The Securities and Exchange Commission announced that it filed an emergency action and obtained a temporary restraining order, an asset freeze, and the appointment of a receiver to stop an alleged Ponzi scheme and misappropriation of investor proceeds perpetrated by Coral Springs, Florida resident Johanna M. Garcia and two entities she controls.
According to the SEC’s complaint, which was filed in federal court in the Southern District of Florida, since about June 2020, Garcia and her companies raised at least $70 million from more than 2,150 investors in a fraudulent securities offering. 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%. 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.