NovaTech FX has been issued a securities fraud cease and desist by California’s Department of Financial Protection & Innovation (DFPI).
The notice marks the first regulatory action against NovaTech FX by a US regulator.
DFPI’s November 22nd cease and desist applies to:
- NovaTech LTD (St. Vincent & Grenadines shell company);
- NovaTech Advisors LLC (Florida company);
- NovaPay LLC (Florida company);
- NovaTrading OU (Estonian shell company);
- Cynthia Petion (US-based NovaTech FX co-founder and CEO); and
- Eddy Petion (US-based NovaTech FX co-founder)
Following an internal investigation, DFPI concluded NovaTech FX is committing securities fraud.
The Packages offered by NovaTech, Cynthia Petion, and Eddy Petion were securities that were neither qualified nor exempt from the qualification requirement under the CSL.
The Department has not issued a permit or other form of qualification authorizing NovaTech, Cynthia Petion, or Eddy Petion to sell these securities in California.
In connection with the offer or sale of these securities, NovaTech, Cynthia Petion, and Eddy Petion made, or caused to be made, untrue statements of material fact and material omissions to investors and potential investors, including but not limited to the following:
a. falsely representing that NovaTech is a registered hedge fund in the United States;
b. falsely representing that NovaTech is a registered investment adviser;
c. falsely representing that NovaTech is a registered broker;
d. failing to disclose that the offer or sale of NovaTech’s securities was not qualified in California;
e. failing to provide any qualifications to substantiate claims that investors’ funds are managed and traded by experienced traders;
f. failing to disclose that in March 2011, Cynthia Petion and Eddy Petion filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Eastern District of New York;
g. failing to disclose that in August 2019, a debt buyer sued Cynthia Petion in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida, Civil Division, for breach of contract and unjust enrichment, alleging that Cynthia Petion had failed and/or refused to repay a loan;
h. failing to disclose that in July 2018, a mortgage lender sued Eddy Petion and Cynthia Petion in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida, Civil Division, in an action to foreclose a defaulted mortgage on residential real property held by Eddy Petion and Cynthia Petion;
i. failing to disclose that in April 2018, a credit card issuer sued Cynthia Petion in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida, Civil Division, for account stated and unjust enrichment.
A judgment was entered against Cynthia Petion in the amount of $11,776.55; and
j. failing to disclose that in October 2017, a credit card issuer sued Eddy Petion in the County Court in and for Palm Beach County, Florida, for account stated. A judgment was entered against Eddy Petion in the amount of $4,740.56.
DFPI goes to confirm that none of the NovaTech FX companies, or the Petions, are registered to offer securities in California.
Pursuant to Corporations Code section 25532, Nova Tech Ltd. a/k/a NovaTech, Ltd., NovaTech Advisors, LLC, NovaPay, LLC, NovaTrading OÜ, Cynthia Petion, and Eddy Petion are hereby ordered to desist and refrain from the further offer or sale of securities in California, including but not limited to investment contracts known as Packages, unless and until the qualification requirements of the CSL have been met.
Pursuant to Corporations Code section 25403, any person who controls or induces another person to violate a provision of the Corporate Securities Law of 1968, or any person who provides substantial assistance to another person in violation of the Corporate Securities Law of 1968, shall be liable for the violations.
DFPI identifies NovaTech FX’s business model as a High Yield Investment Program (HYIP).
NovaTech was luring investors into what is known as a High Yield Investment Program (HYIP).
HYIPs are unregistered investments typically run by unlicensed individuals – and are often frauds. The hallmark of an HYIP scam is the promise of high returns on an annual (or even monthly, weekly, or daily) basis at little or no risk to the investor.
HYIPs are MLM underbelly code for “Ponzi scheme”. BehindMLM reviewed NovaTech FX in 2019, also concluding it was a Ponzi scheme.
DFPI’s cease and desist all but confirms NovaTech FX is likely under investigation at the federal level.
Securities in the US are regulated by the SEC, with which NovaTech FX is also not registered.
SimilarWeb tracked over 2.5 million visits to NovaTech FX’s website in October 2022. ~66% of NovaTech FX’s website traffic comes from the US.
Last month Cynthia Petion endorsed the claim NovaTech FX had been audited and approved by the FBI.
When the inevitable NovaTech FX SEC fraud lawsuit drops, it’ll be interesting to see whether the DOJ files parallel wire fraud and money laundering charges.
In addition to California, NovaTech FX has received securities fraud notices from Russia and British Columbia, Canada.