The U.S. Securities and Exchange Commission (SEC) has announced charges against Cynthia and Eddy Petion, the founders of NovaTech Ltd., and several top promoters involved in a significant crypto fraud scheme. According to the SEC, NovaTech, which operated from 2019 until its collapse in 2023, orchestrated a deceptive scheme that defrauded over 200,000 investors worldwide out of more than $650 million. The Petions, who ran the company as a multi-level marketing (MLM) and crypto asset investment program, are accused of promising high returns on investments in cryptocurrency and foreign exchange markets. However, the reality was starkly different, with the scheme functioning as a classic Ponzi operation, using funds from new investors to pay returns to earlier ones while siphoning millions for personal gain.
The SEC’s complaint highlights the role of key promoters, including Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley, who were instrumental in recruiting new investors. These promoters were reportedly compensated with significant commissions, facilitating the expansion and perpetuation of the fraud despite growing red flags and regulatory warnings. Their actions contributed to the scheme’s ability to mislead investors and sustain operations, leading to substantial financial losses for many.
The SEC has filed the complaint in the U.S. District Court for the Southern District of Florida, charging the Petions and their associates with violations of federal securities laws, including antifraud provisions and registration violations. The SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties. Notably, promoter Martin Zizi has agreed to a partial settlement, paying a $100,000 civil penalty and consenting to a permanent injunction against future violations, although additional monetary remedies are pending court approval.
This case underscores the serious risks associated with unregulated investment schemes, particularly in the volatile and often opaque realm of cryptocurrency. The SEC’s actions reflect a firm commitment to safeguarding investors and holding accountable those who exploit others through fraudulent practices. As the investigation continues, the SEC aims to recover as much as possible for the defrauded investors and send a clear message to potential fraudsters about the consequences of financial deception.
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