SEC Charges NovaTech in Massive $650M Fraud Scheme

The United States Securities and Exchange Commission (SEC) has filed charges against NovaTech and its co-founders, Cynthia and Eddy Petion, for allegedly running a fraudulent crypto scheme that raised a staggering $650 million from more than 200,000 victims worldwide.

What Happened?

According to the SEC’s complaint, filed in a Florida federal court, the couples operated NovaTech as a multi-level marketing (MLM) and crypto investment program from 2019 to 2023. 

The regulator stated that during that time, the couple lured investors, mainly from the Haitian-American community, by claiming that NovaTech would invest their funds in cryptocurrencies and foreign exchange markets. Cynthia Petion even assured investors that their investments would be safe and that they would see profit from day one. 

However, the SEC said that the couple instead used a significant portion of investor funds to pay existing investors and promoters. The regulator added that the couple only used a fraction of the funds for trading. The complaint further alleged that they diverted millions of dollars worth of investor funds for personal use. 

When NovaTech collapsed in May 2023, the majority of the investors were unable to gain access to their funds, resulting in significant losses, the complaint said 

“NovaTech and the Petions caused untold losses to tens of thousands of victims around the world,” Eric Werner, Director of the SEC’s Fort Worth Regional Office, said.

Aside from the Petions, the SEC also charged six NovaTech promoters, including Zizi, Dunbar, Corbett, Sampson, Garofano, and Hadley. As alleged by the Commission, these promoters received substantial commissions to recruit a vast network of investors for NovaTech. The SEC alleged that even when Zizi, Dunbar, Corbett, and Sampson saw red flags, including regulatory actions taken against the company by U.S. and Canadian regulators, they ignored and continued to recruit investors.

Civil Penalty

The complaint, which charges all the defendants with violating the antifraud provisions of the federal securities laws and registration violations, seeks permanent injunctive relief, disgorgement of ill-gotten proceeds, and civil penalties.

One of the defendants, Zizi, has already agreed to a $100,000 settlement with the SEC— subject to court approval.