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On August 12, 2021, the United States District Court for the Southern District of Florida entered an Order in an action filed by the Securities and Exchange Commission appointing Corali Lopez-Castro as the Receiver over MJ Capital Funding, LLC, and MJ Taxes and More, Inc. (the “Receivership Defendants”), and on May 22, 2023, the Court entered an Order appointing Bernice Lee as the successor receiver.  The Court has expanded the receivership estate to include Pavel Ruiz MJCF LLC, and UDM Remodeling, LLC (together with the Receivership Defendants, the “Receivership Entities”).  The SEC’s Complaint alleges that Johanna M. Garcia used the Receivership Defendants 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. The case is styled Securities and Exchange Commission v. MJ Capital Funding, LLC, MJ Taxes and More, Inc. and Johanna M. Garcia, Case No. 21-61644-CIV-SINGHAL. Links to the Complaint, the 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. Since being appointed, 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.


MJ CAPITAL CLASS SETTLEMENT WITH WELLS FARGO

4/10/2023 – The Court has entered the Order Granting Receiver’s Motion to Approve Settlement Agreement with Investor Class Representatives and Wells Fargo in the SEC Action, and the Order Preliminary Approving Settlement in the Investor Class lawsuit.If you have a general question regarding the MJ Capital Class Settlement with Wells Fargo, please visit www.mjcapitalclasssettlement.com and review the frequently asked questions, or you may call this toll-free number 1-844-460-2134.

  • If you have previously submitted a proof of claim to the Court-appointed Receiver for MJ Capital by July 19, 2022, then you do NOT need to do anything to request to participate in the Settlement. Your previously submitted proof of claim will be treated as your request to participate in the Settlement. Please do NOT file a Claim Form.
  • If you did not previously submit a proof of claim to the Court-appointed Receiver for MJ Capital by July 19, 2022, then you should review the Notice carefully to confirm your eligibility as a Settlement Class Member, which is available here, and follow the instructions for completion and submission that are on the “File Claim” tab on the website. You are what is referred to as an “Additional Claimant” in the Notice and the Settlement Agreement. The deadline for an Additional Claimant to submit a Claim Form is June 9, 2023.

FREQUENTLY ASKED QUESTIONS (FAQs):

What is the next step I need to take?
The deadline to submit a proof of claim form and supporting documentation to the Receiver passed on July 19, 2022 at 11:59 p.m. (prevailing Eastern Time).  The Receiver is in the process of reviewing thousands of proofs of claim that were timely submitted by victims, investors and creditors to identify valid claims.  Please be patient.  If the Receiver rejects your proof of claim, in whole or in part, you will receive a Rejection Notice and you will have an opportunity to respond.  For additional information regarding the Claims Administration Process, please review the Order Establishing Bar Date and Approving Claim Submission and Administration Procedures available in the Court Documents section.

What is the status of the MJ Capital Class Settlement with Wells Fargo?
The Court has entered the Order Granting Receiver’s Motion to Approve Settlement Agreement with Investor Class Representatives and Wells Fargo in the SEC Action, and the Order Preliminary Approving Settlement in the Investor Class lawsuit. Both are available in the in the Court Documents section. If you have a general question regarding the MJ Capital Class Settlement with Wells Fargo, please visit www.mjcapitalclasssettlement.com and review the frequently asked questions, or you may call this toll-free number 1-844-460-2134.

  • If you have previously submitted a proof of claim to the Court-appointed Receiver for MJ Capital by July 19, 2022, then you do NOT need to do anything to request to participate in the Settlement. Your previously submitted proof of claim will be treated as your request to participate in the Settlement. Please do NOT file a Claim Form.
  • If you did not previously submit a proof of claim to the Court-appointed Receiver for MJ Capital by July 19, 2022, then you should review the Notice carefully to confirm your eligibility as a Settlement Class Member, which is available on www.mjcapitalclasssettlement.com, and follow the instructions for completion and submission that are on the “File a Claim” tab on the website. You are what is referred to as an “Additional Claimant” in the Notice and the Settlement Agreement. The deadline for an Additional Claimant to submit a Claim Form is June 9, 2023.

When will I receive a distribution?
The Receiver is in the process of reviewing and reconciling proofs of claim filed in the receivership, and has begun issuing Rejection Notices for objectionable claims. The Receiver is also continuing her efforts to recover money that was paid by investors.  Investigations are ongoing and the Receiver is unable to provide a specific time frame as to when distributions will be made.  Updates, however, will be provided on this page when the Receiver is in a position to propose distributions.

How long does this process usually take?
It is unknown as the Receiver is in the process of investigating the facts of this case including reviewing the records recovered from the offices.  Each receiver case is different, and this one involves thousands of investors and extensive records.

What percentage of my investment will I get back?
It is too early to know the percentage.

Will I have to give back the money I earned as interest – even if I have not received my principal back?
The Receiver will determine and propose a distribution plan for claimants that is both fair and reasonable.  Notice will be provided to investors of the distribution plan.  For additional information regarding the Claims Administration Process, please review the Order Establishing Bar Date and Approving Claim Submission and Administration Procedures available in the Court Documents section.

How much money has been recovered?
Please review the Receiver’s reports that can be accessed by clicking on Court Documents.

Will Johanna face criminal charges?
The Receiver is handling the civil receivership matter so she does not know what the authorities will ultimately decide to do with respect to those responsible.  Any criminal action will be brought by the government, and will be a separate proceeding than from the civil SEC action in which the receiver was appointed.

