SEC Charges Two Companies and Their Principal Officer Involved in A Ponzi Scheme

The US Securities and Exchange Commission (SEC) announced that it has charged Florida resident Johanna M. Garcia and two entities she controls for engaging in a Ponzi scheme and misappropriating investor proceeds.

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According to the press release, Garcia and her companies MJ Capital Funding LLC and MJ Taxes and More Inc. raised at least $70 million from more than 2,150 investors in a fraudulent securities offering since about June 2020.

Specifically, the fraudsters told investors that offering proceeds would be used to fund small business loans called "merchant cash advances," and promised investors annual returns of 120-180%. In fact, according to the complaint, the defendants only made, at most, $2.9 million in merchant cash advance loans and earned very little in revenue.

Instead, the defendants allegedly used at least $20 million of new investor money to pay purported returns to existing investors in a classic Ponzi scheme fashion. In addition, the complaint alleges that the defendants misused another $27.4 million of investor money by making payments to various other entities, a substantial portion of which represented payments to sales agents for promoting these investments.

"As alleged in our complaint, Garcia and her companies lured unsuspecting investors with false claims and promises of triple-digit annual returns," said Eric I. Bustillo, Director of the SEC's Miami Regional Office. "We continue to caution investors to be wary of any investment that promises returns that are too good to be true."