‘Fraudulent’ crypto scheme raised more than $650 million, including from Haitian Americans, SEC says

A former Wellington couple has been accused of raising over $650 million in cryptocurrency assets in a pyramid scheme that defrauded more than 200,000 investors, including Haitian Americans.

The Securities and Exchange Commission on Monday filed a complaint accusing Cynthia Petion and her husband Eddy Petion of operating a fraudulent investment program through their company, NovaTech Ltd., from 2019 to 2023.

According to an SEC news release, the Petions lived in Wellington, in Palm Beach County, during the majority of the time they operated the scheme. They have since moved to Panama, the SEC said.

The SEC accuses the couple of attracting victims by claiming NovaTech would invest their funds in crypto asset and foreign exchange markets. Cynthia Petion promised investors their money would be safe, the SEC said. “(I)n this program, you are in profit from day one, because again you have access to that capital,” she was quoted as saying.

Actually, only a fraction of investor funds were used for trading, the agency said. A majority was used to make payments to existing investors and to pay commissions to promoters, the complaint says.

Six of those promoters also are accused in the complaint. They are Martin Zizi of Kennesaw, Georgia; Dapilinu Dunbar of Miami; James Corbett of Mastic Beach, New York; Corrie Sampson of Fairburn, Georgia; John Garofano of Brooksville, Florida, and Marsha Hadley of Murrietta, California.

Because the complaint was filed so recently, no defense attorneys are yet listed in the case.

The release quotes Eric Werner, director of the SEC’s Fort Worth (Texas) Regional office, as saying: “NovaTech and the Petions caused untold losses to tens of thousands of victims around the world. As we allege, multilevel marketing 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 complaint states that the Petions, before forming NovaTech, became the top promoters for another multilevel marketing “scheme” called AWS Mining PTY Ltd. But that operation collapsed, the SEC said, after the Texas State Securities Board accused the company of violating Texas securities laws in a number of ways, including making false and misleading statements to investors and recruiting unregistered agents to sell them.

The Petions pivoted to creating and running their own crypto scheme called NovaTech, the SEC said, “which Cynthia Petion told prospective investors was created as a way for former AWS investors to recoup losses suffered when AWS collapsed.”

Cynthia Petion served as CEO and Eddy Petion serves as chief operating officer of the operation, which marketed itself to investors online and through social media, including Facebook, Instagram, Telegram and WhatsApp, the complaint states. Investors, it adds, were invited to fund their accounts with crypto assets worth a minimum of $99.

Solicitations employed religious overtones, including Cynthia Petion branding herself as “The Reverend CEO” and describing her founding of NovaTech as “God’s vision,” the complaint states.

The SEC reported that investors began experiencing delays in accessing their crypto assets from NovaTech by October 2022, which the company blamed on technical delays. Around the same time, the company came under scrutiny from regulators in the United States and Canada.

By February 2023, the company announced a 60-day “temporary freeze” on investor withdrawals, and by May it halted all U.S. operations and disabled its website, preventing investors from making further withdrawals, the complaint says.

According to the complaint, the small amount of investor proceeds that actually were traded in the crypto market lost $18 million, and the software that reportedly showed investors the results of their trading activity was operated manually by Cynthia Petion and was not connected to any actual trading system.

Meanwhile, Cynthia Petion transferred at least $5.8 million in crypto assets from NovaTech into accounts or wallets owned by her and Eddy Petion, and transferred another $35.2 million from crypto account wallets into accounts or wallets owned and/or controlled by Eddy Petion, the SEC claimed.

The complaint accuses the Petions and NovaTech of numerous offenses, including violations of federal securities and exchange acts for marketing unregistered investments.

The SEC seeks final judgments permanently barring the defendants from further violations. It also seeks a court ruling ordering NovaTech, the Petions and the promoter defendants to disgorge “ill-gotten gains” from the enterprise, and to pay interest and penalties.

Zizi has agreed to partially settle the complaint by consenting to a $100,000 civil penalty and agreeing not to further violate securities and exchange laws. Further penalties will be determined later, the SEC said.

Ron Hurtibise covers business and consumer issues for the South Florida Sun Sentinel. He can be reached by phone at 954-356-4071, on Twitter @ronhurtibise or by email at [email protected].

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