MIAMI.- Johanna Michele Garcia, of Broward County, Florida, former CEO of MJ Capital Funding, pleaded guilty to committing mail and wire fraud through a Ponzi scheme, or pyramid scheme, whose total investment was $190.7 million.
On July 16, Garcia pleaded guilty to conspiracy to commit mail and wire fraud, in violation of Title 18, United States Code, Sections 1349, 1343, and 1341.
According to court records, Garcia’s company was engaged in providing merchant cash advances (MCAs), a type of short-term financing that small businesses often use to access cash.
Beginning in October 2020 and continuing through August 2021, Garcia conspired with Pavel Ramon Ruiz Hernandez and others to fraudulently solicit money from investors to fund MJ Capital Funding’s MCAs.
Court records allege that Garcia and his co-conspirators made false statements and fraudulent representations to potential investors about the nature of MJ Capital Funding’s business, promising them large returns.
“However, the company’s business did not make anywhere near the profits it needed to pay investors the promised returns. Garcia then created a Ponzi scheme, using the funds from new investors he was recruiting to pay existing investors, while embezzling millions of dollars for his own personal benefit,” authorities explained.
“Of the nearly $200 million raised by MJ Capital Funding, investors lost approximately $90 million,” according to court records from the U.S. Attorney’s Office, Southern District of Florida.
In the fall of 2021, the FBI and the Securities and Exchange Commission (SEC) shut down MJ Capital Funding. However, Garcia, along with Ruiz Hernandez, began operating a new pyramid scheme identical to the one created with MJ Capital Funding. This time they used new entities such as New Beginning Global Funding LLC, New Beginning Capital Funding LLC, Lion Heart Capital Group LLC, GMR Remodeling LLC, and Group Management LLC. Again the money raised was used to pay off previous investors and fund the lifestyle of Garcia and his henchmen. This latest criminal scheme was operational until Garcia’s arrest. He even operated it while in the custody of the Bureau of Prisons, judicial authorities stated.
The sentencing hearing will take place on September 20, where U.S. District Court Judge Jose E. Martinez will determine Garcia’s sentence.
In September 2023, Ruiz Hernandez was sentenced to 110 months in prison, followed by three years of supervised release.
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