SEC sues NovaTech for $650 million fraud
The SEC claims the Petions misled investors about the safety and profitability of their investments, used new funds to repay earlier investors and pay commissions, and siphoned off millions for personal use.
The US Securities and Exchange Commission (SEC) has filed a lawsuit against cryptocurrency company NovaTech and its founders, Cynthia and Eddy Petion, accusing them of fraudulently raising over $650 million from investors worldwide. The SEC claims that the Petions assured investors their funds would be secure, with promises of profits from the outset. However, the lawsuit alleges that the couple used new investments to pay off earlier investors and commissions to promoters while diverting millions for personal use. The scheme reportedly continued for four years until NovaTech collapsed in May 2023.
The legal dispute follows a separate lawsuit by New York Attorney General Letitia James in Manhattan, where the fraud was estimated to exceed $1 billion. Both regulators have labelled the operation a pyramid scheme, noting that NovaTech enticed victims through religious appeals on social media, often using platforms like Telegram and WhatsApp to target Haitian-American communities. Cynthia Petion was known to portray herself as the ‘Reverend CEO,’ suggesting NovaTech was part of a divine plan.
The SEC has also charged six NovaTech promoters with fraud, accusing them of continuing to recruit investors despite numerous warning signs, such as delayed withdrawals and regulatory actions in the US and Canada. One promoter, Martin Zizi, has agreed to pay a $100,000 civil fine, though his legal representation has not commented.
The lawsuits in Miami and New York seek restitution for the defrauded investors and civil penalties. The Petions, believed to reside in Panama, have yet to be located for comment, and no legal representatives have been identified. Both cases highlight the significant legal challenges NovaTech faces as authorities seek accountability for the alleged misconduct.
The SEC’s case against NovaTech is being heard in the US District Court for the Southern District of Florida. The lawsuits aim to recover losses for investors and impose financial penalties on those involved in the fraudulent scheme.
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