The US Securities and Exchange Commission (SEC) has taken legal action against NovaTech Ltd., its founders, and a group of individuals who promoted the company for perpetrating a fraudulent scheme that impacted more than 200,000 investors globally.
NovaTech, established by Cynthia Petion and Eddy Petion, presented itself as a legitimate multi-level marketing business and raised over $650 million in a pyramid scheme that primarily targeted the Haitian-American community and other groups. The SEC’s complaint, filed in the US District Court for the Southern District of Florida, alleges violations of federal securities laws’ antifraud and registration provisions.
The SEC’s allegations state that NovaTech operated from 2019 to 2023, assuring investors that their funds would be utilized in the cryptocurrency and foreign exchange markets. The Petions promised investors immediate profits, with Cynthia Petion asserting, “In this program, you are in profit from day one, because again you have access to that capital.” However, instead of investing the majority of the funds as promised, the Petions diverted the money to pay existing investors and promoters, while also embezzling millions for personal gain.
When NovaTech eventually collapsed, many investors were unable to retrieve their investments, resulting in substantial financial losses. The SEC also brought charges against several top NovaTech promoters, including Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley, for recruiting new investors despite being aware of regulatory actions taken against NovaTech by US and Canadian authorities. These promoters downplayed the significance of these warnings and continued to attract investors.
The SEC is seeking permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties against all defendants. One of the promoters, Zizi, has agreed to partially settle the charges by paying a $100,000 civil penalty and agreeing to permanent injunctions, with further monetary penalties to be determined at a later date.
The SEC’s actions send a strong message that individuals involved in massive MLM schemes like NovaTech will be held accountable, including both the masterminds behind the schemes and the promoters who help spread the fraud by unlawfully soliciting victims. It is crucial to remain vigilant and cautious when investing, especially in schemes that promise quick and guaranteed profits.