SEC v. Karina N. Fernandez, No. 0:24-cv-61774, Southern District of Florida (Sept. 26, 2024) — Complaint

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

CASE NO.:

SECURITIES AND EXCHANGE COMMISSION, )
        )
     Plaintiff,  )
        )
v.        )
        )
KARINA            N.            FERNANDEZ,                                                )
        )
     Defendant.  )
________________________________________________)

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF AND
DEMAND FOR JURY TRIAL

Plaintiff Securities and Exchange Commission (the “Commission”) alleges:
I.          INTRODUCTION

1. From  at  least  November  2020  through  August  2021,  Defendant  Karina  N.
Fernandez (“Fernandez”) personally solicited and raised at least $891,000 from about 89 investors
nationwide on behalf of MJ Capital Funding, LLC (“MJ Capital”) and its affiliate MJ Taxes and
More,  Inc.  (“MJ  Taxes”)  (collectively,  the  “MJ  Companies”)  in  an  unregistered  fraudulent
securities offering. Fernandez, a licensed Florida attorney and MJ Capital manager, ran a team of
over 64 sales agents and made false and misleading statements to investors, prospective investors,
and sales agents about MJ Capital’s business and her purported returns from her investment in MJ
Capital.
2. The MJ Companies and their owner, chief executive officer, and president, Johanna
M. Garcia (“Garcia”), operated the MJ Companies as a Ponzi scheme, which, from at least June
2020 through August 2021, raised over $196 million from more than 15,500 investors nationwide
through  an  unregistered  fraudulent  securities  offering.  Garcia  and  the  MJ  Companies  tricked

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investors  into  thinking  their  investment  would  be  used  to  fund  small  business  loans  called
Merchant Cash Advances (“MCAs”) in exchange for a percentage of the business’ income over a
specified period of time. In reality, investors’ outsize annualized “returns” of 120% – 180% were
funded with money obtained from new investors.
3. The  Ponzi  scheme  collapsed  once  the  Commission  filed  its  emergency  action  to
stop this ongoing fraud on August 9, 2021, against Garcia and the MJ Companies (collectively,
the “MJ Defendants”). SEC v. MJ Capital Funding, LLC, et al., Case No.: 21-61644-CIV-AHS
(S.D. Fla.). On August 11, 2021, the Court granted the Commission’s motions for an asset freeze
and  injunctive  relief  against  the  MJ  Defendants  and  the  appointment  of  a  receiver  over  the  MJ
Companies.
4.  Fernandez played a significant role in perpetrating the Ponzi scheme. Fernandez
and her sales agents that she supervised told investors and prospective investors that MJ Capital’s
offering  proceeds  would  be  used  to  make  cash  advance  loans  to  merchants  and,  in  return,  they
would receive returns of 10% per month and their principal investment upon maturity. Fernandez
also promoted MJ Capital in a series of videos replete with false and misleading statements about
MJ Capital’s business and her purported returns from her investment in MJ Capital.  In one video,
she falsely claimed that MJ Capital was not operating a Ponzi scheme and went on to explain the
reasons  why  it  was  not  doing  so.  In  another,  she  misrepresented  that  she  was  able  to  grow  her
investment portfolio and leave her job as an attorney because of her investment in MJ Capital.
5. Furthermore, at all relevant times, Fernandez held no securities licenses, was not
registered with the Commission, and was not associated with a registered broker-dealer. The MJ
Companies’  securities  were  not  registered  with  the  Commission,  nor  did  they  qualify  for  an

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exemption  from  registration.  Fernandez  thus  was  not  permitted  to  sell  the  MJ  Companies’
securities.
6. By engaging in this conduct, Fernandez violated Sections 5(a), 5(c), 17(a)(2), and
17(a)(3) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 77e(a), 77e(c), 77q(a)(2),
77q(a)(3);  and  Section  15(a)(1)  of  the  Securities  Exchange  Act  of  1934  (“Exchange  Act”),  15
U.S.C. § 78o(a)(1).
II.        DEFENDANT
7. Fernandez  is  a  resident  of  Miami,  Florida.  She  was  a  lead  sales  agent  and
“manager” of MJ Capital. She is a Florida attorney and has been member of the bar since October
2019.
III.      OTHER      RELEVANT      ENTITIES AND INDIVIDUAL
8. MJ Capital is a Florida limited liability company located in Pompano Beach, Florida.
Garcia formed MJ Capital in June 2020 and is its Manager, an Authorized Member, and President.
MJ  Capital  purports  to  be  in  the  business  of  providing  merchant  cash  advances  to  businesses
located in Florida and throughout the United States. MJ Capital claimed to fund millions of dollars
in merchant capital loans to small business owners in exchange for a percentage of the business’
income over a specified period of time, with the amount of such funding having steadily increased
every month since its inception in 2020. The total amount to be repaid is supposedly calculated by
a factor rate, a multiplier generally based on a business’ financial status. The Court appointed the
Receiver over MJ Capital on August 11, 2021, and entered a Judgment for Permanent Injunctive
Relief against MJ Capital on October 1, 2021.
9. MJ  Taxes  is  a  Florida  corporation  located  in  the  same  office  as  MJ  Capital  in
Pompano Beach. Garcia incorporated MJ Taxes in December 2016 as MJ Tax Services & More

