The Securities and Exchange Commission has charged two brothers, Jonathan Adam and Tanner Adam, with an alleged $60 million Ponzi scheme impacting more than 80 investors across the country.
The US financial watchdog obtained emergency asset freezes against the two defendants and their respective entities, GCZ Global LLC and Triten Financial Group LLC, to halt the alleged fraud which has been operating since January 2023.
According to the SEC, the Adam brothers solicited and lured victims with the promise of up to 13.5 percent monthly investment returns based on a “bot” that operated on a crypto asset trading platform to identify arbitrage trading opportunities, and that investor funds would be used in a lending pool that would, through smart contracts, fund “flash loans” to complete these arbitrage trades. The Adam brothers allegedly told investors that, short of a global market meltdown, investor funds were safe.
The SEC’s investigation, however, found that the lending pool as described to investors did not exist, and the defendants instead used millions of dollars of investor funds to pay supposed returns to existing investors and to support the two brothers’ lavish lifestyles, including using investor funds to make the down and installment payments to build a $30 million condominium in Miami and at least $480,000 to purchase cars, trucks, and recreational vehicles.
Jonathan Adam had previously been convicted of three counts of securities fraud.
Justin C. Jeffries, Associate Director of Enforcement in the SEC’s Atlanta Regional Office, said: “As we allege, the Adam brothers promised their investors high returns on a crypto investment that did not exist, and then used investor funds to make Ponzi-like payments and to purchase designer goods, recreational vehicles, and million-dollar homes. The SEC will use all tools at its disposal to stop those who exploit the excitement around new technologies to defraud investors.”
SEC sued NovaTech founders with $650 million Ponzi scam
Earlier this month, the SEC charged the founders of NovaTech Ltd., Cynthia and Eddy Petion, along with their company and several promoters, with operating a cryptocurrency pyramid scheme that raised more than $650 million.
The SEC’s complaint was filed in the U.S. District Court for the Southern District of Florida, and accuses the Petions and their co-defendants of defrauding over 200,000 investors worldwide, particularly targeting the Haitian-American community.
The complaint also names several Novatech promoters, including Martin Zizi, Dapilinu Dunbar, James Corbett, Corrie Sampson, John Garofano, and Marsha Hadley. The SEC is seeking “permanent injunctive relief, civil penalties, disgorgement, and the return of funds misappropriated from investors.”
According to the SEC, NovaTech promised investors that their funds would be invested in cryptocurrency and FX markets. However, the company allegedly used the majority of the investors’ money to pay existing investors and commissions to promoters, while also spending millions on personal expenses. The scheme, which collapsed in May 2023, left most investors unable to withdraw their funds.
The SEC has charged NovaTech, the Petions, and others involved with violating antifraud provisions and registration requirements. One of the promoters, Martin Zizi, has agreed to a partial settlement without admitting or denying the allegations. This case follows a similar lawsuit filed by New York Attorney General Letitia James against the Petions in June.
The SEC said that the scale of this scheme was made possible by the actions of promoters and reiterated that it will hold all parties accountable for their roles in such fraudulent activities. The lawsuit also highlighted the use of religious overtones and influencers to attract investors to the alleged Ponzi scheme.
In June 2024, New York Attorney General Letitia James filed a lawsuit against Novatech, its founders, and AWS Mining, accusing them of defrauding more than 11,000 New York City residents.
