The SEC has filed go well with in opposition to NovaTech FX’s founders and a number of other high promoters.
As per the federal regulator’s August twelfth filed lawsuit, Cynthia and Eddie Petion ran a $650 million plus Ponzi scheme.
Along with NovaTech FX’s Petion co-founders, the SEC has additionally sued promoters Martin Zizi, Dapilini Dunbar, James Corbett, Corrie Sampson, John Garofano and Marsha Hadley.
The SEC identifies NovaTech FX as a “fraudulent crypto buying and selling funding and pyramid scheme”.
From June 2019 to roughly Could 2023, Cynthia Petion and Eddy Petion operated a fraudulent crypto buying and selling funding and pyramid scheme primarily by means of NovaTech, an organization registered in St. Vincent and the Grenadines.
NovaTech seems to have traded solely a small fraction of investor property, it suffered vital buying and selling losses, and it had no different identified sources of revenues apart from investor deposits.
In different phrases, NovaTech was a pyramid scheme that relied on the recruitment of latest buyers or new investments from current buyers to fund its enterprise.
The SEC’s findings observe with BehindMLM’s NovaTech FX overview, revealed again in August 2019.
The Petions used a multi-level advertising and marketing (“MLM”) construction to boost crypto property price greater than $650 million from over 200,000 buyers in america and overseas, together with many within the Haitian-American neighborhood.
Like several MLM Ponzi scheme, major recipients of funds invested into NovaTech FX have been the house owners.
The Petions misappropriated investor property for unauthorized functions, together with transferring thousands and thousands of {dollars} of commingled investor property to themselves.
No less than $4.3 million in crypto property have been transferred from NovaTech into accounts or wallets owned and/or managed by Cynthia Petion, and a minimum of $1.5 million in crypto property have been transferred from NovaTech into accounts identified to be owned and/or managed by Eddy Petion.
As well as, NovaTech transferred an extra roughly $35.2 million in crypto property from wallets during which it aggregated investor property to accounts or wallets that, on info and perception, have been owned and/or managed by Eddy Petion.
Prime promoters, together with these sued by the SEC, have been subsequent in line.
On info and perception, [the Petions] additionally used investor funds to make funds to current buyers and fee
funds to promoters.Defendants Zizi, Corbett, Sampson, Dunbar, Garofano, and Hadley (collectively, the “Promoter Defendants”) have been instrumental in providing, advertising and marketing, and distributing the NovaTech funding.
The Promoter Defendants held themselves out as “leaders” and rose to the very best ranks of NovaTech’s MLM program.
They did so by recruiting, growing, and sustaining a large community of “downline” buyers, a lot of whom turned recruiters themselves and introduced in further buyers.
The Promoter Defendants obtained substantial fee funds from NovaTech for recruiting buyers into their downlines.
As NovaTech started to break down in direction of early 2022, regulatory warnings from Canada and the US started rolling in.
Sure Promoter Defendants—Zizi, Corbett, Dunbar, and Sampson—turned conscious of actions in opposition to NovaTech by regulators in america and Canada, buyers experiencing withdrawal delays, NovaTech suspending withdrawals, and different purple flags that raised questions in regards to the legitimacy of NovaTech and the legality of its providing and promoting actions.
However, these Promoter Defendants continued to advertise NovaTech, recruit buyers, and function their MLM networks within the face of those purple flags. In addition they actively downplayed the purple flags to potential buyers and downline promoters.
With respect to the person NovaTech FX defendants;
NovaTech FX was run by co-founders Cynthia Petion (CEO) and Eddie Petion (COO).
The Petions launched NovaTech in 2019 following the collapse of AWS Mining, an MLM Ponzi Cynthia Petion claims she stole over $3 million by means of.
The SEC believes the Petions are hiding in Panama. That is in step with the findings of the New York Lawyer Common’s Workplace, who individually sued the Petions in June.
Of stories to me is defendants Martin Zizi Dapilini Dunbar allegedly visiting the Petions in Panama in early 2023.
In April 2023, Zizi and Dunbar attended Cynthia Petion’s celebration in Panama, and earlier than that, in or round February 2023, Dunbar visited the Petions at their residence in Panama.
To one of the best of my information neither Zizi or Dunbar have ever publicly confirmed the Petions are hiding out in Panama.
Jean Martin Zizi is a NovaTech FX promoter from Georgia.
Defendant Martin Zizi is a resident of Kennesaw, Georgia.
