Through the business she founded in the Fort Lauderdale region, MJ Capital Funding LLC, the Florida lady is charged with perpetrating a $196 million fraud. According to federal investigators, her company received that enormous sum of money from more than 15,400 investors in just over a year, between June 2020 and August 2021.
According to the website of MJ Capital, Garcia was “often referred to as ‘Mother Teresa’ in her community.” Through a device known as a “merchant cash advance,” or MCA, she is able to both lend money to small businesses and assist average people in creating wealth. Although the website is archived online, it is no longer live.
However, according to the Securities & Exchange Commission, MJ Capital used new investments to maintain phony monthly “returns” of 10%, or an annualized rate of 120%, rather than aiding small firms.
Garcia’s business committed to using the funding to provide MCA loans to carefully screened companies. It presented the procedure to potential investors as “buying future receivables,” securing for them a portion of the recipient company’ future earnings.
According to the SEC, MJ Capital really used the money from new investors to sustain a Ponzi scheme by paying out millions of dollars to current investors. The agency also claims that insiders of the business spent millions of dollars on things like travel, designer apparel, and other luxuries.
The SEC further asserts that MJ Capital sold unregistered securities through the employment of unlicensed brokers and sales representatives. Pavel Ruiz, 29, a board member of MJ Capital, is accused by the police of supporting the plan. His team of 70 sales agents is said to have raised at least $46 million from more than 5,100 investors.
Ruiz allegedly received commissions of $292,000 as a result of his labor. But the SEC claims that he also transferred around $7.7 million into accounts that belonged to him personally or that he controlled. He allegedly used some of the funds to “purchase crypto assets and a luxury vehicle.”
A federal judge ordered the assets of Garcia’s firms to be frozen and put them under receivership after the SEC filed its initial case against her last year.
However, the SEC only recently brought another lawsuit, this time against Ruiz. Additionally, on the same day, Ruiz was named the subject of criminal charges in the Southern District of Florida by the U.S. Attorney’s Office, alleging a conspiracy to conduct wire fraud. If convicted, he may spend up to 20 years behind bars.
When someone made a website with a URL resembling MJ Capital’s in April 2021, but accusing the company publicly of operating a Ponzi scheme, the putative scam began to fall apart. Then, in an uncommon move, MJ Capital sued the site’s founder in federal court and demanded a jury trial for alleged defamation.
In Pompano Beach, Florida, two months later, an undercover FBI agent went to MJ Capital’s office and pretended to be an investor. The agent provided the business $10,000, promising a return of 10% over the following 12 months in exchange.
