MJ Capital Funding – A Ponzi Scheme That Defrauded Thousands of Investors

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The SEC alleges in its complaint against MJ Capital Funding and loan underwriter Christian Gonzalez of making false statements during a conference call to potential investors, violating securities regulations. To compensate potential victims of such misconduct, sanctions, including disgorgement of funds received illegally, will be pursued against both entities.

Silver Law Group represents victims of MJ Capital Funding through a class action lawsuit. This article will overview their allegations and ways they may recover their losses.

What is a Merchant Cash Advance (MCA)?

Merchant cash advances (MCAs) provide businesses with financing that enables them to receive an advance on credit card sales from lenders in return for taking a percentage of daily sales until it has been fully repaid. Applying for MCAs online is generally fast and can quickly be completed; business owners must provide information regarding monthly deals and other relevant details to determine eligibility.

MCA loans differ from traditional ones because they don’t require collateral or an exceptional credit score to secure funding. Instead, a lender will assess a business’s past credit and debit card transactions to ascertain average daily receipts and determine the amount of an advance it can offer; then, once agreed upon, business owners will need to decide upon all terms and conditions associated with this transaction, including daily ACH transfers from their business accounts back into lender accounts; factor rate charges and length of agreement term length.

Be mindful when considering a merchant cash advance, as it may be one of the more costly financing solutions. Repayments may strain a business’s cash flow during slower times. Furthermore, MCAs don’t fall under as much regulatory oversight as traditional loans, and this may lead to terms and practices that aren’t helpful for their businesses.

When applying for an MCA, seeking advice from an experienced business attorney is advisable. They can assist in understanding the process and ensure you are getting a fair deal, assist in the application process and negotiate better terms from lenders, and help avoid common pitfalls business owners often fall prey to.

How does MJ Capital Funding work?

MJ Capital Funding has been accused of running a Ponzi scheme that defrauded over 2,000 investors, raising millions from ordinary individuals like police officers, firefighters, and nurses. According to the Securities and Exchange Commission complaint against Johanna Garcia’s companies (MJ Capital Funding LLC and MJ Taxes and More Inc), their money raised through fraudulent securities offerings was used by them to finance merchant cash advances or loans for small businesses – promising investors high returns on investments with lofty promises of returns per investment according to SEC complaints.

Instead, the complaint states that MJ Capital siphoned millions from new investors to company insiders in exchange for false monthly “returns” for older investors. This fraud started unraveling in April 2021 when someone created an anonymous website alleging MJ Capital was a Ponzi scheme; consequently, the company filed suit against its creator for defamation.

The case was assigned to a federal judge in Florida’s Southern District who appointed Corali Lopez-Castro Receiver over both companies, who agreed with the SEC settlement agreement of disgorging unearned gains and accepting civil penalty payment. In contrast, permanent restraint from future business activity was decided upon.

The Receiver is currently conducting an auction to sell off assets owned by two MJ companies located in Pompano Beach and scheduled an auction date of September 28 to sell everything from 60-inch TVs and garbage cans to houseplants.

What are the risks of investing in MJ Capital Funding?

Johanna Garcia of South Florida stands accused of operating an elaborate Ponzi scheme that defrauded nearly $200 million from investors. Her company, MJ Capital Funding LLC, was launched in 2020 to connect investors with cash-strapped small business owners needing merchant cash advances (MCA). They raised more than $70 million from thousands of investors, promising returns between 120% to 18% annually – but all was revealed when an anonymous whistleblower set up a website publicly accusing MJ Capital of operating a Ponzi scheme, rather than responding publicly with an apology MJ Capital sued them instead for defamation!

The lawsuit against MJ Capital Funding alleges that they misused new investor funds to pay off existing investors and cover marketing and sales agent costs to promote MCA’s business. According to the complaint, this company only generated minimal MCAs, failing to generate sufficient profits to repay all previous investors; instead, a significant chunk of company revenues went toward Garcia and other firm board members, including Pavel Ruiz Hernandez.

Ruiz faces criminal charges filed by the Securities and Exchange Commission alleging him of conspiracy to commit wire fraud. If found guilty, he could serve up to 20 years behind bars.

Investors defrauded by MJ Capital should contact Silver Law Group immediately. We are representing victims of the alleged MJ Capital Funding Ponzi scheme through a class action lawsuit and regularly represent victims of Ponzi schemes and investment fraud to recover their losses.

Investors harmed by investment fraud should contact the Securities and Exchange Commission to file a complaint. Suppose they cannot recover from those responsible, such as banks. In that case, they may still be eligible for compensation from liable third parties like Wells Fargo Bank, which allegedly helped facilitate this scheme. Silver Law Group filed a class action lawsuit on behalf of victims of MJ Capital Funding against Wells Fargo, which they allege supported its plan.

How can MJ Capital Funding help me?

If you invested with MJ Capital Funding in Florida and recently collapsed amid allegations of operating a massive Ponzi scheme, you may have questions about getting your money back. At The Silver Law Group, we represent victims of investment fraud such as MJ Capital Funding; let us help you understand your rights and options.

The SEC’s complaint against MJ Capital Funding, Johanna Garcia, and their related companies alleges they raised over $70 million from over 2,000 investors through fraudulent securities offerings. Investors were told their funds would be used to purchase “merchant cash advances,” or MCAs, for small businesses and could expect returns ranging from 120%-180% annually.

According to the SEC’s complaint, MCAs were bought with funds from new investors, and MJ Capital Funding only profited from this activity, according to company higher-ups’ use of MCA profits to pay investor returns as well as cover personal expenses incurred from running them, according to this MJ Capital Funding activity.

Due to this unsustainable MCA business model, MJ Capital Funding began running out of money by April 2021, according to the SEC’s estimate. As soon as that happened, an alleged scam began unraveling: an anonymous website accused MJ Capital of being a Ponzi scheme and sued them in federal court as a result.

After the MJ Capital scheme collapsed, the SEC charged its founder, Johanna Garcia, with multiple counts of wire fraud and money laundering; furthermore, she is subject to an FBI criminal probe. Pavel Ruiz Hernandez has also been charged with conspiring to commit wire and mail fraud.

Bernice Lee was appointed Receiver over MJ Capital Funding LLC, MJ Taxes and More Inc, Pavel Ruiz MJCF LLC, and UDM Remodeling, LLC (collectively known as the Receivership Entities). On August 10, the class action plaintiffs filed a motion seeking to hold Wells Fargo Bank, N. A liable for aiding and abetting the MJ Capital Fraud, Wells Fargo denies all allegations against it and maintains that no wrong was committed on its part.