The SEC has filed suit against NovaTech FX’s founders and several top promoters.

As per the federal regulator’s August 12th filed lawsuit, Cynthia and Eddie Petion ran a $650 million plus Ponzi scheme.

In addition to NovaTech FX’s Petion co-founders, the SEC has also sued promoters Martin Zizi, Dapilini Dunbar, James Corbett, Corrie Sampson, John Garofano and Marsha Hadley.

The SEC identifies NovaTech FX as a “fraudulent crypto trading investment and pyramid scheme”.

From June 2019 to approximately May 2023, Cynthia Petion and Eddy Petion operated a fraudulent crypto trading investment and pyramid scheme primarily through NovaTech, a company registered in St. Vincent and the Grenadines.

NovaTech appears to have traded only a small fraction of investor assets, it suffered significant trading losses, and it had no other known sources of revenues besides investor deposits.

In other words, NovaTech was a pyramid scheme that depended on the recruitment of new investors or new investments from existing investors to fund its enterprise.

The SEC’s findings track with BehindMLM’s NovaTech FX review, published back in August 2019.

The Petions used a multi-level marketing (“MLM”) structure to raise crypto assets worth more than $650 million from over 200,000 investors in the United States and abroad, including many in the Haitian-American community.

Like any MLM Ponzi scheme, primary recipients of funds invested into NovaTech FX were the owners.

The Petions misappropriated investor assets for unauthorized purposes, including transferring millions of dollars of commingled investor assets to themselves.

At least $4.3 million in crypto assets were transferred from NovaTech into accounts or wallets owned and/or controlled by Cynthia Petion, and at least $1.5 million in crypto assets were transferred from NovaTech into accounts known to be owned and/or controlled by Eddy Petion.

In addition, NovaTech transferred an additional approximately $35.2 million in crypto assets from wallets in which it aggregated investor assets to accounts or wallets that, on information and belief, were owned and/or controlled by Eddy Petion.

Top promoters, including those sued by the SEC, were next in line.

On information and belief, [the Petions] also used investor funds to make payments to existing investors and commission
payments to promoters.

Defendants Zizi, Corbett, Sampson, Dunbar, Garofano, and Hadley (collectively, the “Promoter Defendants”) were instrumental in offering, marketing, and distributing the NovaTech investment.

The Promoter Defendants held themselves out as “leaders” and rose to the highest ranks of NovaTech’s MLM program.

They did so by recruiting, developing, and maintaining a wide network of “downline” investors, many of whom became recruiters themselves and brought in additional investors.

The Promoter Defendants received substantial commission payments from NovaTech for recruiting investors into their downlines.

As NovaTech began to collapse towards early 2022, regulatory warnings from Canada and the US began rolling in.

Certain Promoter Defendants—Zizi, Corbett, Dunbar, and Sampson—became aware of actions against NovaTech by regulators in the United States and Canada, investors experiencing withdrawal delays, NovaTech suspending withdrawals, and other red flags that raised questions about the legitimacy of NovaTech and the legality of its offering and selling activities.

Nevertheless, these Promoter Defendants continued to promote NovaTech, recruit investors, and operate their MLM networks in the face of these red flags. They also actively downplayed the red flags to prospective investors and downline promoters.

With respect to the individual 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 through.

The SEC believes the Petions are hiding in Panama. This is in line with the findings of the New York Attorney General’s Office, who separately sued the Petions in June.

Of news 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 birthday party in Panama, and before that, in or around February 2023, Dunbar visited the Petions at their residence in Panama.

To the best of my knowledge 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 first NovaTech promoter to achieve the rank of Two Star Ambassador, the highest promoter rank within NovaTech’s MLM program. He also founded one of the most successful NovaTech promotional groups: Team Trinity of Success Club.

Zizi primarily targeted the Haitian-American community for NovaTech FX recruitment. Prior to NovaTech FX, Zizi was also an AWS Mining and Zeek Rewards Ponzi promoter.

The SEC alleges Zizi was aware of regulatory fraud warnings against NovaTech FX, from Canada and California, “around the time they were issued”.

Despite serving in a role where he advised investors and prospective investors about the merits of the NovaTech investment, Zizi did not adequately investigate these red flags.

In regard to the Canadian province fraud warnings and California Order, for example, Zizi did nothing more than take Cynthia Petion at her word that “legal is on top of it.”

Zizi even went so far as to publicly attempt to discredit and undermine NovaTech FX’s regulatory fraud warnings.

In a WhatsApp chat with a group of high-level NovaTech promoters (who also were investors), Zizi sent a message on or about November 27, 2022 that discredited the California Order on the basis that it was unsigned.

Zizi also testified that, on unspecified dates, he told California investors to circumvent the California Order by forming a Wyoming limited liability company and opening an account in that entity’s name.

