The SEC Files Lawsuit against NovaTech and Eight Promoters Accusing Them of Orchestrating a $650 Million Pyramid Scheme
The SEC recently filed a lawsuit against NovaTech and eight of its promoters, alleging that they orchestrated a massive pyramid scheme that drained $650 million from over 200,000 investors worldwide.
This scam, which lasted for four years, primarily targeted close-knit groups, including members of the Haitian-American community.
Details of the NovaTech Scam
NovaTech allegedly used WhatsApp groups and promotional events to attract investors, particularly among members of Creole-speaking churches in the US and abroad. The company promised weekly returns of 2 to 3%, never displaying any losses according to their promotional materials.
Investors believed that their money would be used for crypto and forex transactions. However, the SEC reveals that only a small portion of the funds was actually invested, and these investments suffered significant losses.
The Masterminds behind the NovaTech Operation
As we maintain, MLM systems of this size need promoters to fuel them, and today’s action demonstrates that we will hold accountable not only the principal architects of these massive systems but also the promoters who propagate their fraud by illegally soliciting victims.
Eric Werner, Director of the SEC’s Fort Worth Regional Office
The scam was led by Cynthia and Eddy Petion, an American couple currently suspected to be living in Panama. Cynthia Petion, who referred to herself as the ‘Reverend CEO’ in NovaTech’s communications, even claimed that the company’s creation had been inspired by a ‘divine vision.’ The other promoters involved, named in the SEC’s complaint, are Martin Zizi, James Corbett, Corrie Sampson, Dapilinu Dunbar, John Garofano, and Marsha Hadley.
The Mechanics of the Ponzi Scheme
The SEC’s complaint indicates that NovaTech essentially functioned as a Ponzi scheme, using money from new investors to pay off older ones. The Petions and their collaborators also allegedly diverted millions of dollars for personal profit. In October 2022, investors began experiencing difficulties in withdrawing their funds, marking the start of the system’s collapse. In May 2023, NovaTech ceased operations and took down its website, leaving remaining investors unable to recover their money.
Legal Repercussions and Accusations
The SEC’s complaint accuses NovaTech and the Petions of multiple violations of federal securities laws, including fraud and securities registration offenses. The other promoters are also charged with similar violations, including broker registration violations. The SEC is seeking permanent injunctions, restitution of illicit gains with prejudgment interest, and civil penalties.
One of the promoters, Martin Zizi, has already reached a partial agreement with the SEC. Although he neither admitted nor denied the allegations, he agreed to pay a civil penalty of $100,000 and be permanently banned from violating securities laws again. This agreement is still pending approval by a judge.