He was the primary NovaTech promoter to attain the rank of Two Star Ambassador, the very best promoter rank inside NovaTech’s MLM program. He additionally based probably the most profitable NovaTech promotional teams: Group Trinity of Success Membership.
Zizi primarily focused the Haitian-American neighborhood for NovaTech FX recruitment. Previous to NovaTech FX, Zizi was additionally an AWS Mining and Zeek Rewards Ponzi promoter.
The SEC alleges Zizi was conscious of regulatory fraud warnings in opposition to NovaTech FX, from Canada and California, “across the time they have been issued”.
Regardless of serving in a job the place he suggested buyers and potential buyers in regards to the deserves of the NovaTech funding, Zizi didn’t adequately examine these purple flags.
In regard to the Canadian province fraud warnings and California Order, for instance, Zizi did nothing greater than take Cynthia Petion at her phrase that “authorized is on high of it.”
Zizi even went as far as to publicly try to discredit and undermine NovaTech FX’s regulatory fraud warnings.
In a WhatsApp chat with a gaggle of high-level NovaTech promoters (who additionally have been buyers), Zizi despatched a message on or about November 27, 2022 that discredited the California Order on the premise that it was unsigned.
Zizi additionally testified that, on unspecified dates, he informed California buyers to avoid the California Order by forming a Wyoming restricted legal responsibility firm and opening an account in that entity’s title.
The SEC framez Zizi’s continued promotion of NovaTech FX, regardless of the apparent warning indicators he was conscious of, as “negligence”.
Zizi had monetary motivations to disregard the purple flags and proceed to advertise NovaTech. Zizi continued to learn from buyers becoming a member of or reinvesting in NovaTech.
Zizi additionally continued to make withdrawals from NovaTech after changing into conscious of the purple flags by means of a minimum of the start of 2023.
James Corbett is a NovaTech FX promoter from New York.
Defendant James Corbett is a resident of Mastic Seashore, New York. Cynthia Petion referred to him as a “Founding Chief” of NovaTech. He achieved the rank of Two Star Ambassador in NovaTech’s MLM program.
Corbett can also be a former AWS Mining Ponzi promoter. The SEC alleges Corbett’s expertise with AWS Mining’s collapse made him “conscious of the indicators of a fraudulent MLM crypto asset funding program.”
[Corbett] knew that buyers in AWS suffered losses after AWS paused or delayed investor withdrawals and the TSSB issued a cease-and-desist order discovering that AWS violated Texas securities legal guidelines.
Like Zizi, Corbett additionally labored to discredit and undermine fraud warnings in opposition to NovaTech FX.
As early as August 2020, for instance, Corbett was conscious of social media posts within the MLM area accusing NovaTech of being a rip-off or Ponzi scheme, which he affirmatively tried to refute by means of his personal feedback and posts on-line.
For instance, on or round August 25, 2020, Corbett posted a remark to a web based article revealed on BehindMLM.com, a web site that purports to be a “useful resource to folks curious in regards to the MLM business and the businesses that exist inside it.”
In response to different posts and feedback to the article that questioned the legitimacy of NovaTech, Corbett wrote:
Just like the opinion editor and Not an actual reporter you give us your opinion with out speaking to whom your [sic] bashing. I do know for a reality you probably did Bias analysis on Nova.
Inform me what slim [sic] gave you your data? I used to be in AWS for 3 years and may guarantee everybody Cynthia was NEVER a [sic] proprietor. All she ever did is attempt to assist everybody.
Nova tech was developed to clear Cynthia’s title. I can let you know this she’s going to cease at nothing to show you fallacious. As for the slime who paid you to put up this FALSE analysis, I believe he misplaced cash (who hasn’t misplaced cash?)….
Sincerely James Corbett Servant chief.
Corbett had earlier claimed BehindMLM’s analysis and reporting into NovaTech was “incorrect and its you who ought to be investigated.”
As one other instance, in January 2021, Corbett obtained an e mail from a potential investor asking:
“[h]ow do we all know that actual buying and selling takes place and this isn’t only a Ponzi utilizing new cash to pay outdated?”
Corbett testified that this was a query he heard “fairly incessantly” whereas selling NovaTech.
An interview Corbett did with Brandon over on the Ponzi Patrol YouTube channel can also be cited.
[Corbett’s] statements created the false and deceptive impression that NovaTech was a reputable funding program and that the problems it confronted would go and/or not forestall buyers from recouping their investments.