The SEC framez Zizi’s continued promotion of NovaTech FX, despite the obvious warning signs he was aware of, as “negligence”.

Zizi had financial motivations to ignore the red flags and continue to promote NovaTech. Zizi continued to benefit from investors joining or reinvesting in NovaTech.

Zizi also continued to make withdrawals from NovaTech after becoming aware of the red flags through at least the beginning of 2023.

James Corbett is a NovaTech FX promoter from New York.

Defendant James Corbett is a resident of Mastic Beach, New York. Cynthia Petion referred to him as a “Founding Leader” of NovaTech. He achieved the rank of Two Star Ambassador in NovaTech’s MLM program.

Corbett is also a former AWS Mining Ponzi promoter. The SEC alleges Corbett’s experience with AWS Mining’s collapse made him “aware of the signs of a fraudulent MLM crypto asset investment program.”

[Corbett] knew that investors in AWS suffered losses after AWS paused or delayed investor withdrawals and the TSSB issued a cease-and-desist order finding that AWS violated Texas securities laws.

Like Zizi, Corbett also worked to discredit and undermine fraud warnings against NovaTech FX.

As early as August 2020, for example, Corbett was aware of social media posts in the MLM space accusing NovaTech of being a scam or Ponzi scheme, which he affirmatively attempted to refute through his own comments and posts online.

For example, on or around August 25, 2020, Corbett posted a comment to an online article published on BehindMLM.com, a website that purports to be a “resource to people curious about the MLM industry and the companies that exist within it.”

In response to other posts and comments to the article that questioned the legitimacy of NovaTech, Corbett wrote:

Like the opinion editor and Not a real reporter you give us your opinion without talking to whom your [sic] bashing. I know for a fact you did Bias research on Nova.

Tell me what slim [sic] gave you your info? I was in AWS for 3 years and can assure everyone Cynthia was NEVER a [sic] owner. All she ever did is try and help everyone.

Nova tech was developed to clear Cynthia’s name. I can tell you this she will stop at nothing to prove you wrong. As for the slime who paid you to post this FALSE evaluation, I suspect he lost money (who hasn’t lost money?)….

Sincerely James Corbett Servant leader.

Corbett had earlier claimed BehindMLM’s research and reporting into NovaTech was “incorrect and its you who should be investigated.”

As another example, in January 2021, Corbett received an email from a prospective investor asking:

“[h]ow do we know that real trading takes place and this is not just a Ponzi using new money to pay old?”

Corbett testified that this was a question he heard “quite frequently” while promoting NovaTech.

An interview Corbett did with Brandon over at the Ponzi Patrol YouTube channel is also cited.

[Corbett’s] statements created the false and misleading impression that NovaTech was a legitimate investment program and that the issues it faced would pass and/or not prevent investors from recouping their investments.

And he made these statements despite being aware of the red flags, acting as an unregistered broker to investors, and holding himself out to investors as having a special relationship and access to NovaTech and its founders and special insight into and knowledge of NovaTech’s operations.

Put together, the SEC claims Corbett failed to act on NovaTech FX’s evident “red flags”.

The red flags … put Corbett on notice that NovaTech was not a legitimate investment program, was defrauding investors, and/or was making false or misleading statements or omissions to investors.

Despite serving in a role where he advised investors and prospective investors about the merits of the NovaTech investment and holding himself out as having special knowledge and insight into NovaTech, Corbett did nothing to independently investigate these red flags or allegations levied against NovaTech.

For example, Corbett testified that he regularly asked Cynthia Petion for additional information about NovaTech’s trading, including as early as January 2021, but she refused to provide it.

He also testified that he did nothing to investigate the California Order aside from asking Cynthia Petion about it, who merely told him the Order was not final and had not been served on NovaTech yet.

He did not even bother to search online for the Order.

Well after learning of these red flags, Corbett continued to promote and solicit investors for NovaTech through at least May 2023.

He also continued to support NovaTech in the face of red flags indicating that it was not operating as a legitimate investment program.

Corbett testifying before the SEC suggests he is cooperating.

Corrie Sampson is another 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 one of the most successful NovaTech promotional groups: Team Diamond.

As of January 2023, Team Diamond had over 50,000 members who were investors 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 one of the most prolific promoters for NovaTech. He was a member of Team Diamond, where he often collaborated with Sampson and Hadley to market and promote NovaTech to investors and prospective investors.

The SEC additionally claims Dubar “has promoted and/or been involved in at least 30 other network marketing businesses that focus on crypto assets”.

Although the SEC doesn’t clarify, most, if not all, of the “network marketing businesses” Dunbar promotes are MLM crypto Ponzis.

Both Sampson and Dunbar were subpoenaed by the SEC in the lead up to their lawsuit back in June 2023.

