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The SEC has filed go well with in opposition to NovaTech FX’s founders and several other prime promoters.
As per the federal regulator’s August twelfth filed lawsuit, Cynthia and Eddie Petion ran a $650 million plus Ponzi scheme.
Along with NovaTech FX’s Petion co-founders, the SEC has additionally sued promoters Martin Zizi, Dapilini Dunbar, James Corbett, Corrie Sampson, John Garofano and Marsha Hadley.
The SEC identifies NovaTech FX as a “fraudulent crypto buying and selling funding and pyramid scheme”.
From June 2019 to roughly Might 2023, Cynthia Petion and Eddy Petion operated a fraudulent crypto buying and selling funding and pyramid scheme primarily by means of NovaTech, an organization registered in St. Vincent and the Grenadines.
NovaTech seems to have traded solely a small fraction of investor belongings, it suffered vital buying and selling losses, and it had no different recognized sources of revenues in addition to investor deposits.
In different phrases, NovaTech was a pyramid scheme that trusted the recruitment of latest traders or new investments from current traders to fund its enterprise.
The SEC’s findings observe with BehindMLM’s NovaTech FX assessment, printed again in August 2019.
The Petions used a multi-level advertising (“MLM”) construction to boost crypto belongings value greater than $650 million from over 200,000 traders in the US and overseas, together with many within the Haitian-American neighborhood.
Like several MLM Ponzi scheme, main recipients of funds invested into NovaTech FX had been the homeowners.
The Petions misappropriated investor belongings for unauthorized functions, together with transferring thousands and thousands of {dollars} of commingled investor belongings to themselves.
At the least $4.3 million in crypto belongings had been transferred from NovaTech into accounts or wallets owned and/or managed by Cynthia Petion, and a minimum of $1.5 million in crypto belongings had been transferred from NovaTech into accounts recognized to be owned and/or managed by Eddy Petion.
As well as, NovaTech transferred an extra roughly $35.2 million in crypto belongings from wallets by which it aggregated investor belongings to accounts or wallets that, on info and perception, had been owned and/or managed by Eddy Petion.
High promoters, together with these sued by the SEC, had been subsequent in line.
On info and perception, [the Petions] additionally used investor funds to make funds to current traders and fee
funds to promoters.Defendants Zizi, Corbett, Sampson, Dunbar, Garofano, and Hadley (collectively, the “Promoter Defendants”) had been instrumental in providing, advertising, and distributing the NovaTech funding.
The Promoter Defendants held themselves out as “leaders” and rose to the best ranks of NovaTech’s MLM program.
They did so by recruiting, growing, and sustaining a large community of “downline” traders, lots of whom grew to become recruiters themselves and introduced in extra traders.
The Promoter Defendants obtained substantial fee funds from NovaTech for recruiting traders into their downlines.
As NovaTech started to break down in direction of early 2022, regulatory warnings from Canada and the US started rolling in.
Sure Promoter Defendants—Zizi, Corbett, Dunbar, and Sampson—grew to become conscious of actions in opposition to NovaTech by regulators in the US and Canada, traders experiencing withdrawal delays, NovaTech suspending withdrawals, and different pink flags that raised questions concerning the legitimacy of NovaTech and the legality of its providing and promoting actions.
Nonetheless, these Promoter Defendants continued to advertise NovaTech, recruit traders, and function their MLM networks within the face of those pink flags. Additionally they actively downplayed the pink flags to potential traders and downline promoters.
With respect to the person 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 by means of.
The SEC believes the Petions are hiding in Panama. That is according to the findings of the New York Lawyer Basic’s Workplace, who individually sued the Petions in June.
Of stories 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 celebration in Panama, and earlier than that, in or round February 2023, Dunbar visited the Petions at their residence in Panama.
To the very best of my information 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 primary NovaTech promoter to realize the rank of Two Star Ambassador, the best promoter rank inside NovaTech’s MLM program. He additionally based one of the profitable NovaTech promotional teams: Staff Trinity of Success Membership.
Zizi primarily focused the Haitian-American neighborhood for NovaTech FX recruitment. Previous to NovaTech FX, Zizi was additionally an AWS Mining and Zeek Rewards Ponzi promoter.
