The Securities and Exchange Commission (“SEC”) was recently granted a temporary restraining order and asset freeze relating to an alleged Ponzi scheme involving Johanna M. Garcia and the MJ Companies.
The SEC also requested that the court appoint a receiver to begin investigating the investment fraud scheme.
According to the SEC Complaint:
- For over a year, Johanna M. Garcia has been running a Ponzi scheme, using her companies to take in between $70.9 million and $128.8 million from over 2,150 investors – who have been tricked into thinking they are funding loans to small businesses – when in reality their outsize annualized “returns” of 120%-180% have been funded with money obtained from new investors. Among other relief, the Commission requests that the Court issue a Temporary Restraining Order and Preliminary Injunction to halt this ongoing scheme, freeze the assets of Garci and her companies, MJ Capital Funding, LLC (“MJ Capital” and MJ Taxes and More Inc (“MJ Taxes” and, with MJ Capital, the “MJ Companies”), and appoint a receiver over the MJ Companies.
The Complaint alleges that Johanna M. Garcia and the MJ Companies used at least $20 million of new money from investors to pay fake returns to existing investors, a classic hallmark of a Ponzi scheme. The SEC further alleges that the Defendants used an additional $27.4 million of investor funds to make payments to various other entities, most of which went as payments to sales agents for promoting the investments in the MJ Companies.
A court hearing is set for August 25, 2021, to determine if a preliminary injunction is warranted and if the asset freeze should remain in place for the duration of the litigation.
If you believe you have suffered losses in the MJ Companies Ponzi Scheme or other investment scheme, please contact us to discuss your possible claim