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SEC Charges Florida Executive, Two Companies In Ponzi Scheme Case

On August 13th, 2021, the Securities and Exchange Commission (SEC) announced securities fraud charges against Johanna M. Garcia of Broward County, Florida. She stands accused of operating a Ponzi scheme through two companies she owned:

  • MJ Capital Funding LLC; and
  • MJ Taxes and More Inc. 

The SEC contends that Ms. Garcia raised at least $70 million from more than 2,100 different investors. Here, our Miami Ponzi scheme attorneys highlight four key things investors should know about the SEC’s complaint.

  1. Johanna M. Garcia Solicited Investment for Loans Called “MCAs” 

According to the allegations raised by the SEC, Johanna M. Garcia began soliciting money from investors in June of 2020. Through her companies MJ Capital Funding LLC and MJ Taxes and More Inc., Ms. Garcia claimed to be engaged in a type of commercial lending called Merchant Cash Advances (MCAs). Altogether, these companies raised between $70.9 million and $128.8 million from more than 2,100 investors in Florida and throughout the country.  

  1. Investors Were Promised Extraordinary Returns 

Investors were promised truly extraordinary returns. The agency alleges that investors were promised average annual returns in excess of 100 percent. Some investors were told that they could make as much as 180 percent in a given year. Many investors were told that they would consistently obtain a ten percent monthly return on their investment. 

  1. Funds Were Misused (Consistent With a Classic Ponzi Scheme) 

In its complaint, the SEC notes that only a small percentage of the money raised from investors were ever used for the MCAs. Out of the $70 million to $128 million raised, only $2.9 million was actually invested in the manner represented to investors.

The remaining funds were largely shifted around in a Ponzi-like manner. Indeed, in its press release, the SEC referred to MJ Capital Funding and MJ Taxes and More as being run in a “classic Ponzi scheme fashion.” A substantial portion of the funds raised from new investors were used to pay off the original investors to keep the Ponzi scheme alive. 

  1. Emergency Asset Freeze and Additional Civil Legal Sanctions

In an effort to protect the remaining investor funds, the SEC has obtained an emergency asset freeze. The agency also requested the appointment of a receiver to stop any additional misappropriation of investor funds. Federal regulators are seeking disgorgement of ill-received gains, payment of financial restitution to affected investors, civil penalties against the companies, and a bar against Ms. Garcia. The matter is still ongoing. The next hearing in this civil case is scheduled for August 25th. 

Get Help From a Miami Ponzi Scheme Lawyer Today

At ​Carlson & Associates, P.A., our Miami Ponzi scheme attorneys are reliable, experienced advocates for investors. If you or someone you know suffered losses in a Ponzi scheme, we will protect your legal rights. Give us a call today to schedule a confidential appointment with a lawyer. Our investment fraud attorneys represent investors in Miami and throughout Southeastern Florida.

Resource:

sec.gov/news/press-release/2021-151

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