Key takeaways:
- The US SEC formally charged Novatech, its founders, Cynthia and Eddy Petion, and promoters who advertised the platform with fraud.
- The SEC complaint also implicated several Novatech promoters, including John Garofano, Dapilinu Dunbar, Martin Zizi, James Corbett, Corrie Sampson, and Marsha Hadley.
On August 12, 2024, the US Securities and Exchange Commission formally charged Novatech, its founders, Cynthia and Eddy Petion, and promoters who advertised the platform with fraud.
The SEC’s complaint claims that Novatech purportedly ran a Ponzi scheme that brought in over $650 million from over 200,000 investors worldwide.
The SEC explicitly claimed that the founders of Novatech misled investors into believing they were investing hundreds of millions of dollars in digital assets and foreign currency markets on behalf of their clients, promising them “profit from day one.”
But market trading was only given a modest percentage of the pooled funds. As to the SEC, most of the funds were used to pay promoters and compensate previous investors.
The regulatory body highlighted the specific effect the purported scam had on the Haitian population in New York City and added that it believes the founders, Cynthia and Eddy Petion, diverted some of the investment funds for their own use.
The SEC complaint also implicated several Novatech promoters, including John Garofano, Dapilinu Dunbar, Martin Zizi, James Corbett, Corrie Sampson, and Marsha Hadley. Eric Werner, the director of the SEC’s Fort Worth Regional Office, made the following announcement in the accompanying press release:
โMLM schemes of this size require promoters to fuel them, and todayโs 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.โ
In addition to civil penalties, disgorgement fines, and the recovery of investor assets that were purportedly diverted into a fraudulent scheme, the financial regulator is also requesting “permanent injunctive relief.”
In June 2024, on behalf of over 11,000 New York City citizens who invested in Novatech, New York Attorney General Letitia James filed a lawsuit against the company, its founders, and its now-defunct parent company, AWS Mining.
Additionally, Novatech was charged in the case with operating a Ponzi scheme and cheating investors of their hard-earned money, in part by marketing the product to the public with religious connotations and influencers.