Leader of $200 Million Ponzi Scheme Pleads Guilty to Mail and Wire Fraud Conspiracy and Faces 20 Years’ Imprisonment

MIAMI - Johanna Michely Garcia, 41, from Broward County, Fla., was the former Chief Executive Officer of MJ Capital Funding, LLC. On July 16, Garcia pled guilty to conspiracy to commit mail and wire fraud, in violation of Title 18, United States Code, Sections 1349, 1343, and 1341. The conspiracy involved Garcia leading others, including Pavel Ramon Ruiz Hernandez, in an investment Ponzi fraud scheme totaling approximately $190,700,000.

According to court records, 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. Beginning in October 2020, and continuing through August 2021, Garcia conspired with others to fraudulently solicit money from investors to fund MJ Capital Funding's MCAs. 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. 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.

According to Court records, after the FBI and Securities and Exchange Commission (SEC) effectively shut down MJ Capital Funding, in the fall of 2021, Garcia, Ruiz Hernandez, and others began operating a new Ponzi scheme that was identical to the MJ Capital Funding criminal enterprise. Garcia led this new scheme from its inception, up until her arrest, and after, while in Bureau of Prisons custody. The entities utilized by Garcia and her co-conspirators for the new fraud scheme 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. In truth, the money raised was used to pay off previous investors, and fund Garcia and her coconspirators' lifestyles.

Garcia's sentencing hearing is currently set for Sept. 20, 2024. U.S. District Court Judge Jose E. Martinez will determine Garcia's sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Ruiz Hernandez was charged in August 2022, pled guilty in April 2023, and was sentenced in September 2023 to 110 months' imprisonment, followed by three years of supervised release.

U.S. Attorney Markenzy Lapointe for the Southern District of Florida, and Special Agent in Charge Jeffrey B. Veltri, FBI Miami, made the announcement.

FBI Miami investigated this case. SEC's Miami Regional Office and Florida's Office of Financial Regulation provided invaluable assistance. Assistant U.S. Attorney Roger Cruz is prosecuting the case. Assistant U.S. Attorney Marx Calderon is handling asset forfeiture.

Related court documents and information may be found on the website of the District Court for the Southern District of Florida at www.flsd.uscourts.gov or at http://pacer.flsd.uscourts.gov under case number 23-cr-20350.

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