The SEC alleges Zizi was conscious of regulatory fraud warnings in opposition to NovaTech FX, from Canada and California, “across the time they had been issued”.
Regardless of serving in a job the place he suggested traders and potential traders concerning the deserves of the NovaTech funding, Zizi didn’t adequately examine these pink flags.
In regard to the Canadian province fraud warnings and California Order, for instance, Zizi did nothing greater than take Cynthia Petion at her phrase that “authorized is on prime of it.”
Zizi even went as far as to publicly try to discredit and undermine NovaTech FX’s regulatory fraud warnings.
In a WhatsApp chat with a gaggle of high-level NovaTech promoters (who additionally had been traders), Zizi despatched a message on or about November 27, 2022 that discredited the California Order on the premise that it was unsigned.
Zizi additionally testified that, on unspecified dates, he advised California traders to bypass the California Order by forming a Wyoming restricted legal responsibility firm and opening an account in that entity’s title.
The SEC framez Zizi’s continued promotion of NovaTech FX, regardless of the plain warning indicators he was conscious of, as “negligence”.
Zizi had monetary motivations to disregard the pink flags and proceed to advertise NovaTech. Zizi continued to profit from traders becoming a member of or reinvesting in NovaTech.
Zizi additionally continued to make withdrawals from NovaTech after turning into conscious of the pink flags by means of a minimum of the start of 2023.
James Corbett is a NovaTech FX promoter from New York.
Defendant James Corbett is a resident of Mastic Seashore, New York. Cynthia Petion referred to him as a “Founding Chief” of NovaTech. He achieved the rank of Two Star Ambassador in NovaTech’s MLM program.
Corbett can also be a former AWS Mining Ponzi promoter. The SEC alleges Corbett’s expertise with AWS Mining’s collapse made him “conscious of the indicators of a fraudulent MLM crypto asset funding program.”
[Corbett] knew that traders in AWS suffered losses after AWS paused or delayed investor withdrawals and the TSSB issued a cease-and-desist order discovering that AWS violated Texas securities legal guidelines.
Like Zizi, Corbett additionally labored to discredit and undermine fraud warnings in opposition to NovaTech FX.
As early as August 2020, for instance, Corbett was conscious of social media posts within the MLM area accusing NovaTech of being a rip-off or Ponzi scheme, which he affirmatively tried to refute by means of his personal feedback and posts on-line.
For instance, on or round August 25, 2020, Corbett posted a remark to a web-based article printed on BehindMLM.com, a web site that purports to be a “useful resource to folks curious concerning the MLM business and the businesses that exist inside it.”
In response to different posts and feedback to the article that questioned the legitimacy of NovaTech, Corbett wrote:
Just like the opinion editor and Not an actual reporter you give us your opinion with out speaking to whom your [sic] bashing. I do know for a truth you probably did Bias analysis on Nova.
Inform me what slim [sic] gave you your data? I used to be in AWS for 3 years and may guarantee everybody Cynthia was NEVER a [sic] proprietor. All she ever did is attempt to assist everybody.
Nova tech was developed to clear Cynthia’s title. I can let you know this she’s going to cease at nothing to show you flawed. As for the slime who paid you to put up this FALSE analysis, I think he misplaced cash (who hasn’t misplaced cash?)….
Sincerely James Corbett Servant chief.
Corbett had earlier claimed BehindMLM’s analysis and reporting into NovaTech was “incorrect and its you who ought to be investigated.”
As one other instance, in January 2021, Corbett obtained an e mail from a potential investor asking:
“[h]ow do we all know that actual buying and selling takes place and this isn’t only a Ponzi utilizing new cash to pay outdated?”
Corbett testified that this was a query he heard “fairly regularly” whereas selling NovaTech.
An interview Corbett did with Brandon over on the Ponzi Patrol YouTube channel can also be cited.
[Corbett’s] statements created the false and deceptive impression that NovaTech was a reputable funding program and that the problems it confronted would go and/or not forestall traders from recouping their investments.
