The U.S. Securities and Exchange Commission (SEC) has filed charges against NovaTech Ltd., its founders and several people who promoted the company for orchestrating a fraudulent scheme that victimized more than 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 more than $650 million in a pyramid scheme that primarily targeted the Haitian-American community, among others.
The charges filed in the U.S. District Court for the Southern District of Florida allege violations of the anti-fraud and registration provisions of the federal securities laws.
SEC fees
According to the SEC’s complaint, NovaTech operated from 2019 through 2023, promising investors that their money would be invested in crypto and currency markets.
The Petions assured investors that they would make a profit from the start, with Cynthia Petion famously saying:
“With this program you make a profit from day one, because you have access to that capital again.”
However, the SEC alleged that instead of investing the bulk of the funds, the Petions used them to pay existing investors and promoters while siphoning off millions for personal use.
The complaint also highlighted that when NovaTech eventually went bankrupt, most investors were unable to withdraw their investments, leading to significant financial losses.
Promoters involved
The SEC has 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 the regulatory actions taken against NovaTech by US and Canadian authorities, these promoters continued to solicit 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 argue, MLM schemes of this magnitude need promoters to fuel them, and today’s action shows that we will hold accountable not only the key architects of these large-scale schemes, but also the promoters who spread their fraud by to unlawfully recruit victims.’
The SEC seeks permanent injunctive relief, recovery of ill-gotten gains, and civil penalties against all defendants.
One of the promoters, Zizi, has agreed to partially settle the charges, agreeing to a $100,000 civil penalty and permanent injunctions, with additional monetary penalties to be determined later.
