SEC charges Novatech and its founders with running a $650M Ponzi scheme.
Novatech, its founders Cynthia and Eddy Petion, and the promoters who advertised the platform were formally charged with fraud by the United States Securities and Exchange Commission on August 12, 2024.
Novatech generated more than $650 million from more than 200,000 investors worldwide in an apparent Ponzi scheme, as per the SEC’s complaint.
The SEC alleged that the Novatech founders raised hundreds of millions of dollars from investors by claiming to invest the funds in digital assets and foreign exchange markets on behalf of their clients. They also promised investors “profit from day one.” Nevertheless, only a minor proportion of the pooled funds were allocated for market trading. According to the Securities and Exchange Commission (SEC), the majority of the funds were allocated to compensate previous investors and reimburse promoters.
In addition, the regulatory agency suspects that Cynthia and Eddy Petion, the founders, diverted a portion of the investment funds for their own personal use. The agency also acknowledged the specific effects of the purported fraud on the Haitian community in New York City.
Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley were among the Novatech promoters named in the SEC complaint. Eric Werner, director of the SEC’s Fort Worth Regional Office, issued the following statement in the accompanying announcement:
The actions taken today demonstrate that we will hold accountable not only the principal architects of these massive schemes, but also the promoters who unlawfully solicit victims in order to spread their fraud. This is because MLM schemes of this magnitude require promoters to fuel them.
The financial regulator is requesting the return of the funds that were allegedly diverted from investors into the alleged fraudulent scheme, as well as civil penalties and disgorgement fines. Additionally, they are seeking “permanent injunctive relief.”
Novatech is being sued by the New York Attorney General.
New York Attorney General Letitia James filed a lawsuit against Novatech, its founders, and AWS Mining, which is no longer operational, in June 2024. The lawsuit was filed on behalf of over 11,000 New York City residents who invested in Novatech.
The lawsuit also accused Novatech of defrauding investors of their hard-earned money and operating a Ponzi scheme. This was achieved in part by utilizing religious connotations and influencers to promote the product to the public.