And he made these statements regardless of being conscious of the pink flags, appearing as an unregistered dealer to traders, and holding himself out to traders as having a particular relationship and entry to NovaTech and its founders and particular perception into and information of NovaTech’s operations.
Put collectively, the SEC claims Corbett did not act on NovaTech FX’s evident “pink flags”.
The pink flags … put Corbett on discover that NovaTech was not a reputable funding program, was defrauding traders, and/or was making false or deceptive statements or omissions to traders.
Regardless of serving in a job the place he suggested traders and potential traders concerning the deserves of the NovaTech funding and holding himself out as having particular information and perception into NovaTech, Corbett did nothing to independently examine these pink flags or allegations levied in opposition to NovaTech.
For instance, Corbett testified that he often requested Cynthia Petion for extra details about NovaTech’s buying and selling, together with as early as January 2021, however she refused to supply it.
He additionally testified that he did nothing to research the California Order except for asking Cynthia Petion about it, who merely advised him the Order was not remaining and had not been served on NovaTech but.
He didn’t even trouble to go looking on-line for the Order.
Nicely after studying of those pink flags, Corbett continued to advertise and solicit traders for NovaTech by means of a minimum of Might 2023.
He additionally continued to assist NovaTech within the face of pink flags indicating that it was not working as a reputable funding program.
Corbett testifying earlier than the SEC suggests he’s cooperating.
Corrie Sampson is one other 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 profitable NovaTech promotional teams: Staff Diamond.
As of January 2023, Staff Diamond had over 50,000 members who had been traders 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 prolific promoters for NovaTech. He was a member of Staff Diamond, the place he typically collaborated with Sampson and Hadley to market and promote NovaTech to traders and potential traders.
The SEC moreover claims Dubar “has promoted and/or been concerned in a minimum of 30 different community advertising companies that concentrate on crypto belongings”.
Though the SEC doesn’t make clear, most, if not all, of the “community advertising companies” Dunbar promotes are MLM crypto Ponzis.
Each Sampson and Dunbar had been subpoenaed by the SEC within the lead as much as their lawsuit again in June 2023.
Dunbar testified earlier than the SEC
that he knew, based mostly on his expertise with different failed crypto and MLM packages, that one signal that an MLM and/or crypto firm is on the breaking point is when the corporate stops paying out as typically because it beforehand did.
Dunbar and Sampson each testified they did nothing to “examine” NovaTech FX’s many pink flags.
Regardless of serving in a job the place they suggested traders and potential traders concerning the deserves of the NovaTech funding, Sampson and Dunbar did nothing to independently examine these pink flags.
Sampson even testified that she took no steps to find out whether or not the California Order was reputable.
Dunbar and Sampson continued to advertise and solicit traders for NovaTech nicely after turning into conscious of the pink flags.
Dunbar and Sampson as an alternative got here up with misinformation to elucidate away NovaTech FX’s pink flags.
In a video presentation hosted by Sampson and posted to the Staff Diamond Telegram channel on or about Might 20, 2023, Dunbar acknowledged:
[W]e allowed an individual, not a state . . . an individual who filed a stop and chorus that meant diddlysquat to scare a whole lot of 1000’s of individuals into pondering NovaTech was going away as a result of they bought a stop and chorus in California.
By no means bought signed by anybody in California.5 It was such as you going and placing a restraining order on somebody by submitting documentation and paying $89.
On the finish of Dunbar’s rant searching for to discredit the California Order, Sampson acknowledged her settlement with Dunbar’s description of the California Order.
She did so in her trusted place because the cofounder and chief of Staff Diamond, to whom Dunbar directed his feedback.
Past California;
Dunbar and Sampson additionally discouraged traders from contacting regulators or authorities authorities about NovaTech.
In a video posted to his Vimeo channel in Might 2023 (which additionally grew to become out there on YouTube), Dunbar acknowledged:
Let me let you know guys, a few of you saying, “I’m gonna name the SEC, I’m gonna name the CFTC.” Go forward and name and see if everyone doesn’t lose their cash.
No establishment increased up desires to see folks win. We now have to guard what we now have and we try this by being affected person.
