SEC charges 2 companies Floridian into merchant cash advance Ponzi scheme
The Security and Trade Commission (SEC) filed emergency action and obtained a temporary restraining order, an asset freeze and the appointment of a receiver to stop an alleged Ponzi scheme and the embezzlement of investor income perpetrated by Coral Springs , Florida resident Johanna M. Garcia and two entities that it controls.
According to the SEC’s complaint, filed in federal court in the Southern District of Florida, over the past year, Garcia and his companies have raised at least $ 70 million from more than 2,150 investors under the scheme. a fraudulent offer of securities. The complaint alleges that Garcia and the companies MJ Capital Funding LLC and MJ taxes and More Inc. told investors that the proceeds of the offering would be used to fund cash advances from traders to small businesses and promised investors annual returns of 120 to 180 percent.
The reality was very different. Garcia and his companies have only made loans of $ 2.9 million at most and have generated little income. Instead, the defendants allegedly used at least $ 20 million in new money to pay alleged returns to existing investors in the manner of a classic Ponzi scheme. The lawsuit alleges that the defendants embezzled an additional $ 27.4 million of investor money by making payments to various other entities, a substantial portion of which were payments to sales agents for the promotion of these investments.
“As alleged in our complaint, Garcia and its companies have lured unsuspecting investors with false statements 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 complaint, filed on August 9, 2021 and unsealed last week, accuses the defendants of violating the anti-fraud and registration provisions of federal securities laws. In addition to emergency aid, the complaint seeks preliminary and permanent injunctions; restitution, pre-judgment interest and civil penalty of each of the defendants; and an officer and director bar against Garcia. The court has set a hearing for August 25 to determine whether a preliminary injunction should be issued and whether the assets freeze should remain in place for the duration of the litigation.