Johanna Garcia, Pavel Ruiz of MJ Capital Paying $196M Ponzi Scheme: NPR

The MJ Capital Funding website said its founder, Joanna Garcia, “is often referred to as ‘Mother Teresa’ in her community.” But federal authorities say Garcia was actually running a Ponzi scheme. The site was closed by court order; An archived version is shown here.


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The MJ Capital Funding website said its founder, Joanna Garcia, “is often referred to as ‘Mother Teresa’ in her community.” But federal authorities say Garcia was actually running a Ponzi scheme. The site was closed by court order; An archived version is shown here.


Internet Archive / screenshot by NPR

She said she worked miracles – not for charity, but for profit: Joanna M. Garcia connected investors with companies in need of short-term financing, promising solid returns on their money. But federal prosecutors say it wasn’t a miracle. The Ponzi scheme was profitable.

The Florida woman is accused of committing a $196 million fraud through MJ Capital Funding LLC, the company she founded in the Fort Lauderdale area. Federal investigators said its business took that huge amount of money from more than 15,400 investors in just over a year, from June 2020 to August 2021.

The MJ Capital website said Garcia is “often referred to as ‘Mother Teresa’ in her community”. It describes its ability to help ordinary people create wealth as well as provide loans to small businesses through a tool known as a Merchant Cash Advance, or MCA. The website is no longer active; it’s a Archive online.

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But instead of supporting small businesses, the Securities and Exchange Commission says, MG Capital pulled millions of dollars to company insiders and used new investments to support false monthly “returns” of 10% — at a 120% annual rate.

How do I convince people to invest money?

Garcia promised to use the funds to provide MCA loans to carefully vetted businesses. For potential investors, she portrayed the process as a “future receivable purchase” – ensuring them a share of the recipient companies’ income for the coming months.

In fact, MJ Capital has used new investors’ money to make millions of dollars in payments to satisfy existing investors and fuel a Ponzi scheme, according to the Securities and Exchange Commission. In addition, the agency says, company insiders have spent millions of dollars on things like travel, luxury goods and apparel.

The SEC also alleges that MG Capital used unlicensed brokers and sales agents to sell unregistered securities. Scheme support, authorities claim, was Pavel RuizMJ Capital, 29, is a board member of MJ Capital whose sales team of 70 agents has raised at least $46 million from more than 5,100 investors.

Ruiz has reaped significant rewards from his work, allegedly making $292,000 in commissions. But he also transferred about $7.7 million directly to his personal accounts or accounts he controls, according to the Securities and Exchange Commission. She says he used some of the money to “buy crypto assets and a luxury car.”

The Securities and Exchange Commission (SEC) has submitted its preliminary filing Complaint against Garcia Last year – she led a federal judge to freeze her companies’ assets and orders in judicial custody.

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but only last weekthe Securities and Exchange Commission introduced again complaintThis is against Ruiz. On the same day, the US Attorney’s Office in the Southern District of Florida Notify criminal charges against Ruiz, accusing him of conspiracy to commit wire fraud. He faces up to 20 years in prison if convicted.

A secret FBI agent visited the company

The alleged scheme showed signs of unraveling in April 2021, when someone created a website with a similar URL to MJ Capital – but publicly accused the company of running the Ponzi scheme. MJ Capital then took the unusual step of suing the site’s creator in federal court, demanding a jury trial in defamation lawsuits.

Two months later, an undercover FBI agent visited the office of MJ Capital in Pompano Beach, Florida, pretending to be a potential investor. The agent gave the company $10,000, which they were told would yield a guaranteed 10% return for the next 12 months.

Garcia’s name does not appear in the criminal case against Ruiz; She is only referred to as “Co-Conspirator 1”, who has been identified as the company’s leader. When NPR asked the U.S. Attorney’s office whether Garcia might also face criminal charges, a representative said Monday, “In accordance with Department of Justice policy, we cannot confirm or deny that an investigation exists.”

Last week, the Securities and Exchange Commission and Garcia agreed to a partial settlement that would put the agency’s complaint against them in the background. They jointly asked Judge Rag Sengal to approve the deal, citing potential complications from what Garcia called a “parallel federal criminal investigation.”

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The proposed wording for the partial settlement acceptance order states that “the Securities and Exchange Commission can process its request for monetary relief once the criminal judgment has been completed (in the event that the defendant does not win at trial).”

The Securities and Exchange Commission says it has also reached a partial settlement with Ruiz similarly deferring the issue of the cash exemption, citing the criminal charges against him.

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