets.

The Ponzi scheme, which operated from 2019 to 2023, disproportionately impacted the Haitian-American community. The Petions lured investors with promises of substantial returns on crypto and foreign exchange trading. However, according to the SEC's complaint, the couple and their associates misappropriated most of the invested funds to pay existing investors, compensate promoters, and enrich themselves. A fraction of the funds was used for actual trading activities.

To amplify their scheme, the Petions recruited a network of promoters, including Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley. These individuals were instrumental in expanding NovaTech’s reach and enticing new investors. Despite facing regulatory scrutiny in the United States and Canada, the promoters continued to aggressively recruit, downplaying the mounting risks.

The SEC's complaint outlines a classic Ponzi scheme, where new investor funds are used to pay off earlier investors, creating a false illusion of profitability. When the scheme inevitably collapses, as it did with NovaTech, the vast majority of investors suffer significant financial losses.

The agency is seeking to hold the Petions and their associates accountable for their fraudulent actions. The SEC is pursuing injunctive relief, disgorgement of ill-gotten gains, and civil penalties. As part of a settlement, Zizi has agreed to pay a $100,000 fine and is permanently barred from future securities law violations.

Resources:

SEC.GOV