On Monday, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against the alleged crypto pyramid scheme NovaTech and eight of its promoters, accusing them of fraud and multiple breaches of federal securities laws.
The lawsuit alleges that NovaTech defrauded investors of approximately $650 million over a four-year span. This legal action follows a similar suit filed in June by New York Attorney General Letitia James against NovaTech, its founders, and another purported pyramid scheme linked to NovaTech.
According to the SEC’s complaint, NovaTech targeted specific affinity groups, particularly Haitian Creole-speaking church communities both in the U.S. and abroad, using WhatsApp groups and promotional events to solicit investments. The scheme purportedly attracted over 200,000 investors globally, who collectively invested $650 million between June 2019 and May 2023, when the scheme collapsed.
The SEC alleges that the company’s founders, Cynthia and Eddy Petion, an American couple now believed to be residing in Panama, and other promoters—including Martin Zizi, James Corbett, Corrie Sampson, Dapilinu Dunbar, John Garofano, and Marsha Hadley—employed “religious overtones” to solicit funds. Cynthia Petion, who referred to herself as the “Reverend CEO,” reportedly claimed that her decision to start NovaTech was inspired by a divine vision.
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Investors were led to believe their money would be pooled and traded in the cryptocurrency and foreign exchange markets. NovaTech’s marketing materials promised returns of 2-3% per week and claimed never to have posted a trading loss. However, the SEC’s complaint alleges that only a small portion of investors’ funds was actually invested, and those investments incurred substantial losses. Instead, the scheme allegedly operated as a Ponzi scheme, using new investors’ funds to pay earlier investors and transferring millions of dollars to the Petions and their associates.
The scheme began to collapse in October 2022, as investors faced significant delays withdrawing their funds. Shortly thereafter, several state securities regulators in the U.S. and Canada issued cease-and-desist orders against NovaTech. By May 2023, the Petions had shut down NovaTech and removed its website, leaving investors unable to access their funds.
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The SEC’s complaint accuses NovaTech and the Petions of violating anti-fraud and securities-registration provisions of federal securities laws, while the promoter defendants face allegations of violating anti-fraud, securities-registration, and broker-registration provisions. The SEC is seeking permanent injunctive relief, disgorgement with prejudgment interest, and civil penalties.
One of the defendants, Martin Zizi, has agreed to a partial settlement. Without admitting or denying the charges, Zizi will pay a $100,000 civil penalty and is permanently barred from future securities violations, pending judicial approval of the settlement.
Cre: CoinDesk
David Ma was born in 1980 in California, is a Vietnamese American, known as one of the entrepreneurs and investors in the field of cryptocurrency and stock market. In 2006, he graduated from Stanford University with honors and began his career in business.
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