SEC Brings Charges in $650 Million Cryptocurrency Fraud Case in Florida
On August 12th, 2024, the Securities and Exchange Commission (SEC) charged NovaTech and its principals as part of a cryptocurrency fraud case in a federal court in Florida. Cynthia Petion and Eddy Petion stand accused of defrauding many investors in Florida and throughout the United States. Six more defendants associated with the company—James Corbett, Corrie Sampson, Martin Zizi, Dapilinu Dunbar, and Marsha Hadley, and John Garofano—were charged as well. Here, our Miami securities losses attorney discusses the SEC complaint in more detail.
SEC Charges: Multi-Level-Marketing (MLM) Cryptocurrency Scheme Defrauded Investors
Federal regulators brought a civil securities fraud complaint against NovaTech and its principals in the United States District Court for the Southern District of Florida. The SEC contends that approximately $650 million was defrauded from nearly 205,000 investors. NovaTech is alleged to be a cryptocurrency-related Ponzi scheme. A Ponzi scheme involves the shuffling of funds to pay old inventors with the money of new investors to make it appear as though there are legitimate gains. However, with Ponzi schemes, there is generally little (or no) actual gain. Once new investment slows, the scheme will collapse under the weight of the fraud.
Funds Were Allegedly Shifted Around in a Ponzi-Like Manner
The SEC argues that Cynthia Petion and Eddy Petion operated NovaTech as a multi-level-marketing (MLM) scheme. Broadly defined, an MLM is a business model where participants earn money both from selling products and from recruiting new sellers. However, in this case, the SEC alleges that NovaTech’s MLM was effectively a Ponzi scheme. The owners and operators of NovaTech reportedly falsely promised investors safe return and immediate profits from both crypto gains and forex trading. However, in reality, they primarily used new investor funds to pay existing investors. Further, a significant amount of money was siphoned off.
The SEC is Seeking All Appropriate Sanctions Against the Company and its Principals
The SEC is seeking all available sanctions against NovaTech and its principals through a civil securities fraud claim. Federal regulators are seeking a permanent injunction, disgorgement of ill-obtained profits, and the maximum possible civil financial penalties. Notably, one defendant, Mr. Zizi, already entered into a settlement with the SEC. He agreed to pay a $100,000 civil fine without admitting or denying any of the specific allegations.
A Proactive Approach is Key for Investors in Ponzi Scheme Cases
Investors who have suffered losses in a Ponzi scheme should always adopt a proactive approach in order to protect their legal rights and their financial interests. Early detection and swift legal action can dramatically increase your ability to recover compensation for your damages.
Speak to an Experienced Miami Investment Fraud Attorney
At Carlson & Associates, P.A., we are a securities fraud firm committed to fighting for the rights of investors. You need compensation to account for your investment losses that were caused by fraud. We are here to help. Contact our firm today for a confidential case assessment. With a legal office in Miami, our firm fights for the rights of investors throughout Southeastern Florida.
Source:
sec.gov/newsroom/press-releases/2024-95