Florida 'Mother Theresa' Was Actually Running $196 Million Ponzi Scheme According To SEC
"The MJ Companies misused investor funds by making payments totaling at least $61.8 million to sales agents..."
Florida 'Mother Theresa' Was Actually Running $196 Million Ponzi Scheme According To SEC
BY TYLER DURDEN
WEDNESDAY, SEP 07, 2022 - 07:45 PM
A Florida woman whose website claimed she was "often referred to as 'Mother Teresa' in her community" was actually running a multi-million dollar Ponzi scheme which promised investors 120% - 180% annual returns, federal prosecutors allege.
Broward County resident Johanna Garcia, connected investors with small businesses which needed short-term financing - promising the investors huge returns. Between June 2020 and August 2021, her company, MJ Capital Funding LLC took in more than $196 million from over 15,400 investors. She created a tool known as a "merchant cash advance" or MCA to provide loans to small businesses via a now-defunct website.
Garcia told prospective investors that they were "purchasing future receivables," which guaranteed them a share of the recipient businesses' income for months. According to the SEC, however, she was using new investors' funds to satisfy payments to existing investors - fueling a Ponzi scheme, NPR reports. Company insiders, meanwhile, are accused of spending millions of dollars on travel, luxury goods, clothing and other items.
"From June 1, 2020 through August 31, 2021, the MJ Companies misused investor funds by making payments totaling at least $61.8 million to sales agents for promoting investments in the MJ Companies," reads a new complaint against unlicensed broker, Pavel Ruiz.
The SEC also alleges that MJ Capital used unlicensed brokers and sales agents to sell unregistered securities. Supporting the scheme, the authorities allege, was Pavel Ruiz, 29, an MJ Capital board member whose sales team of some 70 agents allegedly reeled in at least $46 million from more than 5,100 investors.
Ruiz reaped large rewards from his work, allegedly taking in $292,000 in commissions. But he also diverted some $7.7 million directly into his personal accounts or ones he controlled, according to the SEC. It says he used some of the money to "purchase crypto assets and a luxury vehicle." -NPR
After initially filing a complaint against Garcia last year, a federal judge has since frozen her companies' assets and ordered them into receivership.
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