And he made these statements regardless of being conscious of the purple flags, appearing as an unregistered dealer to buyers, and holding himself out to buyers as having a particular relationship and entry to NovaTech and its founders and particular perception into and information of NovaTech’s operations.
Put collectively, the SEC claims Corbett did not act on NovaTech FX’s evident “purple flags”.
The purple flags … put Corbett on discover that NovaTech was not a reputable funding program, was defrauding buyers, and/or was making false or deceptive statements or omissions to buyers.
Regardless of serving in a job the place he suggested buyers and potential buyers in regards to the deserves of the NovaTech funding and holding himself out as having particular information and perception into NovaTech, Corbett did nothing to independently examine these purple flags or allegations levied in opposition to NovaTech.
For instance, Corbett testified that he commonly requested Cynthia Petion for added details about NovaTech’s buying and selling, together with as early as January 2021, however she refused to offer it.
He additionally testified that he did nothing to research the California Order other than asking Cynthia Petion about it, who merely informed him the Order was not ultimate and had not been served on NovaTech but.
He didn’t even trouble to go looking on-line for the Order.
Properly after studying of those purple flags, Corbett continued to advertise and solicit buyers for NovaTech by means of a minimum of Could 2023.
He additionally continued to help NovaTech within the face of purple flags indicating that it was not working as a reputable funding program.
Corbett testifying earlier than the SEC suggests he’s cooperating.
Corrie Sampson is one other NovaTech FX promoter from Georgia.
Defendant Corrie Sampson is a resident of Fairburn, Georgia.
She was a Two Star Ambassador in NovaTech’s MLM program. She cofounded probably the most profitable NovaTech promotional teams: Group Diamond.
As of January 2023, Group Diamond had over 50,000 members who have been buyers in NovaTech.
Dapilinu Dunbar (aka Dap Dunbar) is a NovaTech FX promoter from Florida.
Defendant Dapilinu Dunbar is a resident of Miami, Florida. He was a One Star Ambassador in NovaTech’s MLM program, the second highest rank behind Two Star Ambassador.
He was probably the most prolific promoters for NovaTech. He was a member of Group Diamond, the place he typically collaborated with Sampson and Hadley to market and promote NovaTech to buyers and potential buyers.
The SEC moreover claims Dubar “has promoted and/or been concerned in a minimum of 30 different community advertising and marketing companies that target crypto property”.
Though the SEC doesn’t make clear, most, if not all, of the “community advertising and marketing companies” Dunbar promotes are MLM crypto Ponzis.
Each Sampson and Dunbar have been subpoenaed by the SEC within the lead as much as their lawsuit again in June 2023.
Dunbar testified earlier than the SEC
that he knew, primarily based on his expertise with different failed crypto and MLM packages, that one signal that an MLM and/or crypto firm is on the snapping point is when the corporate stops paying out as typically because it beforehand did.
Dunbar and Sampson each testified they did nothing to “examine” NovaTech FX’s many purple flags.
Regardless of serving in a job the place they suggested buyers and potential buyers in regards to the deserves of the NovaTech funding, Sampson and Dunbar did nothing to independently examine these purple flags.
Sampson even testified that she took no steps to find out whether or not the California Order was reputable.
Dunbar and Sampson continued to advertise and solicit buyers for NovaTech effectively after changing into conscious of the purple flags.
Dunbar and Sampson as an alternative got here up with misinformation to elucidate away NovaTech FX’s purple flags.
In a video presentation hosted by Sampson and posted to the Group Diamond Telegram channel on or about Could 20, 2023, Dunbar said:
[W]e allowed an individual, not a state . . . an individual who filed a stop and chorus that meant diddlysquat to scare lots of of 1000’s of individuals into considering NovaTech was going away as a result of they obtained a stop and chorus in California.
By no means obtained signed by anybody in California.5 It was such as you going and placing a restraining order on somebody by submitting documentation and paying $89.
On the finish of Dunbar’s rant in search of to discredit the California Order, Sampson said her settlement with Dunbar’s description of the California Order.
She did so in her trusted place because the cofounder and chief of Group Diamond, to whom Dunbar directed his feedback.
Past California;
Dunbar and Sampson additionally discouraged buyers from contacting regulators or authorities authorities about NovaTech.
In a video posted to his Vimeo channel in Could 2023 (which additionally turned obtainable on YouTube), Dunbar said:
Let me let you know guys, a few of you saying, “I’m gonna name the SEC, I’m gonna name the CFTC.” Go forward and name and see if everyone doesn’t lose their cash.