Dunbar testified before the SEC

that he knew, based on his experience with other failed crypto and MLM programs, that one sign that an MLM and/or crypto company is on the verge of collapse is when the company stops paying out as often as it previously did.

Dunbar and Sampson both testified they did nothing to “investigate” NovaTech FX’s many red flags.

Despite serving in a role where they advised investors and prospective investors about the merits of the NovaTech investment, Sampson and Dunbar did nothing to independently investigate these red flags.

Sampson even testified that she took no steps to determine whether the California Order was legitimate.

Dunbar and Sampson continued to promote and solicit investors for NovaTech well after becoming aware of the red flags.

Dunbar and Sampson instead came up with misinformation to explain away NovaTech FX’s red flags.

In a video presentation hosted by Sampson and posted to the Team Diamond Telegram channel on or about May 20, 2023, Dunbar stated:

[W]e allowed a person, not a state . . . a person who filed a cease and refrain that meant diddlysquat to scare hundreds of thousands of people into thinking NovaTech was going away because they got a cease and refrain in California.

Never got signed by anyone in California.5 It was like you going and putting a restraining order on someone by filing documentation and paying $89.

At the end of Dunbar’s rant seeking to discredit the California Order, Sampson stated her agreement with Dunbar’s description of the California Order.

She did so in her trusted position as the cofounder and leader of Team Diamond, to whom Dunbar directed his comments.

Beyond California;

Dunbar and Sampson also discouraged investors from contacting regulators or government authorities about NovaTech.

In a video posted to his Vimeo channel in May 2023 (which also became available on YouTube), Dunbar stated:

Let me tell you guys, some of you saying, “I’m gonna call the SEC, I’m gonna call the CFTC.” Go ahead and call and see if everybody doesn’t lose their money.

No institution higher up wants to see people win. We have to protect what we have and we do that by being patient.

In a YouTube live stream interview on May 16, 2023 that received over 9,000 views, Dunbar admonished concerned investors: “[t]he more negativity you put out there, the more at risk our funds are.”

During a call with the investor in January 2023, the investor asked Sampson if they could share her contact information with the SEC.

Sampson refused and responded:

“[w]hy would you do that? Why would you share our information with a government agency?

Because you haven’t been able to get your withdrawals? Just like others have not been able to get their withdrawals? Are you doing it out of spite? Out of spite?”

But while Dunbar and Sampson continued to mislead and lie to NovaTech FX investors as the Ponzi scheme collapsed;

Despite advising investors to “just hang in there,” Sampson privately began withdrawing heavily from NovaTech starting on January 2, 2023, and continuing through March 2023, during which time she ultimately withdrew nearly $1 million in crypto assets from NovaTech.

Likewise, Dunbar continued to withdraw from NovaTech until as late as March or April 2023.

John Garofano (right) is another 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 originally recruited Garofano to invest and participate in NovaTech and its MLM program, and the two often worked together to market and promote NovaTech to investors and prospective investors.

Garofano is also a former AWS Mining Ponzi promoter.

Marsha Hadley (right) 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 Team Diamond.

NovaTech FX’s pitch was simple. NovaTech FX and its promoters solicited investment on the promise of a weekly passive return.

ROI revenue was represented to be generated via “PAMM account” trading, which of course was a load of baloney.

Records from NovaTech’s known trading platforms show that traders and accounts associated with NovaTech lost approximately $18 million in trading these assets during the Relevant Period.

In actuality, NovaTech FX’s weekly return wasn’t pegged to anything. Cynthia Petion made it up each week.

The sole input into the accounting system for the reported trading profits/ROI was provided manually by Cynthia Petion on a weekly basis.

Specifically, Cynthia Petion manually entered the weekly performance percentage in the back office and would then “run” the software code that would use such manually entered percentage to generate each investor’s weekly profit and commissions amounts and post those amounts to each investor’s back office account.

This appears to have been confirmed by Martin Zizi, who appear to, at least on some level, be cooperating with the SEC.

Zizi testified that Cynthia Petion told him that there were times when NovaTech was not profitable, and that when reporting trading results, she used profits from other profitable weeks to avoid reporting a loss or lower profit in the weekly ROI figures.

“Profit” in NovaTech FX was new investment for the week versus withdrawals.

Furthermore with respect to regulation, NovaTech FX’s passive returns investment scheme constituted a securities offering.

As noted by the SEC;

In a slide deck dated October 2021 that was posted to the back office—which Cynthia Petion drafted and Eddy Petion reviewed and participated in drafting—NovaTech stated that it was a “[l]egally registered hedge fund.”

On July 15, 2022, NovaTech repeated this statement in a post published to investors on its Telegram channel, which the Petions controlled.

In a March 25, 2020 WhatsApp message to prospective investors, Cynthia Petion stated that “[w]e are registered in USA as a hedge fund and money management company.”

