Two Broward residents accused of $196 million Ponzi scheme
Two Broward County residents have been accused of managing a massive Ponzi plan that raised additional than $196 million from at the very least 15,400 investors in a minor over a yr.
Johanna M. Garcia, Pavel Ramon Ruiz Hernandez and a workforce of 70 income brokers ran the plan out of headquarters on West Atlantic Boulevard in Pompano Seaside, according to complaints submitted by the U.S. Attorney’s Business office and the Securities and Trade Fee in U.S. District Court in Fort Lauderdale.
Hernandez, 29, is the matter of two separate issues submitted in federal court on Monday: a civil criticism by the SEC and a legal grievance by the U.S. Attorney’s Business in the Southern District of Florida.
Garcia, 39, who life in Lauderdale Lakes, is a defendant in a case submitted in August 2021 by the Securities and Exchange Commission. In an April filing responding to the rates, Garcia acknowledged she is the subject of a federal legal investigation associated to the SEC prices.
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In accordance to issues filed so considerably, buyers were advised that Garcia’s firms, MJ Cash Funding and its affiliate MJ Taxes and A lot more Inc., would use their money to provide financial loans to funds-strapped little enterprises, the grievances state.
In return, buyers would generate 120% to 180% every 12 months.
In its place, much less than $1 million in loans were produced although traders had been paid out $64 million “in purported returns,” the SEC mentioned. But they weren’t basically returns. It was cash paid out by afterwards traders in what the SEC is calling a typical Ponzi plan.
Dependent on the quantity of smaller company loans it made, the corporations “were not earning anywhere around the earnings required to pay out the promised returns to investors,” the SEC mentioned.
“The only way the MJ corporations could honor their obligations to traders would be by profitable continuation of their fraudulent scheme,” the complaint states.
Garcia, Hernandez and their product sales brokers lived lavishly off of the investments although functioning the plan involving June 2020 and August 2021, the grievances condition.
The trouble began when an anonymous personal set up a web site with a similar area identify as MJ Capital’s and crammed it with posts boasting the procedure was a Ponzi plan.
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The internet site got ample consideration from traders that MJ Capital was compelled to deny the allegations on its web-site and file a defamation accommodate from the anonymous particular person.
In the go well with, MJ Funds created quite a few statements that the SEC referred to as “false” or “misleading,” such as a declaration by Garcia less than penalty of perjury that MJ Funds “funds hundreds of thousands of bucks in service provider money loans” every month.
In June 2021, MJ Money was visited by an undercover FBI agent posing as a potential trader. The agent invested $10,000 and gained an initial 10% monthly curiosity payment soon afterward, the SEC said.
The SEC shut down the procedure in August 2021 just after acquiring a short-term restraint buy and asset freeze towards Garcia and her two businesses.
Hernandez, a Fort Lauderdale resident, is charged with boosting at minimum $46 million from much more than 5,100 investors. The SEC’s complaint states he was a direct gross sales agent, involved in “high-level determination-creating,” served as a board member and experienced entry to MJ Capital’s lender accounts.
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He “misappropriated or misused” $6.5 million of investors’ funds, such as on individual fees these as crypto property and a luxurious motor vehicle, the SEC’s complaint states.
Hernandez could not be reached for remark Tuesday. According to a Department of Justice information release, he created his preliminary visual appeal in federal court on Tuesday. He faces a maximum of 20 a long time in jail if convicted on fees of conspiring to commit wire fraud through an investment Ponzi scheme.
The SEC’s civil complaints cost Garcia and Hernandez with quite a few counts of violating many U.S. securities laws. They are searching for courtroom orders barring Garcia and Hernandez from running again and requiring them to repay victims of the plan.
Garcia, in an April statement submitted in reaction to the SEC’s costs, cited the legal investigation in her conclusion to plead the Fifth Amendment right towards self incrimination in reaction to 71 paragraphs of the SEC’s criticism. Garcia’s attorney did not immediately reply to an interview ask for.
But in response to a demand that she was liable for unlawful acts by others, Garcia reported she “at all occasions acted in good faith and did not immediately or indirectly induce” any violation of U.S. securities regulation.
Her previous corporations are now below manage of a receiver appointed to liquidate the companies’ assets and get better resources for the scheme’s traders. For more info about the receiver, go to kttlaw.com/mjcapital.
Ron Hurtibise covers enterprise and purchaser challenges for the South Florida Solar Sentinel. He can be arrived at by phone at 954-356-4071, on Twitter @ronhurtibise or by e-mail at [email protected].