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Inc. and is its President. In March 2020, Garcia changed the company’s name to MJ Taxes and
More Inc. The Court appointed the Receiver over MJ Taxes on August 11, 2021, and entered a
Judgment for Permanent Injunctive Relief against MJ Taxes on October 1, 2021.
10. Garcia is a resident of North Lauderdale, Florida. Garcia controlled the MJ Companies
prior  to  their  going  into  receivership.  On  September  8,  2021,  the  Court,  by  consent,  entered  a
preliminary  injunction  against  Garcia.  On  August  24,  2023,  Garcia  was  indicted  on  charges  for
conspiracy to commit wire fraud and mail fraud, 18 U.S.C. § 1349, wire fraud, 18 U.S.C. § 1343,
and mail fraud, 18 U.S.C. § 1341, based on the conduct alleged herein. United States v. Garcia,
Case  No.  23-cr-20350-JEM  (S.D.  Fla.).  On  July  16,  2024,  Garcia  pled  guilty  to  conspiracy  to
commit  wire  fraud  and  mail  fraud  (18  U.S.C.  §  1349).  Id.  at  DE  43.  She  is  currently  awaiting
sentencing. Id. at DE 53.
IV. JURISDICTION AND VENUE
11. The Court has jurisdiction over this action pursuant to Sections 20(b) and 22(a) of
the  Securities  Act,  15  U.S.C.  §§  77t(b)  and  77v(a);  and  Sections  21(d),  21(e),  and  27  of  the
Exchange Act, 15 U.S.C. §§ 78u(d), 78u(e), and 78aa.
12. This  Court  has  personal  jurisdiction  over  Fernandez,  and  venue  is  proper  in  the
Southern  District  of  Florida,  because  many  of  Fernandez’s  acts  and  transactions  constituting
violations of the Securities Act and the Exchange Act occurred in the Southern District of Florida,
where Fernandez resides and conducts business.
13. In connection with the conduct alleged in this Complaint, Fernandez, directly and
indirectly,  made  use  of  the  means  or  instrumentalities  of  interstate  commerce,  the  means  or
instruments of transportation and communication in interstate commerce, and the mails.

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V.        FACTS
A. The MJ Defendants’ Securities and Solicitation of Investor Funds

14. Since at least June 2020, MJ Taxes began soliciting investments, agreeing to pay
annual returns of varying amounts, typically 120%, for six-month investments. Between June 2020
and September 2020, MJ Taxes and investors entered into written agreements, signed by Garcia
on  behalf  of  MJ  Taxes,  called  a  Loan  Agreement.  These  agreements  refer  to  the  investor  as
“Investor” or “Lender” and MJ Taxes as the “Facilitator” or “Borrower.”
15. Beginning  at  least  as  early  as  October  2020,  MJ  Capital  became  the  primary
investment vehicle for raising funds from investors. From October 2020 until the Ponzi scheme
collapsed  in  August  2021,  MJ  Capital  entered  into  written  agreements  with  investors  called  a
Merchant Cash Advance Agreement. These agreements refer to the investor as the “Purchaser,”
and MJ Capital agrees that it will use the investor’s money to fund an MCA. MJ Capital promises
an annual return of varying amounts, typically 120%, with MJ Capital guaranteeing repayment of
principal  if  the  merchant  defaults.  The  term  of  the  investment  is  either  6  months,  9  months,  12
months or 6 months with an option by the investor to extend the term for an additional 6 months.
16. In addition to the written agreement, MJ Capital required investors to sign:  a Non-
Disclosure  Agreement,  where  the  investor  would  agree  not  to  disclose  confidential  information
about MJ Capital; a Purchaser Non-Compete Agreement, where the investor would agree not to
engage in any business that would compete with MJ Capital for two years; an IRS W-9 form; and
a Referral Program Agreement, which allowed an investor to receive a one-time referral bonus of
an unspecified amount for each referred person who invests with MJ Capital.
17. The MJ Companies solicited investors through its own employees, external sales
agents, and word-of-mouth.