Will the brokers be investigated?
The receiver will be investigating various matters relating to the receivership estate.  Securities violation investigations are conducted by the Securities and Exchange Commission.  Criminal charges would be investigated and brought by the government.

Should I hire an attorney?
You have a right to be represented in this matter, however, we are unable to provide you legal advice.

This page is periodically updated with additional information about the case.


LATEST UPDATE FROM RECEIVER

  • 5/22/2023 – The Court has entered an Order appointing Bernice Lee as the successor receiver because Corali Lopez-Castro has become a bankruptcy judge. Bernice Lee has been involved with this receivership since it began, and has handled every aspect of the receivership as counsel to Corali Lopez-Castro. She has significant knowledge and experience with this receivership, which will allow for the efficient and orderly transition of receivership responsibilities with minimal cost. Please click here to review the Order.
  • 4/28/2023 – Receiver’s Seventh Interim Report
  • 4/27/2023 – In the SEC’s case against Pavel Ruiz, the SEC filed an Unopposed Motion for Entry of Judgment Against Pavel Ruiz, and the Court has entered a Judgment as to Defendant Pavel Ruiz. You may review the Motion here, and the Order here.
  • 4/26/2023 – On April 26, 2023, Pavel Ruiz plead guilty in the criminal case brought by the United States of America (Case No. 22-20400). You may review the Plea Agreement here. It provides in part that Pavel Ruiz pleads guilty to Count I of the Information, which charged him with Conspiracy to Commit Wire Fraud.
  • 3/22/2023 – The Court has entered the Order Granting Receiver’s Motion to Approve Settlement Agreement with Investor Class Representatives and Wells Fargo in the SEC Action. Please click here to review the Order. If the settlement is approved on a final basis by the Court in the Investor Class lawsuit and becomes effective, the Receiver estimates the settlement fund will provide over $19.5 million in distributions to victim investors. The final approval hearing in the Investor Class lawsuit is scheduled for June 30, 2023. There will be a separate website set up to address the class settlement, and notice of the settlement will be provided to settlement class members. The Receiver will provide another update when the class settlement website is ready. The Receiver is continuing to evaluate approximately 12,950 timely filed proofs of claim through the two-step process described in the prior update. The Receiver has issued approximately 800 Rejection Notices for duplicative claims. If the Receiver takes issue with your claim, she will provide you with a Rejection Notice and you will have an opportunity to respond. If the Receiver accepts your claim, you will not receive a Rejection Notice, and your claim will be included in the Receiver’s distribution plan. The Receiver needs to complete her evaluation of all claims before she can propose a distribution plan.
  • 3/03/2023 – In the Investor Class lawsuit, the Court entered the Order Preliminary Approving Settlement for the settlement agreement reached between the Receiver, Wells Fargo Bank and Investor Class Representatives. Please click here to review the Order. The Receiver’s Motion to Approve Settlement remains pending before the Court in the SEC Action. If the settlement is approved by the Court in both the SEC Action and the Investor Class lawsuit on a final basis and the agreement becomes effective, the Receiver estimates the settlement fund will provide over $19.5 million in distributions to victim investors. The Receiver will provide additional updates regarding the approval process. The Receiver is continuing to evaluate approximately 12,950 timely filed proofs of claim through a two-step process.  The Receiver is first reviewing whether the claimant appears in the bank reconstructions for the Receivership Entities, whether an investment agreement has been provided or can be located, and the terms of such investor agreements. The Receiver has completed this first step for nearly all timely filed proofs of claim. Next, the Receiver is reconciling the investment and payment amounts asserted in the proofs of claim against the bank reconstructions, and reviewing other information and documents provided by the claimants to determine whether the amounts asserted should be rejected. The Receiver has completed this second step for approximately 5,000 claims. The Receiver has issued approximately 500 Rejection Notices for duplicative claims. If the Receiver takes issue with your claim, she will provide you with a Rejection Notice and you will have an opportunity to respond. If the Receiver accepts your claim, you will not receive a Rejection Notice, and your claim will be included in the Receiver’s distribution plan. The Receiver needs to complete her evaluation of all claims before she can propose a distribution plan.
  • 1/26/2023 – Receiver’s Sixth Interim Report
  • 1/02/2023 -The Receiver has reached a settlement with Wells Fargo Bank and the Investor Class Representatives. If the settlement is approved by the Court in both the SEC Action and the Investor Class lawsuit on a final basis and the agreement becomes effective, the Receiver estimates the settlement fund will provide over $19.5 million in distributions to victim investors. Please click here for more details and to review the Receiver’s Motion to Approve Settlement with Investor Class Representatives and Wells Fargo Bank. The Receiver will provide additional updates regarding the approval process. The Receiver is continuing her review of approximately 12,950 timely filed proofs of claim and documents, and reconciliation of information against the Receivership Entities’ bank and other records. The Receiver has reviewed more than 75% of the timely filed proofs of claim and related documents, and for such reviewed claims, has begun the reconciliation process. Please continue to be patient.

COURT DOCUMENTS



CLAIMS ADMINISTRATION PROCESS

The deadline to submit a proof of claim form and supporting documentation passed on July 19, 2022 at 11:59 p.m. (prevailing Eastern Time). The Receiver is in the process of reviewing approximately 12,950 timely filed proofs of claim and documents. Please be patient.  If the Receiver rejects your proof of claim, in whole or in part, you will receive a Rejection Notice and you will have an opportunity to respond. For additional information regarding the Claims Administration Process, please review the Order Establishing Bar Date and Approving Claim Submission and Administration Procedures: link.

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