The U.S. Securities and Exchange Commission (SEC) has filed charges against NovaTech, a multi-level marketing (MLM) company, and its principals, Cynthia Petition and Eddy Petion, for orchestrating a fraudulent scheme that defrauded more than 200,000 investors globally and raised over $650 million in crypto assets. The SEC’s complaint also targets several top promoters of the scheme, including Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley.
From 2019 through 2023, the Petions operated NovaTech as an MLM-based crypto asset investment program. Investors were enticed with promises that their funds would be invested in cryptocurrency and foreign exchange markets, with Cynthia Petion assuring them of guaranteed profits from day one. However, according to the SEC, the reality was far different. NovaTech used the majority of the raised funds to pay returns to earlier investors, effectively operating as a Ponzi scheme. Only a small portion of the funds was actually invested in trading, while millions were siphoned off by the Petions for personal gain. As the scheme collapsed, most investors were left unable to withdraw their funds, suffering significant financial losses.
The SEC’s complaint reveals that NovaTech‘s top promoters, including Zizi, Dunbar, Corbett, and Sampson, were instrumental in recruiting a vast network of investors. Even after becoming aware of regulatory actions taken against NovaTech by U.S. and Canadian authorities, these promoters continued to recruit new investors, downplaying the risks and red flags. NovaTech rewarded these promoters with substantial commissions for their efforts, further fueling the expansion of the scheme.
The SEC has charged NovaTech, the Petions, and their promoters with violating the antifraud provisions of federal securities laws. The complaint, filed in the U.S. District Court for the Southern District of Florida, seeks permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties. While all defendants face significant legal consequences, Zizi has agreed to a partial settlement, which includes a $100,000 civil penalty and a permanent injunction against future violations, with additional monetary penalties to be determined.
