MIAMI – A Broward woman on Tuesday was sentenced to 20 years in prison in a Ponzi scheme that defrauded investors more than $190 million, including duping clients while in federal custody.
Johanna Michely Garcia, the former Chief Executive Officer of MJ Capital Funding, LLC, in Pompano Beach pleaded guilty on July 16 to piracy to commit mail and wire fraud in the case in the Southern District of Florida.
Garcia was convicted of defrauding customers with MJ Capital Funding as well as clients with other companies formed later.
In 2021, CBS News Miami reported she was being investigated by the Securities and Exchange Commission. More than 2,000 people were persuaded to invest thousands of dollars and in exchange they would get back typically 120% for six-month investments.
The conspiracy involved Garcia leading others, including Pavel Ramon Ruiz Hernandez, in an investment Ponzi fraud scheme totaling approximately $190,700,000. Hernandez was charged in August 2022, pleaded guilty in April 2023 and was sentenced in September 2023 to 110 months’ imprisonment, followed by three years of supervised release.
Garcia’s MJ Capital Funding was purportedly engaged in providing merchant cash advances, or MCAs, a type of short-term financing typically used by small businesses.
From October to August 2021, Garcia conspired with others to fraudulently solicit money from investors to fund MJ Capital Funding’s MCAs, according to the U.S. Department of Justice.
Garcia and her co-conspirators recruited other people to solicit investors for MJ Capital Funding’s investment offering and paid those recruiters commissions.
“Court records state that Garcia and her co-conspirators, directly and indirectly, made false statements and fraudulent representations to investors concerning the nature of the MJ Capital Funding investment and the use of investor funds,” according to a DOJ release. “Garcia and others falsely told investors that their money would be used to fund MCAs and that investor returns would be paid from the profits of MJ Capital Funding’s MCA business. However, the company made few loans and failed to earn anywhere near the profits it needed to pay the investors the promised returns.
As a result, Garcia paid investors by running a large Ponzi fraud scheme, paying existing investors using new investor funds while misappropriating millions of dollars for her own personal benefit. Of the nearly $200 million raised, investors lost nearly $90 million.
After the FBI and SEC shut MJ Capital Funding in the fall of 2021, Garcia, Ruiz Hernandez and others began operating a new Ponzi scheme that was comparable to the MJ Capital Funding criminal enterprise. DOJ said.
Garcia led this new scheme from its inception, up until her arrest and while in Bureau of Prisons custody.
The entities included New Beginning Global Funding LLC, New Beginning Capital Funding LLC, Lion Heart Capital Group L.L.C., GMR Remodeling LLC and Group Management LLC
“Similar to the MJ Capital Funding fraud, Garcia and her partners told victims that their money would be used to fund commercial loans,” DOJ said in the news release. “In truth, the money raised was used to pay off previous investors, and fund Garcia and her coconspirators’ lifestyles.
