The MJ Capital Funding lawsuit refers to a set of civil and criminal cases arising out of a $196 million Ponzi scheme run out of South Florida between 2020 and 2021. The Securities and Exchange Commission sued the company and its founder, Johanna Michely Garcia, in August 2021; Garcia was later indicted, pleaded guilty to conspiracy to commit wire and mail fraud, and was sentenced in December 2024 to 20 years in federal prison. More than 15,400 investors lost close to $90 million, and a court-appointed receiver is still distributing recovered funds.
What MJ Capital Funding Actually Did
MJ Capital Funding, LLC and its affiliate MJ Taxes and More, Inc. told investors they were funding merchant cash advances, short-term loans to small businesses. Written agreements promised annualized returns of 120 to 180 percent, and the companies marketed themselves through a polished website, social media, and even non-disclosure agreements that gave the operation a professional veneer.1U.S. Securities and Exchange Commission. SEC Charges MJ Capital Funding, MJ Taxes and More, and Johanna Garcia
The lending business barely existed. Of the roughly $196 million raised beginning in June 2020, only about $923,000 was ever used to fund actual business loans. At least $108.9 million was paid to earlier investors as fake “returns” using money from newer investors, $62.3 million went to sales agents as recruiting commissions, and at least $7.35 million was spent on luxury goods, travel, and entertainment for insiders.2U.S. Securities and Exchange Commission. SEC Complaint, SEC v. Joel Castellanos The whole operation depended on a growing stream of new money and on persuading existing investors to roll their principal over instead of cashing out.
The SEC Enforcement Case
On August 9, 2021, the SEC filed an emergency civil enforcement action against MJ Capital Funding, MJ Taxes and More, and Johanna Garcia in the U.S. District Court for the Southern District of Florida. The complaint charged violations of the registration and antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Initial estimates put the fraud at $70 million and 2,150 investors, numbers that grew dramatically as investigators worked through the records.1U.S. Securities and Exchange Commission. SEC Charges MJ Capital Funding, MJ Taxes and More, and Johanna Garcia
The court quickly issued a temporary restraining order, froze the defendants’ assets, and appointed a receiver. Consent judgments permanently barred the MJ Capital entities from further securities violations. On May 1, 2025, the court entered a final judgment against Garcia personally for $3,286,798.50 in disgorgement and $840,309.15 in prejudgment interest, along with a permanent injunction and an officer-and-director bar. Those monetary amounts were deemed satisfied by a much larger $186,312,000 forfeiture order entered in her criminal case.3ALM Media. Receiver’s Seventeenth Interim Report, SEC v. MJ Capital Funding
Garcia’s Criminal Conviction and 20-Year Sentence
Garcia was indicted in August 2023 on 29 counts, including conspiracy to commit wire and mail fraud, substantive fraud counts, and money laundering. Prosecutors alleged that even after the FBI and SEC shut MJ Capital down in the fall of 2021, she launched a second Ponzi scheme through new entities including New Beginning Global Funding LLC, New Beginning Capital Funding LLC, and Lion Heart Capital Group, continuing to take money from victims until her arrest.4U.S. Department of Justice. Leader of $200 Million Ponzi Scheme Sentenced to 20 Years in Prison
On July 16, 2024, Garcia pleaded guilty to one count of conspiracy to commit wire and mail fraud, and the remaining 28 counts were dismissed.5NBC Los Angeles. Florida Woman Who Led $200 Million Ponzi Scheme Sentenced to 20 Years in Prison On December 3, 2024, U.S. District Judge Jose Martinez imposed the statutory maximum of 240 months in federal prison followed by three years of supervised release.4U.S. Department of Justice. Leader of $200 Million Ponzi Scheme Sentenced to 20 Years in Prison On March 5, 2025, the parties stipulated that Garcia is liable for $65,802,500 in restitution.6Kozyak Tropin & Throckmorton. MJ Capital Funding Receivership
Garcia appealed, arguing sentencing enhancements were misapplied and that her term was disproportionate to her co-conspirator’s. On March 17, 2026, the Eleventh Circuit Court of Appeals affirmed, finding the sentence procedurally sound and substantively reasonable. The panel called Garcia the “mastermind” of the scheme, responsible for $86 million in losses compared to $43 million for her co-conspirator.7U.S. Court of Appeals for the Eleventh Circuit. United States v. Garcia, No. 24-14110
