SEC charges NovaTech with operating a pyramid scheme that raised $650 million in crypto

A couple who founded company NovaTech Ltd., allegedly operated a pyramid scheme that raised more than $650 million in cryptocurrency, according to the U.S. Securities and Exchange Commission.

The regulator on Monday charged NovaTech founders Cynthia and Eddy Petion, their company and promoters Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano and Marsha Hadley with promoting NovaTech to investors.

The scheme affected more than 200,000 investors globally, including many in the Haitian-American community, according to the SEC.

"Certain Defendants targeted affinity groups, in particular the Haitian-American community, and used religious overtones and appeals to financial freedom and independence to solicit investors," the SEC said in the complaint filed in the U.S. District for the Southern District of Florida.

The Petions "lured investors" by saying that NovaTech would invest their money in crypto and foreign exchange markets, but instead, NovaTech used most of those investor funds to pay existing investors, pay commissions to the promoters and spend millions of dollars on themselves, the SEC said.

“NovaTech and the Petions caused untold losses to tens of thousands of victims around the world,” said Eric Werner, director of the SEC’s Fort Worth Regional Office in the statement. “As we allege, MLM schemes of this size require promoters to fuel them, and today’s action demonstrates that we will hold accountable not just the principal architects of these massive schemes, but also promoters who spread their fraud by unlawfully soliciting victims.”

The SEC charged NovaTech, the Petions, Zizi, Dunbar, Corbett and Sampson with violating antifraud provisions and all of the defendants with violating registration requirements.

Zizi agreed to partially settle without admitting or denying the allegations, according to the statement.

New York Attorney General Letitia James previously sued Cynthia Petion and her husband, Eddy Petion, along with others, with defrauding thousands of investors in June.

NovaTech collapsed in May 2023 and most investors were not able to withdraw their investments, the SEC said.