A South Florida woman known as “Mother Theresa” in her community has been accused of running her business like a lucrative Ponzi scheme that defrauded nearly $200 million.
Johanna M. Garcia, of North Lauderdale, allegedly defrauded more than 15,400 investors of up to $196 million through her company, MJ Capital Funding LLC, NPR reported Tuesday.
Founded in 2020, MJ Capital committed to connecting investors to small businesses through a “merchant cash advance” or MCA.
Described as a “hardworking woman who has her priorities in line” in his company biographyGarcia boasted of being a down-to-earth businesswoman who helped ordinary people generate wealth – she was even “called ‘Mother Theresa'” [sic] in his community.
The ruse began to unravel in April 2021, when a website appeared accusing MJ Capital of running a Ponzi scheme.
Garcia sued the anonymous whistleblower for defamation and continued to collect money from investors until August 2021, when the Securities and Exchange Commission filed a formal complaint against the company.
In the document dated August 9the SEC alleges that MJ Capital used investor money to fund “outside annualized ‘returns’ of 120% to 180%,” while company executives invested in personal excursions and luxury goods.
In addition to using new cash injections to satisfy existing investors, the SEC says MJ Capital used unlicensed brokers and sales agents to sell unregistered securities.
A federal judge responded to the filing by freezing Garcia’s business assets and ordering them to sequestration.
As Garcia awaits further investigation, the case against MJ Capital received new fodder last Tuesday, when the SEC filed a second complaint against Pavel Ruiz, a member of the company’s board of directors.
The SEC alleges Ruiz, 29, played a “significant role in perpetuating the Ponzi scheme”.
Armed with a team of around 70 sales agents, Ruiz allegedly defrauded more than 5,100 investors out of at least $46 million, including $7.7 million he diverted to his personal accounts.
According to the SEC, Ruiz used some of the pocketed money to buy a luxury car and crypto assets.
On the same day the SEC complaint was released, the U.S. Attorney’s Office for the Southern District of Florida charged Ruiz with conspiracy to commit wire fraud.
It’s unclear whether Garcia, who has not been named in the federal case, will also face similar charges.
If convicted, Ruiz faces up to 20 years in prison.
Last week, Garcia and Ruiz reached partial settlements with the SEC, delaying monetary penalties until the conclusion of any criminal proceedings.
Ruiz is currently free on $250,000 bond.
The MJ Capital scandal is just the latest in a troubling string of similar cases, some of which have seen investors scammed out of hundreds of millions of dollars.
In March this year, The Post reported on the crackdown on a $300 million Ponzi scheme that ended with FBI gunfire in Las Vegas. Last month, the SEC filed a lawsuit against 11 people for their roles in an elaborate cryptographic pyramid scheme that targeted retail investors.