Ponzi scheme mastermind sentenced; victims lose millions in fraud

MIAMI, Fla. — The former CEO of MJ Capital Funding, LLC, was sentenced to 20 years in federal prison for her role in a $200 million Ponzi scheme that defrauded investors and caused nearly $90 million in losses, according to the U.S. Attorney’s Office for the Southern District of Florida (USAO).

Johanna Michely Garcia, 41, of Broward County, pleaded guilty in July to conspiracy to commit mail and wire fraud. Prosecutors said Garcia led the scheme, along with others, including Pavel Ramon Ruiz Hernandez, to fraudulently solicit funds for purported merchant cash advances (MCAs) through MJ Capital Funding.

According to court records, Ms Garcia and her co-conspirators falsely claimed that investor funds would be used to finance MCAs for small businesses and that returns would come from the profits of the MCA business.

However, the company reportedly made only a few loans and generated far less profit than promised. Instead, Garcia is said to have run a Ponzi scheme, using funds from new investors to pay earlier ones while misappropriating millions for personal use.

According to the USAO, between October 2020 and August 2021, the scheme raised approximately $190.7 million, resulting in $90 million in investor losses.

After MJ Capital Funding was shut down by the FBI and the Securities and Exchange Commission (SEC) in 2021, Ms Garcia and her associates reportedly launched a new Ponzi scheme using entities such as New Beginning Global Funding LLC, New Beginning Capital Funding LLC, and others.

According to court documents, the second scheme, which Garcia is said to have operated even while in federal custody, used the same fraudulent tactics.

Ruiz Hernandez, a co-conspirator, pleaded guilty in 2023 and was sentenced to over nine years in prison, followed by supervised release.

The sentencing was announced by U.S. Attorney Markenzy Lapointe, Special Agent in Charge Jeffrey B. Veltri of FBI Miami, and Florida Office of Financial Regulation (OFR) Commissioner Russell C. Weigel III.

The FBI Miami Field Office and OFR led the investigation, with assistance from the SEC’s Miami Regional Office. Assistant U.S. Attorney Roger Cruz prosecuted the case, while Assistant U.S. Attorney Marx Calderon handled asset forfeiture.