MJ Capital Funding Receivership

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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 September 30, 2024, the receivership estate has a balance of approximately $15.8 million, and the Wells Fargo settlement fund has a balance of approximately $20.6 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?
The Receiver and her professionals are working on the initial distribution analysis and distribution plan for the allowed claims that were filed with the Receiver and have not been rejected. The Receiver anticipates that she will file the distribution plan with the Court next month (January 2025). The distribution plan will be subject to Court approval. There are approximately 50 claims for which the Receiver has issued rejection notices that remain disputed and will be addressed in the distribution plan.

The distribution plan will be both fair and reasonable. If you have an allowed claim that has not been rejected in its entirety, you will receive notice of the distribution plan shortly after it is filed with the Court. Please make sure you know your claim number so you can look up your claim in the distribution plan. Please continue to check this website for updates regarding the distribution plan.

There were 12,958 timely proofs of claim submitted to the Receiver by the July 19, 2022 bar date that asserted approximately $230 million. There were 104 late proofs of claim submitted to the Receiver after the bar date that asserted approximately $3 million. Through the Receiver’s claims review and reconciliation process, the Receiver has rejected $68 million in asserted claims that were improper, and the Receiver has accounted for over $10 million in payments received by claimants that were not disclosed in their claims. This process has significantly reduced the amount of allowed claims that will share in the distributions. 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].

Please note that the foregoing addresses the receivership estate funds and claims filed with the Receiver only. The Wells Fargo settlement fund and additional claims filed are discussed next.

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 $20.6 million as of September 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.

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 will be issuing rejection notices for claims that are duplicative, improper, unsupported, or otherwise subject to disallowance. After the Receiver’s distribution plan for the receivership estate 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.

What is the status of Johanna Garcia’s criminal case?
On December 3, 2024, Johanna Garcia was sentenced to 240 months imprisonment in Case No. 23-20350 by U.S. District Court Judge Jose E. Martinez. The United States of America filed an Indictment against Johanna Garcia with 29 counts for Conspiracy to Commit Wire Fraud, Mail Fraud, Wire Fraud, Money Laundering, and for Forfeiture. Johanna Garcia pled guilty to Count 1.

Will the brokers be investigated?
The Receiver has filed a lawsuit against certain Board Members, which is further described in the Receiver’s interim reports available on the Court Documents page. 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, Erick M. Ruiz, Marco A. Rosas, Bryant Guayara, Karina N. Fernandez and Leonela M. Duarte. 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.