Attorney James previously sued the Petions, among others, for defrauding thousands of investors.
The U.S. Securities and Exchange Commission (SEC) has charged crypto trading platform NovaTech and its top executives in a massive $650 million fraud case. The charges alleged that the company operated a fraudulent scheme, misleading thousands of investors while falsely promising significant returns.
On August 12, the securities watchdog charged NovaTech founders Cynthia and Eddy Petion, their company and promoters Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley for their roles in promoting the company to investors.
The scheme affected over 200,000 investors globally. The U.S. regulator noted that the firm allegedly lured investors and claimed to invest their funds in crypto assets and foreign exchange markets, according to a press release.
“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.
MLM Scheme Promoters
Werner further noted that an MLM scheme of this magnitude needs promoters to fuel it. He said the action against the firm shows a commitment to holding the masterminds behind these large-scale schemes accountable and the promoters who perpetuate the fraud by illegally recruiting victims.
The press release also revealed that the firm allocated most of the investor funds to pay existing investors and cover promoter commissions, while only a small portion was used for actual trading activities.
The SEC charged NovaTech, the Petions, Zizi, Dunbar, Corbett, and Sampson with violating antifraud provisions and all of the defendants with violating registration requirements.
Zizi Agrees to Pay Settlement
The regulator stated that Zizi, Dunbar, Corbett, and Sampson noticed warning signs regarding NovaTech, such as regulatory actions from U.S. and Canadian authorities. However, they chose to downplay these issues and continue recruiting investors.
Zizi agreed to partially settle the SEC’s charges by paying $100,000 without admitting or denying the allegations, according to the statement.
Meanwhile, in June, New York Attorney General Letitia James previously filed a lawsuit against Cynthia Petion, her husband Eddy Petion, and others, accusing them of defrauding thousands of investors.