Investors who entrusted their savings to MJ Capital Funding, LLC and Johanna M. Garcia under the guise of funding small business loans have faced significant financial disruption. Instead of generating legitimate profits, the SEC alleges that the company operated a classic Ponzi scheme, using new investor funds to pay returns to earlier investors.
If you’ve been pressured into making an investment you didn’t fully understand or suspect might have been fraudulent, you’re not alone—the securities fraud lawyers at Meyer Wilson Werning can help. Reach out today to discuss your next steps with us.
What Is the Current Status of the MJ Capital Receivership?
Following the SEC’s emergency action, the United States District Court for the Southern District of Florida appointed Bernice Lee as Receiver for MJ Capital Funding, LLC, MJ Taxes and More, Inc., and related entities. The Receiver is tasked with securing assets, investigating financial affairs, and managing the claims process for harmed investors.
As of October 1, 2025, the Receiver reported the following financial status:
- Receivership Estate Balance: Approximately $8.7 million.
- Wells Fargo Settlement Fund: Approximately $21.1 million.
- Total Distributed to Investors: Over $11.7 million has been disbursed to holders of allowed claims.
While millions have been distributed, the process is ongoing. The Receiver continues to reconcile claims, address mailing deficiencies, and recover assets from third parties, including promoters and board members.
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How Does the “Rising Tide” Distribution Plan Impact Payouts?
The court approved a “Rising Tide” methodology to calculate investor payouts. This method is designed to equalize the recovery percentage for all investors, ensuring that those who received little or no money prior to the scheme’s collapse are prioritized.
How Rising Tide Works
The plan sets a recovery baseline. As of the approved distribution order, that baseline is 21.397% of the principal investment.
- No Prior Payments: If you received $0 before the Receivership, your initial distribution check will equal 21.397% of your allowed claim.
- Partial Prior Payments: If you received some payments (between 0.2% and 21.33%) before the Receivership, your check will be calculated to bring your total recovery up to the 21.397% threshold.
- Example: An investor who deposited $2,000 and previously received $200 (a 10% recovery) would receive a check for $227.94. This brings their total recovery to $427.94, matching the 21.397% target.
- Net Winners: There are 3,683 claimants who received more than 21.397% of their investment prior to the collapse. These investors will not receive a payment from this specific initial distribution, though they may still be eligible for future funds from the Wells Fargo settlement.
What Investors Need to Know About the Wells Fargo Settlement Fund
In addition to the Receivership estate, a separate recovery pool known as the MJ Capital Wells Fargo settlement fund has been established, holding approximately $21.1 million as of October 2025. Investors who filed a proof of claim with the Receiver by July 19, 2022, are automatically considered for this fund, while those who missed that deadline were permitted to file a separate claim with the Settlement Administrator by June 9, 2023.
In October 2025, the Settlement Administrator began issuing rejection notices for claims that were duplicative, lacked necessary documentation such as investor agreements or bank records, or were filed by “net winners” who had already recovered more than their principal investment. Once the reconciliation process is complete, a distribution schedule will be prepared for this fund.
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The SEC Complaint: Allegations of a Massive Ponzi Scheme
The SEC lawsuit against MJ Capital Funding and Johanna Garcia outlines a deceptive operation that raised at least $70 million from more than 2,150 investors.
According to the complaint:
- False Promises: Investors were told their money would fund “Merchant Cash Advances” (MCAs) for small businesses, with promised annual returns of 120% to 180%.
- Reality of Operations: The SEC alleges the defendants made, at most, $2.9 million in actual loans.
- Ponzi Payments: At least $20 million of new investor money was allegedly used to pay returns to existing investors.
- Misappropriation: Another $27.4 million was allegedly misused, including substantial payments to sales agents for promoting the scheme.
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Criminal Sentencing and Civil Accountability
Authorities have pursued aggressive action against the individuals responsible for the scheme. In October 2024, Johanna Garcia was sentenced to 240 months (20 years) in federal prison after pleading guilty to conspiracy charges. Subsequent legal filings on March 5, 2025, established a restitution stipulation holding Garcia liable for $65,802,500 , while a separate forfeiture order of $186,312,000 was entered to satisfy the SEC’s civil disgorgement request. The effort to claw back ill-gotten gains extends beyond the scheme’s leadership, as the Receiver has filed lawsuits against certain board members and over 125 promoters involved in the operation.
How Meyer Wilson Werning Helps Victims of Investment Fraud
The MJ Capital Ponzi scheme illuminates the devastating impact of unregulated and fraudulent investment offerings. While the Receivership and settlement funds provide a path to partial recovery, the process is complex and strictly governed by court orders.
At Meyer Wilson Werning, we represent investors nationwide who have suffered losses due to fraud, lack of supervision, and unsuitable recommendations by financial advisors. If you believe a financial professional failed to protect your interests or recommended MJ Capital as a safe investment, you may have grounds for a claim. Contact us today for a free and confidential consultation to review your case and explore your legal options.
Frequently Asked Questions
What is the current recovery percentage for MJ Capital investors?
Under the court-approved “Rising Tide” plan, the initial distribution target is 21.397% of the allowed claim amount. This percentage accounts for any money an investor received prior to the Receivership.
Will I receive money from the Wells Fargo settlement fund?
Eligibility depends on whether you have an allowed claim and your level of prior recovery. The Receiver anticipates that many claimants—including some who did not qualify for the initial Receivership distribution—will receive payments from the $21.1 million Wells Fargo fund once the reconciliation process is complete.
Why haven’t I received my check yet?
While most checks have been mailed, some are pending due to missing or incorrect mailing addresses. If you submitted a change of address form, the Receiver’s team is reviewing it. Ensure your contact information is up to date with the Receiver to avoid further delays.
Can I sue the person who sold me the MJ Capital investment?
The Receiver has already filed lawsuits against over 125 promoters. However, investors may also have independent arbitration claims against registered brokers or financial advisors who recommended MJ Capital if those advisors failed to conduct proper due diligence. A securities attorney can help evaluate if you have a viable claim.
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