MJ Capital Funding Receivership

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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 December 31, 2024, the receivership estate has a balance of approximately $16.7 million, and the Wells Fargo settlement fund has a balance of approximately $20.8 million. These amounts will change based on expenses and fees paid, and additional amounts recovered.

What is the status of the Receivership estate’s claims process and distribution plan?

On January 30, 2025, the Receiver filed her Motion for Approval of Distribution Plan and Initial Distributions, which is subject to Court approval. The Receiver proposes to make initial distributions set forth in the distribution schedule attached to the motion as Exhibit A of approximately $12.5 million to claimants with allowed claims on a pro rata basis using the Rising Tide methodology. Holders of allowed claims can look up the proposed initial distribution for their claim in Exhibit A by using their claim number.

Under the plan, upon completion of the initial distributions, investors with allowed claims will receive 21.397% of their dollars invested from a combination of pre-Receivership returns and the initial distributions. The plan will result in payments to: (a) 2,405 holders of allowed claims who received no pre-Receivership disbursements to bring those claimants to the same level of recovery as those who received 21.397% of their investments back during the Ponzi Scheme, and (b) 3,791 holders of allowed claims who received pre-Receivership disbursements of between 0.2% and 21.33% of their investments to bring these claimants up to the same 21.397% level of recovery. There are 3,683 holders of allowed claims who received pre-Receivership disbursements of 21.397% or more of their investments, and will not receive a payment under the first distribution schedule. The Receiver anticipates that many of the allowed claims, including the claimants who received 21.397% or more of their investments, will receive a future distribution from the separate Wells Fargo Settlement Fund (discussed below) and future distributions from the Receivership estate. There are also 56 disputed claims that are addressed in the plan.

Please continue to check this website for updates regarding the Motion for Approval of Distribution Plan and Initial Distributions. This Motion is subject to Court approval. 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 $20.8 million as of December 31, 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 Settlement Administrator has completed the claims reconciliation and rejection process, the Settlement Administrator and her accountants will need to prepare the distribution schedule for 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.