Eddy Petion sent this same message to prospective investors via WhatsApp on March 25, 2020.

In a Zoom presentation on May 4, 2022, intended for prospective investors and posted on YouTube, Cynthia Petion stated that, “[i]n the United States, we’re registered as a hedge fund company.”

In a March 26, 2020 WhatsApp message to prospective investors, Cynthia Petion represented that “[w]e are registered Brokers” at NovaTech.

As the Petions and NovaTech knew, or were severely reckless in not knowing, these statements were false at the time they were made.

Neither NovaTech nor the Petions were registered with the SEC or with any regulatory authority in the United States as a “hedge fund,” “money management company,” investment adviser, broker, or dealer.

At a minimum, these statements were highly misleading, because they created the false impression that NovaTech was a legitimate financial services company that operated in compliance with U.S. laws and regulations and under the oversight of U.S. regulators, when in fact, it operated as an unregistered entity and a fraudulent crypto trading investment and pyramid scheme.

A big part of NovaTech FX was religious affinity fraud.

When the Petions and certain Promoter Defendants solicited investors, they frequently employed religious overtones, appealed to the financial freedom and independence purportedly attained by investing in crypto assets and participating in MLM programs, and targeted certain affinity groups, in particular the Haitian-American community.

To that end, Cynthia Petion ran around 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 vision.”

In another video in which Cynthia Petion trained promoters on how to present NovaTech to prospective investors, which was posted to YouTube on May 4, 2022, Cynthia Petion stated: “Jesus was the best affiliate marketer in the world.”

Martin Zizi also leaned heavily into religion to recruit Haitian-Americans into NovaTech FX.

In a video presentation posted to YouTube and dated January 21, 2022, Zizi told investors and prospective investors that the Petions are “the people that God g[a]ve the vision to start this company.”

During that presentation, he further advised:

And it’s very difficult to make a decision to take a little bit of your hard-earned money, and this is why I make you comfortable in a sense that with NovaTech, there are different levels.

And Pastor Bob just shows you that you could start as low as $500 all the way down to a million bucks. It’s based on where you are at and how comfortable you are.

Now, we do know there are some people are going through some financial struggle that probably lost their job during the pandemic and are looking for a solid way to improve their financial wellbeing.

Based on our experience with the owners of the company and with the robots who’s been blessing us for the past 28 going on 29 months, we feel comfortable presenting this project as a way that will change our lives.

One person conspicuously absent from the SEC’s lawsuit is Cynthia Petions’ relative and NovaTech FX’s CTO, Ricardo Roy Jr.

To save his own skin, Roy Jr. has been cooperating with the SEC.

The Petions did not provide the SEC access to NovaTech’s internal records during the SEC’s investigation that preceded the filing of this Complaint. Instead, the Petions and NovaTech ignored the SEC’s investigative subpoenas and failed to produce any documents or provide testimony in response to those subpoenas.

Nevertheless, the SEC obtained substantial evidence concerning NovaTech’s crypto asset transactions and trading, including but not limited to public blockchain data, Payment Processor data, other data from various crypto asset exchanges, and documents and information obtained from NovaTech’s former Chief Technology Officer.

The exact nature of Roy Jr.’s involvement in the SEC investigation and what that means for him as a potential defendant is unclear at time of publication.

Across seven claims of relief, the SEC has sued the NovaTech FX defendants for

  1. violations of Section 17(a)(1) of the Securities Act (Novatech FX, the Petions, Corbett, Dunbar and Sampson);
  2. violations of Section 17(a)(2) of the Securities Act (NovaTech FX, the Petions and Zizi);
  3. violations of Section 17(a)(3) of the Securities Act (Novatech FX, the Petions, Zizi, Corbett, Dunbar and Sampson);
  4. violations of Section 10(b) of the Exchange Act (NovaTech FX, the Petions, Corbett, Dunbar and Sampson);
  5. violations of Section 10(b) of the Exchange Act (NovaTech FX and the Petions);
  6. offering unregistered securities in violation of Sections 5(a) and 5(c) of the Securities Act (all defendants);
  7. operating as an unregistered broker in violation of Section 15(a) of the Exchange Act (all NovaTech FX promoter defendants);

The SEC is seeking permanent injunctions against the NovaTech FX defendants, as well as disgorgement of ill-gotten gains and payment of a civil penalty.

An August 12th press-release from the SEC confirms that Martin Zizi has already partially settled.

Zizi has consented to a $100,000 civil penalty and permanent injunction. Disgorgement doesn’t appear to be part of the settlement, meaning it has yet to be determined.

Stay tuned for updates as BehindMLM continues to track the SEC’s NovaTech FX case.

 

Update 14th August 2024 – Martin Zizi’s settlement has provided insight into how the SEC intends to handle NovaTech FX victim restitution.