Others Held Liable
Pavel Ramon Ruiz Hernandez, an MJ Capital board member and Garcia’s primary co-conspirator, admitted to fraudulently obtaining at least $42,942,000 from investors, paying his recruiters roughly 10 percent commissions. He pleaded guilty to conspiracy to commit wire fraud in April 2023 and was sentenced on September 19, 2023, to 110 months in prison and three years of supervised release.8U.S. Department of Justice. Broward County Resident Sentenced to 110 Months in Prison for Conspiracy Christian Gonzalez was convicted of two counts of money laundering tied to transfers made after the receiver had taken over.9Yahoo News. Broward ‘Mother Theresa,’ Her Cronies Ran $190M Ponzi Scheme
The SEC has also pursued the sales agents and board members who drove recruitment. In September 2023, it sued Nathalia Burgos, the former vice president and 50 percent owner, alleging she solicited investors while knowing the operation was a Ponzi scheme and personally misappropriated about $39,000 in investor money. The same day, the SEC filed against Christian Cuesta, whose team of more than 100 agents raised at least $29.5 million from over 970 investors, and against Steven Fernandez and Monica O’Mealia, who together raised at least $19.4 million from over 800 investors. Fernandez and O’Mealia settled without admitting or denying the allegations, paying $755,017 in disgorgement plus $75,000 each in civil penalties.10U.S. Securities and Exchange Commission. SEC Charges Sales Agents in MJ Capital Ponzi Scheme
In February 2026, the SEC filed against Joel Castellanos, another board member and lead sales agent who ran a team of about 42 agents and raised at least $25.2 million from over 1,222 investors. He consented to a final judgment without admitting or denying the allegations, agreeing to pay $46,861.94 in disgorgement, $13,084.42 in prejudgment interest, and a $150,000 civil penalty, and accepting a bar from the securities industry.11U.S. Securities and Exchange Commission. SEC Administrative Proceeding, In the Matter of Joel Castellanos
Investors separately sued Wells Fargo Bank, alleging the bank ignored its own anti-money-laundering policies and let MJ Capital push large sums through its accounts unchecked. The case, Bautista et al v. Wells Fargo Bank, N.A. (Case No. 0:21-cv-61749), produced a $26.6 million class settlement that advanced toward final approval in March 2023, with class counsel receiving nearly $6.6 million in fees.12Law360. Bautista v. Wells Fargo Bank
How Investors Are Being Repaid
Bernice Lee of Kozyak Tropin & Throckmorton was appointed receiver over MJ Capital Funding, MJ Taxes and More, Pavel Ruiz MJCF LLC, and UDM Remodeling LLC. As of December 31, 2025, the receivership estate held about $9 million, and the separate Wells Fargo settlement fund held about $21.2 million.6Kozyak Tropin & Throckmorton. MJ Capital Funding Receivership
The receiver has issued more than 6,200 checks totaling over $11.8 million to investors with allowed claims. Distributions follow a “Rising Tide” method that brings all claimants to a uniform recovery level; in the first round, eligible investors who had received nothing before the receivership recovered 21.397 percent of their investment.6Kozyak Tropin & Throckmorton. MJ Capital Funding Receivership The allowed claims pool totals about $161.9 million, and the investors behind those claims had received roughly $38.9 million from the companies before the receivership began. The receiver has also obtained final judgments or settlements against board members who received over $7.9 million in fraudulent transfers and has sued more than 125 promoters connected to the scheme.3ALM Media. Receiver’s Seventeenth Interim Report, SEC v. MJ Capital Funding
For the Wells Fargo settlement fund, the administrator reviewed over 1,100 additional claims asserting more than $26 million. As of early 2026, roughly 840 of those claims had been rejected, cutting the additional-claims pool to under $6.3 million. A distribution schedule will be prepared once claims reconciliation finishes.6Kozyak Tropin & Throckmorton. MJ Capital Funding Receivership
The claim deadlines have already passed. The receivership bar date was July 19, 2022, and the Wells Fargo settlement claim deadline was June 9, 2023. New claims can no longer be filed in either proceeding.6Kozyak Tropin & Throckmorton. MJ Capital Funding Receivership If you filed a claim before those dates, updates on distributions come through the receiver’s office; if you did not, the two established recovery channels for this case are closed.