A South Florida woman known as “Mother Theresa” in her community has been accused of running her business as a lucrative Ponzi scheme that scammed close to $200 million.
Johanna M. Garcia, of North Lauderdale, allegedly defrauded over 15,400 investors of up to $196 million through her company, MJ Capital Funding LLC, NPR reported Tuesday.
Founded in 2020, MJ Capital pledged to connect investors with small businesses through “merchant cash advance,” or MCA.
Described as a “hardworking woman that has her priorities in line” in her company bio, Garcia boasted of being a down-to-earth businesswoman who helped regular people generate wealth– she was even “referred to as ‘Mother Theresa’ [sic] in her community.”
The ruse started to fall apart in April 2021, when a website emerged accusing MJ Capital of running a Ponzi scheme.
Garcia sued the anonymous whistleblower for defamation and continued to collect money from investors through Aug. 2021, when the Securities & Exchange Commission filed a formal complaint against the company.
In the document dated Aug. 9, the SEC alleges that MJ Capital used investors’ cash to fund “outside annualized ‘returns’ of 120%-180%,” while company higher-ups squirreled away investments for personal excursions and luxury goods.
In addition to using new injections of money to satisfy existing investors, the SEC claims that MJ Capital used unlicensed brokers and sales agents to sell unregistered securities.
A federal judge responded to the filing by freezing Garcia’s corporate assets and ordering them into receivership.
While Garcia awaits further investigation, the case against MJ Capital got new fodder last Tuesday, when the SEC filed a second complaint against Pavel Ruiz, a company board member.
The SEC argues that Ruiz, 29, played a “significant role in perpetuating the Ponzi scheme.”
Armed with a team of around 70 sales agents, Ruiz allegedly defrauded over 5,100 investors of at least $46 million, $7.7 million of which he diverted into his personal accounts.
According to the SEC, Ruiz used some of the pocketed money to purchase a luxury car and crypto assets.
The same day as the SEC complaint was released, the U.S. Attorney’s Office in the Southern District of Florida charged Ruiz with conspiring to commit wire fraud.
It is unclear if Garcia, who was not named in the federal case, will face similar charges as well.
If convicted, Ruiz faces up to 20 years in prison.
As of last week, both Garcia and Ruiz had 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 merely the latest in a disturbing string of similar cases, some of which saw 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. Just last month, the SEC filed a complaint against 11 people for their roles in an elaborate crypto pyramid scheme that targeted retail investors.