INVESTORS: Former board member and top sales agent for MJ Capital Funding, LLC, Pavel Ruiz, was charged by the SEC for his role in an alleged $196 million fraud perpetrated by the company.
Pavel Ruiz, former board member and top sales agent for MJ Capital Funding, LLC, was charged by the SEC for his role in the alleged $196 million fraud perpetrated by the company. In August 2021, MJ Capital and an affiliated company, MJ Taxes and More, Inc., and their principal officer, Johanna M. Garcia were charged with allegedly engaging in a fraudulent securities offering and Ponzi scheme. MJ Capital and MJ Taxes are currently under a court-appointed receivership.
The SEC’s complaint against Ruiz alleges that from at least June 2020 until August 2021, Ruiz and his team of about 70 sales agents solicited and raised at least $46 million from over 5,100 MJ Capital investors. Ruiz and his sales team allegedly represented to investors that their money would be used to make small business loans called “merchant cash advances,” and that in exchange, investors would receive monthly returns of 10% to 15%. In reality, Ruiz knew or was severely reckless in not knowing, that MJ Capital was using new investor money to pay purported returns to existing investors in a classic Ponzi scheme fashion.
The SEC also alleges that Ruiz misappropriated or misused about $6.5 million of investor funds, a portion of which he spent on various personal expenditures. While Ruiz’s sales team received at least $5.3 million, and Ruiz directly received another $292,000, in commission payments from MJ Capital for promoting these investments.
The SEC is charged Ruiz with violating the antifraud, and securities and broker-dealer registration provisions of the federal securities laws. Specifically, the complaint alleges that Ruiz violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 15(a) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Ruiz consented to a bifurcated settlement, subject to court approval, under which he will be enjoined from violating the charged provisions of the federal securities laws. Ruiz is facing parallel criminal charges brought by the U.S. Attorney’s Office for the Southern District of Florida.
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