12/4 UPDATE: SENTENCING HEARING INFO
Almost 3 years after the SEC launched a fraud investigation into MJ Capital and almost a year after a grand jury charged Johanna Michely Garcia with multiple counts of wire fraud and mail fraud, she made her way into a courtroom to change her plea on Tuesday morning.
That plea? Guilty.
Not looking like the person in earlier pictures, a handcuffed Johanna Michely Garcia clad in her brown jumpsuit with her hair in a bun sat with her two attorneys in a Miami Federal courthouse opposite prosecutors with just a few others in attendance. Appearing composed, the moment she faced today had to be one of the most difficult she's ever encountered.
The hearing began with the prosecutor stating the reasons for being there today. The judge then asked her a series of questions to determine if she was competent and understood what she was agreeing to in her new plea. She answered in the affirmative to all of the judge's questions, while at one point her voice crackled a little bit as the emotions became too much when asked if she understood the length of the maximum possible prison term of 20 years.
Johanna Michely Garcia, 41, once hailed as a successful, Mother Theresa-like figure in the community, understood and admitted she committed wire fraud, mail fraud, and conspiracy to commit wire fraud in an over $150 million Ponzi scheme from her offices in South Florida.
Ms Garcia and her other accomplices, one of whom already pleaded guilty, ran this investment scheme that was supposed to use money from investors to fund merchant cash advances, a form of short-term business financing. Ms. Garcia, the owner of MJ Capital and other entities, and Pavel Ramon Ruiz Hernandez hired almost 70 representatives to raise funds from over 2000 investors.
Instead, they didn't fund many advances at all, used the money to pay back only some investors, and then took money from the rest to fund their lavish lifestyle. They continued to raise money but weren’t ever going to be able to pay back all of the money with the promised returns of over 100% annually.
The whole operation came to an end in August of 2021 when a civil complaint was filed by the Securities and Exchange Commission.
In 2022, Pavel Ramon Ruiz Hernandez was charged criminally with fraud and then pled guilty in 2023. He received just over 9 years in prison.
In August of 2023, a South Florida federal grand jury charged Johanna Michely Garcia with conducting a fraud scheme, totaling approximately $190,700,000.
Victims turned plaintiffs in this case as they brought a class action lawsuit against Wells Fargo Bank, N.A. (“Wells Fargo”) alleging that it aided and abetted MJ Capital in the fraud. The case was settled for $26.625 million. The settlement was reached “to avoid the uncertainties, delays, and expenses of ongoing litigation”.
Now that she has pleaded guilty, the last critical date, barring any issues with the case, is sentencing. The maximum sentence is 20 years plus a $250,000 fine. She was described as the ring leader by Pavel Hernandez. There wasn’t any leverage for her to get a great deal with the prosecutors as there was no one above her. Since Ruiz Hernandez got 9 years, Ms Garcia will almost certainly get more than that amount. Prosecutors did say there is still time to negotiate recommendations for sentencing to the court. Sentencing is set for September 20th, 2024.
While the sentencing will bring this case to closure, today was a day Johanna Michely Garcia probably never thought would happen to her when she started this investment scheme. She said she attained an Associates degree in Criminal Justice in response to the court's question about what was her highest level of education. As she walked away with her hands and legs shackled, she learned the hard way how the criminal justice system works.
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