In a YouTube reside stream interview on Might 16, 2023 that obtained over 9,000 views, Dunbar admonished involved traders: “[t]he extra negativity you place on the market, the extra in danger our funds are.”
Throughout a name with the investor in January 2023, the investor requested Sampson if they might share her contact info with the SEC.
Sampson refused and responded:
“[w]hy would you try this? Why would you share our info with a authorities company?
Since you haven’t been in a position to get your withdrawals? Identical to others haven’t been in a position to get their withdrawals? Are you doing it out of spite? Out of spite?”
However whereas Dunbar and Sampson continued to mislead and misinform NovaTech FX traders because the Ponzi scheme collapsed;
Regardless of advising traders to “simply grasp in there,” Sampson privately started withdrawing closely from NovaTech beginning on January 2, 2023, and persevering with by means of March 2023, throughout which era she in the end withdrew almost $1 million in crypto belongings from NovaTech.
Likewise, Dunbar continued to withdraw from NovaTech till as late as March or April 2023.
John Garofano (proper) is one other 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 initially recruited Garofano to take a position and take part in NovaTech and its MLM program, and the 2 typically labored collectively to market and promote NovaTech to traders and potential traders.
Garofano can also be a former AWS Mining Ponzi promoter.
Marsha Hadley 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 Staff Diamond.
NovaTech FX’s pitch was easy. NovaTech FX and its promoters solicited funding on the promise of a weekly passive return.
ROI income was represented to be generated through “PAMM account” buying and selling, which in fact was a load of baloney.
Information from NovaTech’s recognized buying and selling platforms present that merchants and accounts related to NovaTech misplaced roughly $18 million in buying and selling these belongings in the course of the Related Interval.
Surely, NovaTech FX’s weekly return wasn’t pegged to something. Cynthia Petion made it up every week.
The only real enter into the accounting system for the reported buying and selling earnings/ROI was offered manually by Cynthia Petion on a weekly foundation.
Particularly, Cynthia Petion manually entered the weekly efficiency share within the again workplace and would then “run” the software program code that will use such manually entered share to generate every investor’s weekly revenue and commissions quantities and put up these quantities to every investor’s again workplace account.
This seems to have been confirmed by Martin Zizi, who seem to, a minimum of on some stage, be cooperating with the SEC.
Zizi testified that Cynthia Petion advised him that there have been instances when NovaTech was not worthwhile, and that when reporting buying and selling outcomes, she used earnings from different worthwhile weeks to keep away from reporting a loss or decrease revenue within the weekly ROI figures.
“Revenue” in NovaTech FX was new funding for the week versus withdrawals.
Moreover with respect to regulation, NovaTech FX’s passive returns funding scheme constituted a securities providing.
As famous by the SEC;
In a slide deck dated October 2021 that was posted to the again workplace—which Cynthia Petion drafted and Eddy Petion reviewed and took part in drafting—NovaTech acknowledged that it was a “[l]egally registered hedge fund.”
On July 15, 2022, NovaTech repeated this assertion in a put up printed to traders on its Telegram channel, which the Petions managed.
In a March 25, 2020 WhatsApp message to potential traders, Cynthia Petion acknowledged that “[w]e are registered in USA as a hedge fund and cash administration firm.”
Eddy Petion despatched this similar message to potential traders through WhatsApp on March 25, 2020.
In a Zoom presentation on Might 4, 2022, supposed for potential traders and posted on YouTube, Cynthia Petion acknowledged that, “[i]n the US, we’re registered as a hedge fund firm.”
In a March 26, 2020 WhatsApp message to potential traders, Cynthia Petion represented that “[w]e are registered Brokers” at NovaTech.
Because the Petions and NovaTech knew, or had been severely reckless in not figuring out, these statements had been false on the time they had been made.
Neither NovaTech nor the Petions had been registered with the SEC or with any regulatory authority in the US as a “hedge fund,” “cash administration firm,” funding adviser, dealer, or supplier.
At a minimal, these statements had been extremely deceptive, as a result of they created the misunderstanding that NovaTech was a reputable monetary companies firm that operated in compliance with U.S. legal guidelines and laws and below the oversight of U.S. regulators, when the truth is, it operated as an unregistered entity and a fraudulent crypto buying and selling funding and pyramid scheme.
