In reality, the MJ Companies only made around $2.9 million in merchant cash advance loans and generated very small revenue. The defendants allegedly used at least $20 million from new investors to pay the promised annual returns to their existing investors. Their payment strategy is a classic Ponzi scheme.
Additionally, the SEC alleged that the defendants misused $27.4 million of investors’ funds by making payments to different entities. A significant portion of this amount was paid to sales agents promoting the Ponzi scheme.
Garcia and her companies engaged in misconduct and violated certain provisions of the Securities Acts of 1933 and the Exchange Act of 1934, according to the Commission.
In a statement, SEC Miami Regional Office Director Eric Bustillo said, “As alleged in our complaint, Garcia and her companies lured unsuspecting investors with false claims and promises of triple-digit annual returns. We continue to caution investors to be wary of any investment that promises returns that are too good to be true.”
