The Securities and Exchange Commission has filed a complaint against MJ Capital Funding, LLC, MJ Taxes and More Inc. and Johanna M. Garcia, the owner of MJ Capital Funding and MJ Taxes, for allegedly running a Ponzi scheme. On August 13, 2021, the SEC announced that it filed an emergency action and obtained a temporary restraining order, an asset freeze, and the appointment of a receiver to stop the misappropriation of funds allegedly carried out by Garcia and the entities she controls.
According to the SEC’s complaint, which was filed in federal court in the Southern District of Florida, Garcia and her companies raised at least $70 million from more than 2,000 investors in an allegedly fraudulent Ponzi scheme. The complaint alleges that Garcia, and her companies MJ Capital Funding, LLC and MJ Taxes and More, Inc. told investors that offering proceeds would be used to fund small business loans called “merchant cash advances” and promised investors annual returns of 120% to 180%.
The complaint also alleged that the defendants only made at most $2.9 million in merchant cash advance loans and earned little in revenue.
The defendants instead used at least $20 million from new investors to pay returns to existing investors in a classic Ponzi scheme structure. Additionally, the complaint alleges that Garcia and her businesses misused another $27.4 million of investor money by making payments to various entities, a large portion of which represented payments to sales agents for promoting these investments.