Led by lawyers in its Fort Worth office, the U.S. Securities and Exchange Commission brought charges Monday against the owners, employees and promoters of a $650 million crypto asset company that the federal agency claims was actually a multi-level marketing scheme that defrauded more than 200,000 investors, including many in Texas.
In a 55-page federal complaint filed in the Southern District of Florida, the SEC accuses a Florida couple — Cynthia and Eddy Petion — the company that they founded, NovaTech Ltd., and a half-dozen other defendants who promoted the investments with seven counts of violating federal securities laws by “marketing the NovaTech investment to investors who were inexperienced in crypto assets and who wanted to participate in the crypto markets.”
The scheme, which operated from 2019 to 2023, targeted the Haitian-American community. The defendants, according to the SEC, lured investors through claims that NovaTech would invest their funds in crypto asset and foreign exchange markets.
Cynthia Petion assured investors that their investments would be safe and promised that they would “profit from day one, because again you have access to that capital.”
The lawsuit led by SEC trial lawyer Pat Disbennett of the Fort Worth Regional Office claims that the defendants, who mostly operated in Florida, made solicitations through its public website, social media and network of promoters.
Disbennett, who is a former partner at Lynn Pinker Hurst & Schwegmann and joined the SEC a year ago, wrote in the complaint that NovaTech “made a barrage of false and misleading statements,” including a commitment to pay profits to investors from this trading activity on a weekly basis and reported average returns of 2 percent or more each week.
“In reality, 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,” the SEC complaint states. “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 Petions misappropriated investor assets for unauthorized purposes, including transferring millions of dollars of commingled investor assets to themselves,” the SEC claims. “On information and belief, they also used investor funds to make payments to existing investors and commission payments to promoters.”
The SEC alleges that the scheme collapsed around May 2023 after “investors experienced withdrawal delays and regulators in several U.S. states and Canadian provinces took action against, or issued fraud warnings about, NovaTech and the Petions.”
In court documents, the SEC states that the Petions lived in Florida but are now living in Panama.
“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. “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’s complaint alleges that NovaTech’s top promoters, Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano and Marsha Hadley, each recruited a wide network of investors and promoters even though they “became aware of certain red flags about NovaTech, including regulatory actions taken against it by U.S. and Canadian regulators, they continued recruiting investors and downplayed the red flags.”
The defense lawyers include Dwight E. Jefferson of Grealish & McZeal in Houston representing Dunbar and Sampson, Alina Veneziano of Oberheiden PC in Houston advising Garofano, David R. Chase of Fort Lauderdale representing Zizi, and William Grausso of Bohemia, New York, counseling Corbett.
The SEC’s investigation was conducted by Catherine Rowsey, Todd Baker and Jamie Haussecker of the Fort Worth Regional Office, with assistance from Sejal Bhakta of the Crypto Assets and Cyber Unit, under the supervision of Nikolay Vydashenko and B. David Fraser.
The case is Securities and Exchange Commission v. Nova Tech LTD, SDFL, No. 24-cv-23058.