An enormous a part of NovaTech FX was spiritual affinity fraud.
When the Petions and sure Promoter Defendants solicited traders, they regularly employed spiritual overtones, appealed to the monetary freedom and independence purportedly attained by investing in crypto belongings and taking part in MLM packages, and focused sure affinity teams, specifically the Haitian-American neighborhood.
To that finish, Cynthia Petion ran round 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 imaginative and prescient.”
In one other video by which Cynthia Petion skilled promoters on methods to current NovaTech to potential traders, which was posted to YouTube on Might 4, 2022, Cynthia Petion acknowledged: “Jesus was the very best affiliate marketer on this planet.”
Martin Zizi additionally leaned closely into faith to recruit Haitian-People into NovaTech FX.
In a video presentation posted to YouTube and dated January 21, 2022, Zizi advised traders and potential traders that the Petions are “the folks that God g[a]ve the imaginative and prescient to start out this firm.”
Throughout that presentation, he additional suggested:
And it’s very troublesome to decide to take a bit little bit of your hard-earned cash, and for this reason I make you comfy in a way that with NovaTech, there are totally different ranges.
And Pastor Bob simply reveals you that you might begin as little as $500 all the way in which right down to one million bucks. It’s based mostly on the place you might be at and the way comfy you might be.
Now, we do know there are some individuals are going by means of some monetary wrestle that in all probability misplaced their job in the course of the pandemic and are searching for a strong means to enhance their monetary wellbeing.
Based mostly on our expertise with the homeowners of the corporate and with the robots who’s been blessing us for the previous 28 occurring 29 months, we really feel comfy presenting this venture as a means that may change our lives.
One particular person conspicuously absent from the SEC’s lawsuit is Cynthia Petions’ relative and NovaTech FX’s CTO, Ricardo Roy Jr.
To save lots of his personal pores and skin, Roy Jr. has been cooperating with the SEC.
The Petions didn’t present the SEC entry to NovaTech’s inside data in the course of the SEC’s investigation that preceded the submitting of this Grievance. As an alternative, the Petions and NovaTech ignored the SEC’s investigative subpoenas and failed to supply any paperwork or present testimony in response to these subpoenas.
Nonetheless, the SEC obtained substantial proof regarding NovaTech’s crypto asset transactions and buying and selling, together with however not restricted to public blockchain information, Cost Processor information, different information from varied crypto asset exchanges, and paperwork and data obtained from NovaTech’s former Chief Expertise Officer.
The precise nature of Roy Jr.’s involvement within the SEC investigation and what meaning for him as a possible defendant is unclear at time of publication.
Throughout seven claims of aid, the SEC has sued the NovaTech FX defendants for
- violations of Part 17(a)(1) of the Securities Act (Novatech FX, the Petions, Corbett, Dunbar and Sampson);
- violations of Part 17(a)(2) of the Securities Act (NovaTech FX, the Petions and Zizi);
- violations of Part 17(a)(3) of the Securities Act (Novatech FX, the Petions, Zizi, Corbett, Dunbar and Sampson);
- violations of Part 10(b) of the Trade Act (NovaTech FX, the Petions, Corbett, Dunbar and Sampson);
- violations of Part 10(b) of the Trade Act (NovaTech FX and the Petions);
- providing unregistered securities in violation of Sections 5(a) and 5(c) of the Securities Act (all defendants);
- working as an unregistered dealer in violation of Part 15(a) of the Trade Act (all NovaTech FX promoter defendants);
The SEC is searching for everlasting injunctions in opposition to the NovaTech FX defendants, in addition to disgorgement of ill-gotten features and fee of a civil penalty.
An August twelfth press-release from the SEC confirms that Martin Zizi has already partially settled.
Zizi has consented to a $100,000 civil penalty and everlasting injunction. Disgorgement doesn’t seem like a part of the settlement, which means it has but to be decided.
Keep tuned for updates as BehindMLM continues to trace the SEC’s NovaTech FX case.
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