Restraining Order and Preliminary Injunction to halt …

[Pages:17]Case 0:21-cv-61644-AHS Document 1 Entered on FLSD Docket 08/09/2021 Page 1 of 17

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U NITED STA TES DISTR ICT C O U R T SO U TH ER N DIST RICT O F FL O RIDA

C A S2E1-6N1O64.4:-CV-SINGHAL/VALLE SEC U R ITIE S A ND EX CH AN G E C O M M ISSIO N,

Plaintiff,

V.

M J CA PITAL FUN D IN G ,LLC , M J TA X ES A N D M O R E IN C,and JO H AN N A M .G A RC IA ,

D efendants.

C O M PLA INT FO R IN JUN CTIV E A N D O TH ER RELIEF A ND D EM AN D FO R JUR Y TR IA L

PlaintiffSeculitiesandExchangeCommission(t-commission'-)alleges:

1.INTR O DU CTIO N Forover a year,Johanna M .G arcia has been running a Ponzischem e,using her companiestotakeinbetween $70.9m illion and $128.8million from over2,150 investors who have been tricked into thinking they are funding loansto sm allbusinesses when in reality their outsize annualized ttreturns''of120% - 180% have been funded with m oney obtained from new investors. Am ong other relief, the Com m ission requests that the Courtissue a Tem porary

Restraining Orderand Preliminary Injunction to haltthisongoing schem e,freeze the assetsof Garciaandhercompanies,MJCapitalFunding,LLC (:'M JCapital'')andMJTaxesandM oreInc. (V?MJTaxes-'and,with MJCapital,the-?MJCompaniesh'),and appointareceiverovertheMJ

Com panies. Since atleastJune 2020,M J Taxesbegan soliciting investm ents,agreeing to pay

annualretum sofvarying am ounts,typically 120% ,forsix-m onth investm ents.

Case 0:21-cv-61644-AHS Document 1 Entered on FLSD Docket 08/09/2021 Page 2 of 17

By atleastas early asO etober2020,M J C apitalbecam e the prim ary investm ent vehicle, representing that it would use investor m oney to fund sm all business loans called

MerehantCash Advances(''MCAs''). Between October2020andongoingto thedateofthis

Com plaint,M J Capitalhas prom ised investors an annualreturn ofvarying am ounts,typically 120% .

lnvesto'rs enterinto aw ritten agreem entw ith the M JC om panies,initially ealled a Loan Am eem ent and later a M erchant Cash A dvance A greem ent,but D efendants have not registered theseseculitiesw ith theCom m ission.

W ithrareexceptions,theM JCom paniesdo notuseinvestorfundstom ake M CA S, and theM JCom paniesearn littlerevenue.H ow ever,theyhaveto datebeen ableto pay thereturns

promised to investors(a)through a rising stream offundsfrom new investors,and (b)by

convincing existing investors to renew their existing investm ents, thus defening the M J Com panies'need to repay investors'principal.

Byengaginginthisconduct,theM JCom paniesandGarciaviolated Sections5(a), 5((r),and 17(a)oftheSecuritiesActof1933(?tseeulitiesAct''),15U.S.C.jj77e(a),77e(c),and 77q(a)',andSedion l0(b)oftheSeeulitiesExehangeAd of1934(-tExehangeAd''),l5U.S.C.j 78j(b),andExchangeActRule10b-5,17C.F.R.j240.1017-5.lnthealternative,Gareia,directly orindirectly,controlstheM JCompaniesandistherefore,pursuanttoExchangeActSection20(a), 15 U.S.C.j78t(a),jointly and severally liablewith theM JCompaniesfortheirviolationsof ExchangeActSection 10(b)andRule10b-5.

lI.D EFEND AN TS M JCapitalisaFloridalim itedliability com pany located in Pom pano Beaeh,Florida. Garcia fonned M J Capitalin June 2020 and isitsM anager,an Authorized M em ber.and President.

Case 0:21-cv-61644-AHS Document 1 Entered on FLSD Docket 08/09/2021 Page 3 of 17

M J Capitalpurports to be in the business ofproviding m erchant cash advances to businesses located in Floridaandthl-oughouttheU nited States. M JCapitalclaim sto fundm illionsofdollars in m erchanteapitalloansto sm allbusinessownersin exehangefo ................
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