Johanna Garcia claimed her merchant funds-advance business was so beneficial to smaller companies in Florida that she was like the Catholic saint Mother Teresa.
But to the 15,400 investors who sank $194.1 million into MJ Funds Funding, the lender Garcia launched with her partner, Pavel Ramon Ruiz Hernandez, it was merely a Ponzi scheme, federal investigators say.
Previous 7 days, Ruiz Hernandez, 29, of Broward County, was strike with federal wire-fraud fees in Miami. Garcia, who had been MJ Capital’s president and chief government, had before been named in a civil fit introduced by the Securities and Trade Commission, which accused the operation of staying a blatant fraud.
Messages remaining with lawyers for Ruiz Hernandez and Garcia weren’t right away returned.
Investigators say the pair released MJ Cash Funding and other similar entities in 2020 with the promise that they have been boosting cash from traders to lend to tiny organizations in need to have of shorter-term financial loans. They promised buyers returns of 10% a month or 120% in a 12 months.
The combine of altruism — the company’s website claimed Garcia, in her effort and hard work to support hardworking folks make dollars, experienced been likened in her community to the Albanian nun Mom Teresa, who served the inadequate in Kolkata, India, for many years and gained the Nobel Peace Prize prior to staying canonized by Pope Francis — and higher returns proved a strike. In just a calendar year, the enterprise lifted virtually $200 million from 1000’s of traders, the SEC claimed.
But federal prosecutors and the SEC say really little lending ever occurred. Most of the cash was made use of to shell out the salespeople who introduced in traders and fork out out earlier traders in the plan, according to court docket paperwork. Thousands and thousands additional went into the pockets of the company’s founders, investigators alleged.
Prosecutors say Ruiz Hernandez funneled some $7.7 million into his personal accounts which he used to obtain luxurious autos and spend in cryptocurrencies.
Inevitably, some investors grew uneasy, and 1 anonymously made a web page accusing MJ Funds of being a Ponzi scheme. The enterprise submitted a lawsuit going to get the internet site taken down, saying its company was completely authentic — something investigators say was a bald-faced lie.
In late 2021, an undercover FBI agent approached MJ Cash posing as an trader to accumulate proof, according to court docket documents.
Garcia, who was originally sued by the SEC final year, has partially settled the situation, agreeing to flip in excess of property for auction. She has not been billed criminally.
Ruiz Hernandez faces up to 20 many years in prison if convicted of wire fraud charges. He was introduced last week on $250,000 bond.