No establishment larger up needs to see folks win. We have now to guard what now we have and we do this by being affected person.
In a YouTube dwell stream interview on Could 16, 2023 that obtained over 9,000 views, Dunbar admonished involved buyers: “[t]he extra negativity you place on the market, the extra in danger our funds are.”
Throughout a name with the investor in January 2023, the investor requested Sampson if they may share her contact info with the SEC.
Sampson refused and responded:
“[w]hy would you do this? Why would you share our info with a authorities company?
Since you haven’t been capable of get your withdrawals? Identical to others haven’t been capable of get their withdrawals? Are you doing it out of spite? Out of spite?”
However whereas Dunbar and Sampson continued to mislead and deceive NovaTech FX buyers because the Ponzi scheme collapsed;
Regardless of advising buyers to “simply cling in there,” Sampson privately started withdrawing closely from NovaTech beginning on January 2, 2023, and persevering with by means of March 2023, throughout which period she finally withdrew almost $1 million in crypto property from NovaTech.
Likewise, Dunbar continued to withdraw from NovaTech till as late as March or April 2023.
John Garofano (proper) is one other NovaTech FX promoter from Florida.
Defendant John Garofano is a resident of Brooksville, Florida. He was a Two Star Ambassador in NovaTech’s MLM program.
Corbett initially recruited Garofano to take a position and take part in NovaTech and its MLM program, and the 2 typically labored collectively to market and promote NovaTech to buyers and potential buyers.
Garofano can also be a former AWS Mining Ponzi promoter.
Marsha Hadley is a NovaTech FX promoter from California.
Defendant Marsha Hadley is a resident of Murrietta, California. She was a One Star Ambassador in NovaTech’s MLM program.
Hadley and Sampson cofounded Group Diamond.
NovaTech FX’s pitch was easy. NovaTech FX and its promoters solicited funding on the promise of a weekly passive return.
ROI income was represented to be generated through “PAMM account” buying and selling, which after all was a load of baloney.
Information from NovaTech’s identified buying and selling platforms present that merchants and accounts related to NovaTech misplaced roughly $18 million in buying and selling these property in the course of the Related Interval.
If truth be told, NovaTech FX’s weekly return wasn’t pegged to something. Cynthia Petion made it up every week.
The only real enter into the accounting system for the reported buying and selling earnings/ROI was offered manually by Cynthia Petion on a weekly foundation.
Particularly, Cynthia Petion manually entered the weekly efficiency proportion within the again workplace and would then “run” the software program code that might use such manually entered proportion to generate every investor’s weekly revenue and commissions quantities and put up these quantities to every investor’s again workplace account.
This seems to have been confirmed by Martin Zizi, who seem to, a minimum of on some stage, be cooperating with the SEC.
Zizi testified that Cynthia Petion informed him that there have been instances when NovaTech was not worthwhile, and that when reporting buying and selling outcomes, she used earnings from different worthwhile weeks to keep away from reporting a loss or decrease revenue within the weekly ROI figures.
“Revenue” in NovaTech FX was new funding for the week versus withdrawals.
Moreover with respect to regulation, NovaTech FX’s passive returns funding scheme constituted a securities providing.
As famous by the SEC;
In a slide deck dated October 2021 that was posted to the again workplace—which Cynthia Petion drafted and Eddy Petion reviewed and took part in drafting—NovaTech said that it was a “[l]egally registered hedge fund.”
On July 15, 2022, NovaTech repeated this assertion in a put up revealed to buyers on its Telegram channel, which the Petions managed.
In a March 25, 2020 WhatsApp message to potential buyers, Cynthia Petion said that “[w]e are registered in USA as a hedge fund and cash administration firm.”
Eddy Petion despatched this identical message to potential buyers through WhatsApp on March 25, 2020.
In a Zoom presentation on Could 4, 2022, meant for potential buyers and posted on YouTube, Cynthia Petion said that, “[i]n america, we’re registered as a hedge fund firm.”
In a March 26, 2020 WhatsApp message to potential buyers, Cynthia Petion represented that “[w]e are registered Brokers” at NovaTech.
Because the Petions and NovaTech knew, or have been severely reckless in not understanding, these statements have been false on the time they have been made.
Neither NovaTech nor the Petions have been registered with the SEC or with any regulatory authority in america as a “hedge fund,” “cash administration firm,” funding adviser, dealer, or seller.
