The U.S. Securities and Exchange Commission (SEC) launched a significant legal challenge against NovaTech and its key figures. On a quiet Monday that quickly turned tumultuous, the SEC accused the company, along with its founders Cynthia and Eddy Petion and several promoters, of orchestrating a massive $650 million fraud. This action follows closely on the heels of a similar lawsuit filed by New York Attorney General Letitia James, signaling a serious crackdown on deceptive financial schemes.

NovaTech, which promised lucrative returns through investments in digital assets and foreign exchange markets, allegedly operated as a Ponzi scheme, enticing over 200,000 investors globally to part with their money. The founders claimed these funds were to be pooled and profitably traded, boasting a flawless record of weekly earnings. Yet, the SEC’s detailed investigation revealed a starkly different reality: a significant portion of these investments was siphoned off by the Petions for personal use, with the majority used to pay earlier investors, keeping the illusion of success alive.

Source: SEC, Page 1 of the Charges

The scheme predominantly targeted Haitian Creole-speaking communities, exploiting their trust and cohesion. The promoters, who included figures like Martin Zizi and James Corbett, employed religious rhetoric and social gatherings to lure investors, enhancing the scheme’s credibility among tight-knit church groups. This strategy of exploitation particularly impacted investors in New York City, prompting state-level legal action.

As the fraudulent structure began to collapse in late 2022, investors faced increasing difficulties withdrawing their funds, leading to a cascade of cease-and-desist orders from various U.S. and Canadian securities regulators. By May 2023, the scheme had unraveled completely, with the Petions shutting down the company and fleeing, presumably to Panama, leaving thousands unable to retrieve their investments.

The SEC’s lawsuit seeks not only to penalize but also to rectify, demanding permanent injunctions, the return of ill-gotten gains with interest, and civil penalties against those involved. One of the promoters, Martin Zizi, has opted for a partial settlement, agreeing to a significant penalty without admitting guilt, pending judicial approval.

The SEC says the case not only highlights the risks inherent in unregulated investment opportunities, particularly in the burgeoning field of digital assets but also underscores the vigilance of regulatory bodies like the SEC in pursuing fraud and protecting investors.

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