Title: SEC Charges NovaTech Ltd. and Individuals in $650 Million Crypto Asset Fraud Scheme

The Securities and Exchange Commission (SEC) has taken legal action against NovaTech Ltd. and its founders, Cynthia and Eddy Petion, for allegedly orchestrating a fraudulent scheme that generated over $650 million in crypto assets from more than 200,000 investors worldwide. The SEC also charged several individuals, including Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley, for their roles in promoting NovaTech to investors.

According to the SEC's complaint, NovaTech operated as a multi-level marketing (MLM) and crypto asset investment program from 2019 to 2023. Investors were enticed by promises of their funds being invested in the crypto asset and foreign exchange markets. Cynthia Petion reassured investors that their investments would be safe, stating that they would be in profit from day one. However, it is alleged that NovaTech primarily used investor funds to pay existing investors and commissions to promoters, with only a fraction actually being used for trading.

The SEC further claims that the Petions diverted millions of dollars of investor assets for their personal benefit. When NovaTech eventually collapsed, the majority of investors were unable to withdraw their investments, resulting in significant losses. Eric Werner, Director of the SEC's Fort Worth Regional Office, described the scheme as causing "untold losses to tens of thousands of victims around the world."

The SEC's complaint also accuses top promoters of NovaTech, including Zizi, Dunbar, Corbett, Sampson, Garofano, and Hadley, of recruiting a vast network of investors and promoters. These promoters were rewarded with substantial commissions for the investors they brought in. Despite being aware of red flags, such as regulatory actions taken against NovaTech, some of these promoters continued to recruit investors and downplayed the concerns.

The SEC's complaint, filed in the U.S. District Court for the Southern District of Florida, charges NovaTech, the Petions, Zizi, Dunbar, Corbett, and Sampson with violating federal securities laws. All defendants are also charged with registration violations. The SEC seeks permanent injunctive relief, disgorgement of ill-gotten gains, and civil penalties.

Martin Zizi has agreed to partially settle the SEC's charges by consenting to a $100,000 civil penalty and a permanent injunction against future violations of the charges, with additional monetary remedies yet to be determined, subject to court approval.

The SEC's investigation involved the assistance of various entities, including the Office of the New York Attorney General's Investor Protection Bureau, the California Department of Financial Protection and Innovation, the British Columbia Securities Commission, and the Ontario Securities Commission.

In light of this case, the SEC's Office of Investor Education and Advocacy and the Division of Enforcement's Retail Strategy Task Force have issued multiple investor alerts, including those on fraudulent digital asset and crypto trading websites, affinity fraud, crypto scams, and pyramid schemes posing as MLM programs. Investors are encouraged to exercise caution and familiarize themselves with the warning signs of fraud, which can be found at Investor.gov.

The charges brought against NovaTech Ltd. and the individuals involved highlight the SEC's commitment to holding accountable not only the masterminds behind large-scale fraudulent schemes but also the promoters who facilitate the spread of such fraud by unlawfully soliciting victims. The case serves as a reminder for investors to be cautious and conduct thorough due diligence before engaging in crypto asset investments or MLM programs.