At a minimal, these statements have been extremely deceptive, as a result of they created the misunderstanding that NovaTech was a reputable monetary companies firm that operated in compliance with U.S. legal guidelines and laws and underneath the oversight of U.S. regulators, when in actual fact, it operated as an unregistered entity and a fraudulent crypto buying and selling funding and pyramid scheme.
An enormous a part of NovaTech FX was spiritual affinity fraud.
When the Petions and sure Promoter Defendants solicited buyers, they incessantly employed spiritual overtones, appealed to the monetary freedom and independence purportedly attained by investing in crypto property and taking part in MLM packages, and focused sure affinity teams, particularly the Haitian-American neighborhood.
To that finish, Cynthia Petion ran round proclaiming herself to be “The Reverend CEO”.
In an interview posted to YouTube on October 6, 2022, Cynthia Petion described her founding of NovaTech as “God’s imaginative and prescient.”
In one other video during which Cynthia Petion educated promoters on methods to current NovaTech to potential buyers, which was posted to YouTube on Could 4, 2022, Cynthia Petion said: “Jesus was one of the best affiliate marketer on this planet.”
Martin Zizi additionally leaned closely into faith to recruit Haitian-People into NovaTech FX.
In a video presentation posted to YouTube and dated January 21, 2022, Zizi informed buyers and potential buyers that the Petions are “the those who God g[a]ve the imaginative and prescient to start out this firm.”
Throughout that presentation, he additional suggested:
And it’s very troublesome to decide to take somewhat little bit of your hard-earned cash, and for this reason I make you comfy in a way that with NovaTech, there are completely different ranges.
And Pastor Bob simply reveals you that you would begin as little as $500 all the best way right down to 1,000,000 bucks. It’s primarily based on the place you might be at and the way comfy you might be.
Now, we do know there are some persons are going by means of some monetary battle that in all probability misplaced their job in the course of the pandemic and are in search of a stable means to enhance their monetary wellbeing.
Based mostly on our expertise with the house owners of the corporate and with the robots who’s been blessing us for the previous 28 happening 29 months, we really feel comfy presenting this challenge as a means that may change our lives.
One particular person conspicuously absent from the SEC’s lawsuit is Cynthia Petions’ relative and NovaTech FX’s CTO, Ricardo Roy Jr.
To save lots of his personal pores and skin, Roy Jr. has been cooperating with the SEC.
The Petions didn’t present the SEC entry to NovaTech’s inside data in the course of the SEC’s investigation that preceded the submitting of this Grievance. As a substitute, the Petions and NovaTech ignored the SEC’s investigative subpoenas and failed to provide any paperwork or present testimony in response to these subpoenas.
However, the SEC obtained substantial proof regarding NovaTech’s crypto asset transactions and buying and selling, together with however not restricted to public blockchain knowledge, Fee Processor knowledge, different knowledge from varied crypto asset exchanges, and paperwork and data obtained from NovaTech’s former Chief Know-how Officer.
The precise nature of Roy Jr.’s involvement within the SEC investigation and what meaning for him as a possible defendant is unclear at time of publication.
Throughout seven claims of reduction, the SEC has sued the NovaTech FX defendants for
- violations of Part 17(a)(1) of the Securities Act (Novatech FX, the Petions, Corbett, Dunbar and Sampson);
- violations of Part 17(a)(2) of the Securities Act (NovaTech FX, the Petions and Zizi);
- violations of Part 17(a)(3) of the Securities Act (Novatech FX, the Petions, Zizi, Corbett, Dunbar and Sampson);
- violations of Part 10(b) of the Trade Act (NovaTech FX, the Petions, Corbett, Dunbar and Sampson);
- violations of Part 10(b) of the Trade Act (NovaTech FX and the Petions);
- providing unregistered securities in violation of Sections 5(a) and 5(c) of the Securities Act (all defendants);
- working as an unregistered dealer in violation of Part 15(a) of the Trade Act (all NovaTech FX promoter defendants);
The SEC is in search of everlasting injunctions in opposition to the NovaTech FX defendants, in addition to disgorgement of ill-gotten good points and cost of a civil penalty.
An August twelfth press-release from the SEC confirms that Martin Zizi has already partially settled.
Zizi has consented to a $100,000 civil penalty and everlasting injunction. Disgorgement doesn’t look like a part of the settlement, that means it has but to be decided.
Keep tuned for updates as BehindMLM continues to trace the SEC’s NovaTech FX case.