INVESTORS:
The United States District Court for the Southern District of Florida has appointed Bernice Lee as the Receiver over MJ Capital Funding, LLC, MJ Taxes and More, Inc., Pavel Ruiz MJCF LLC and UDM Remodeling, LLC (collectively, the “Receivership Entities”) in Case No. 21-61644-CIV-SINGHAL filed by the Securities and Exchange Commission against Johanna M. Garcia, MJ Capital Funding, LLC and MJ Taxes and More, Inc. The SEC’s Complaint alleges that Johanna M. Garcia used the defendant companies to perpetrate a Ponzi scheme by tricking investors into thinking they were funding loans to small businesses when in reality their “returns” were funded with money obtained from new investors. Links to the Complaint, Order appointing the Receiver, and other court documents are available under the “Court Documents” section on this page. The Receiver has been directed to take exclusive jurisdiction and possession of all assets of the Receivership Entities, and to exercise all powers of the officers, directors, managers and general and limited partners of the Receivership Entities, among other things. The Receiver has been engaged in the process of identifying and securing the Receivership Entities’ assets, investigating their operations and financial affairs, and identify the nature and scope of claims to be administered through this receivership proceeding.
FREQUENTLY ASKED QUESTIONS (FAQs):
How much money has been recovered?
As of June 30, 2024, the receivership estate has a balance of approximately $15 million, and the Wells Fargo settlement fund has a balance of approximately $20.5 million. These amounts will change based on expenses and fees paid, and additional amounts recovered.
How many claims have been filed against the Receivership and Wells Fargo settlement fund?
In total, approximately 14,188 claims have been filed against the receivership estate and the Wells Fargo settlement fund for an estimated total of $264 million.
What is the status of the Receivership estate’s claims process and distribution plan?
For the 12,958 timely proofs of claim submitted to the Receiver by the July 19, 2022 bar date and approximately 100 late proofs of claim submitted to the Receiver after the bar date, the Receiver has issued all rejection notices. In March and April 2024, the Receiver issued the final set of more than 1,000 rejection notices. Claimants who receive a rejection notice have 60 days to submit a reconsideration letter to the Receiver, and the Receiver has 90 days to issue a final determination. There is an additional appeal process. The claims process is set forth in the Order Granting Receiver’s Motion to (I) Establish Bar Date for Claims; (II) Approve Form and Manner of Notice; (III) Approve Proof of Claim Form; and (IV) Approve Claim Submission and Administration Procedures [DE 125]. The Receiver addressed thousands of responses from investors regarding rejection notices, and analyzed hundreds of documents provided by certain investors in response to rejection notices.
As of July 20, 2024, there are an estimated 200 responses remaining for the Receiver to review. The Receiver has encountered numerous issues in the claims reconciliation process that require additional time, such as: (a) investors who claim a relative, other third party or related company provided the funds to MJ Capital to fund their investments, and only provide documents or information disclosing such party after receiving a rejection notice and specific request from the Receiver, (b) investors who fail to provide any copy of an investor agreement or any bank records in support of their claim until after receiving a rejection notice and specific requests from the Receiver, (c) investors who deny receiving payments until they receive either a list of deposited checks from the Receiver, or at times, copies of the checks they deposited, and (d) investors who send multiple emails in response to rejection notices, which requires the receiver’s team to sort through hundreds of emails to piece together the complete response.
Once the Receiver has resolved or otherwise addressed the remaining responses to rejection notices, the Receiver will finalize the initial pro rata distribution plan and submit the plan to the Court for approval. The initial plan will be both fair and reasonable. If you have a claim pending on the claims register that has not been rejected in its entirety, you will receive notice of the distribution plan when it is ready. Please make sure you know your claim number so you can look up your claim in the distribution plan when it is finalized. Additional updates regarding the status of the remaining rejection notices, resolution of same, and the distribution plan will be provided on this website.
The Receiver’s team has already eliminated tens of millions of dollars in improper claims and significantly reduced the amount of valid claims that will share in the pro rata distribution. The Receiver has issued: (a) over 1,500 rejection notices to disallow an estimated $30 million in duplicative claims, (b) over 690 rejection notices for an estimated $12.3 million in claims filed by promoters and those related to promoters or who received payments in excess of their investment, (c) 2,840 rejection notices for claims that failed to account for over $10.3 million in payments received, (d) over 1,140 rejection notices for over $39 million in claims filed by claimants who failed to provide complete information regarding the funds they invested, failed to provide sufficient supporting documentation, failed to disclose payments received, and/or had a discrepancy within the information and documents provided, (e) over 340 rejection notices for claims filed by claimants whose claims improperly inflated the amount owed or failed to account for payments received, and (f) approximately 98 rejection notices for late filed claims on the basis that such claims are untimely, duplicative of other claims, and/or fail to account for payments received.
What is the status of the Wells Fargo settlement fund ‘s claims process and distributions?
The Receiver serves as the Settlement Administrator for the Wells Fargo settlement fund. As noted above, the Wells Fargo settlement fund has approximately $20.5 million as of June 30, 2024. These funds are in addition to the funds in the receivership estate. Investors who did not file a proof of claim with the Receiver by the July 19, 2022 claims bar date were permitted to submit a claim to the Settlement Administrator by June 9, 2023 to request to participate in the Wells Fargo settlement. Investors who previously submitted a proof of claim to the Receiver by the July 19, 2022 deadline did not need to submit an additional claim to request to participate in the Wells Fargo settlement. A copy of the agreement, which includes the claims review and distribution procedures, can be viewed at www.mjcapitalclasssettlement.com under the Case Documents section. For additional answers to general questions regarding the Wells Fargo settlement, please review the frequently asked questions on the webpage, or you may call this toll-free number 1-844-460-2134.
Approximately 1,130 claim forms were submitted to the Settlement Administrator under the additional claims process provided for the Wells Fargo settlement fund. The Settlement Administrator is in the process of reviewing, and will be issuing rejection notices for, claims that are duplicative, improper, unsupported, or otherwise subject to disallowance. After the Receiver’s distribution plan is approved by the Court (discussed above), and the Settlement Administrator has completed the claims reconciliation and rejection process for the 1,130 additional claim forms, the Settlement Administrator will issue the distributions from the Wells Fargo settlement fund.
Will Johanna face criminal charges?
Yes. The United States of America filed an Indictment against Johanna Garcia (Case No. 23-20350) with 29 counts for Conspiracy to Commit Wire Fraud, Mail Fraud, Wire Fraud, Money Laundering, and for Forfeiture. Johanna Garcia has plead guilty to Count 1. Please review the 7/16/24 update for details regarding the sentencing hearing and submitting a Victim Impact Statement.
Will the brokers be investigated?
The Receiver is investigating various matters relating to the receivership estate, including fraudulent transfer claims. Securities violation investigations are conducted by the Securities and Exchange Commission (“SEC”). The SEC has filed cases against Johanna Garcia, Pavel Ruiz, Christian Gonzalez, Nathalia Burgos, Christian Cuesta, Steven Fernandez and Monica O’Mealia. Criminal charges are investigated and brought by the Department of Justice, U.S. Attorneys Office. The U.S. Attorney has filed criminal actions against Johanna Garcia, Pavel Ruiz, and Christian Gonzalez.
Should I hire an attorney?
You have a right to be represented in this matter, however, we are unable to provide you legal advice.
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