A Florida woman who orchestrated a $200 million Ponzi scheme was given a 20-year prison sentence.

A Florida woman who orchestrated a $200 million Ponzi scheme was given a 20-year prison sentence.
A Florida woman who orchestrated a $200 million Ponzi scheme was given a 20-year prison sentence.
  • A woman from Florida who confessed to her part in a Ponzi scheme that amassed almost $200 million was given 20 years in prison.
  • Johanna Garcia was given the maximum sentence for one charge of conspiring to commit wire and mail fraud.
  • Allegations were made by investors in MJ Capital that Wells Fargo assisted in a fraud scheme by not adhering to its anti-money laundering regulations. The bank reportedly settled the claims for $26.6 million.

On Tuesday, a Florida woman who confessed to her part in a Ponzi scheme that amassed almost $200 million was given 20 years in prison.

In southern Florida, a 41-year-old woman named Johanna Garcia of Broward County was given the maximum sentence for one count of conspiracy to commit wire fraud and mail fraud. Out of the 29 counts she was indicted for, 28 were dismissed, according to court filings in U.S. District Court.

Garcia was also sentenced to three years of supervised release and a $100 special assessment, plus additional restitution to be determined on March 3, according to the case docket.

Federal prosecutors accused Garcia of controlling MJ Capital Funding, which fraudulently solicited investors to fund its purported business of providing short-term, high-cost loans called merchant cash advances, or MCAs.

Prosecutors claimed that she and her accomplices made "false statements and fraudulent representations" to investors regarding the nature of their investment and how the funds would be utilized.

According to the indictment, Garcia and her co-conspirators falsely promised investors that their money would fund MCAs and that returns on their investments would be paid from the profits of the MCA business, but in reality, they promised significant returns at an annual rate of 120%.

Prosecutors stated in Tuesday's release that her company "failed to meet its profit targets and did not make enough loans to pay back the investors' promised returns."

"Garcia defrauded investors by running a Ponzi scheme, using new investor funds to pay existing investors while embezzling millions for personal gain."

Between October 2020 and August 2021, Garcia made at least $190,700,000 through a fraudulent conspiracy. Of that total, investors lost nearly $90 million, according to prosecutors.

In March 2023, the bank agreed to settle a lawsuit filed by investors in MJ Capital in 2021, accusing the bank of aiding a fraud scheme by failing to follow its own anti-money laundering policies. The settlement amount was $26.6 million, as reported by Law360.

In September 2023, Garcia's partner, Pavel Ramon Ruiz Hernandez, was sentenced to nine years and two months in prison, plus three years of supervised release after pleading guilty in April 2023 to one count of conspiracy to commit wire fraud, which he was charged with in August 2022.

In the fall of 2021, Garcia, Ruiz Hernandez and others launched a new Ponzi scheme after MJ Capital was shut down by the FBI and the Securities and Exchange Commission.

According to prosecutors, Garcia led the new scheme from its start until her arrest in August 2023, and after, while in Bureau of Prisons custody.

Garcia and her partners were using entities such as New Beginning Global Funding LLC and New Beginning Capital Funding LLC to fund commercial loans, according to the new scheme.

Prosecutors stated that the funds raised were utilized to settle debts with prior investors and finance Garcia and her accomplices' lavish lifestyles.

In a Nov. 27 sentencing memo, Garcia's lawyers claimed that Ruiz Hernandez was the true leader of the scheme. They also argued that her actions through New Beginning, despite being misguided and wrong, were driven by a desire to repay her former investors.

On Monday, the U.S. Attorney's Office filed a memo rejecting the characterization that Garcia was an innocent man and urged the judge to sentence him to 240 months' imprisonment.

Prosecutors wrote that Garcia was the leader/organizer of two Ponzi schemes that defrauded over 15,400 victims out of an actual loss amount of nearly $90 million, according to the evidence.

The Federal Public Defender's Office, representing Garcia, did not respond to CNBC's request for comment on the sentence.

— CNBC's Dan Mangan contributed to this report.

by Kevin Breuninger

Politics