SEC Obtains Emergency Relief, Charges Two Florida Companies and their Principal Officer with Operating a Ponzi Scheme
Washington D.C., Aug. 13, 2021 —
The Securities and Exchange Commission today 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 120-180%. 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.
“As alleged in our complaint, Garcia and her companies lured unsuspecting investors with false claims and promises of triple-digit annual returns,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “We continue to caution investors to be wary of any investment that promises returns that are too good to be true.”
The SEC’s complaint, filed on Aug. 9, 2021, and unsealed today, charges the defendants with violating the antifraud and registration provisions of the federal securities laws. In addition to the emergency relief granted by the court, the complaint seeks preliminary and permanent injunctions; disgorgement, prejudgment interest, and a civil penalty from each of the defendants; and an officer and director bar against Garcia. The court set a hearing for Aug. 25, 2021, to determine if a preliminary injunction should be entered and whether the asset freeze should remain in force for the duration of the litigation.
The SEC’s investigation was conducted by Raynette R. Nicoleau and Julia A. D’Antonio in the Miami Regional Office, and was supervised by Chedly C. Dumornay, Fernando Torres and Glenn S. Gordon. The SEC’s litigation will be led by Andrew Schiff and Stephanie Moot. The SEC acknowledges the assistance of the Florida Office of Financial Regulation.