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18. MJ Capital employed a multi-tiered sales team to solicit investors and a complex
payment  system  to  pay  these  agents.  The  sales  team  hierarchy  was  as  follows:  Board  Member,
Manager, Team Leader, and Account Representative. Multiple undisclosed commission payments,
which came out of the offering proceeds, were paid to each agent in this hierarchy based on each
investment.
19.     MJ  Capital  also  solicited  investors  through  its  website  and  social  media.  MJ
Capital’s  then  website,  www.mjcapitalfunds.com  (the  “Website”),  whose  domain  name  was
registered on July 29, 2020, represented that MJ Capital was in the business of funding MCAs and
that  investor  money  would  be  used  for  this  purpose.  The  Website  provided  background
information  on  how  MJ  Capital  can  assist  small  businesses  with  merchant  cash  advances  and
further  invited  business  owners  to  fill  out  an  online  application  for  funding.  For  example,  the
Website stated that MJ Capital could provide “an alternative option to satisfy a business’s financial
needs”, and that it had a “pipeline of investors” from whom the business could expect “cash of up
to $200,000 to fulfill [its] needs . . . .”
20. At  least  as  early  as  May  12,  2021,  the  Website’s  “blog”  section  stated:  “[MJ
Capital] has grown to an extent where there is a team of underwriters who qualify every company
that seeks funds from MJ Capital. There are no exceptions to this! The process consists of checking
6 months’ worth of bank statements, last year’s tax returns, and [the merchant’s] profit and loss
sheet for the last year.”
21. Additionally,  at  least  as  early  as  May  12,  2021,  MJ  Capital  represented  through
social  media  that  it  is  in  the  business  of  funding  MCAs  and  offers  “quick  approvals,”  “fast
funding,”  “flexible  terms”  and  “help[s]  small  businesses”.  Its  then  Twitter  page  touted:  “MJ

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Capital specializes in MCA funding for businesses, our goal is to help you and your business thrive
during uncertain times by working with our team.”
22. In  or  around  June  2021,  an  undercover  Federal  Bureau  of  Investigation  agent
(“UC”) posing as a prospective investor spoke with MJ Capital’s office manager at MJ Capital’s
office  in  Pompano  Beach.  The  office  manager  explained,  among  other  things,  that  MJ  Capital
would use the UC’s funds to purchase future sales or profits of companies and the UC would make
a  10%  monthly  return,  an  underwriting  team  determines  a  merchant’s  ability  to  repay,  and  MJ
Capital has liens on a merchant’s projects as further security.
23. The    Loan    Agreements    and    Merchant    Cash    Advance    Agreements    (the
“Agreements”) are investment contracts. Investors looked solely to the MJ Companies to produce
returns, and the MJ Companies’ ability to do so depended entirely on their ability to either fund
profitable MCAs or attract new investors to cover payments to existing investors. The Agreements
are  also  notes.  As  investment  contracts  and/or  notes,  the  Agreements  are  securities  within  the
meaning  of  the  Securities  Act  and  the  Exchange  Act.  These  securities  have  not  been  registered
with the Commission.
B. The MJ Defendants’ Material Misrepresentations to Investors and Misuse and
Misappropriation of Investor Funds___________________________________

24. The  representations  that  the  MJ  Companies  were  using  investor  money  to  fund
MCAs and that their money was secure were lies. In fact, the MJ Companies made very few MCAs,
they did not file liens in connection with the few MCAs they did make, and investors’ ability to
receive  the  promised  returns  and  repayment  of  principal  was  dependent  on  the  MJ  Defendants’
ability to continue to raise new investor money and convince existing investors to extend the term
of their agreements.

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25. From June 2020 through August 2021, the MJ Companies received at least $196
million  in  investor  funds  from  investors  in  Florida  and  several  other  states.  However,  the  MJ
Companies only made approximately $923,000 in MCAs. During that same time period, the MJ
Companies received approximately $316,500 in repayment for those MCAs.
26. From June 2020 through August 2021, the MJ Companies misused investor funds
by making payments totaling at least $62.3 million to sales agents for promoting investments in
the MJ Companies. The MJ Companies also misused investor funds by making payments on loans
owed by MJ Taxes via transfers to MJ Taxes’ bank account.
27. From  June  2020  through  August  2021,  Garcia  and  the  MJ  Companies  also
misappropriated at least $7.35 million of investor funds on a variety of purchases unrelated to the
business, including credit card payments, travel, entertainment, restaurants, and luxury goods and
clothing.
28. Because  the  MJ  Companies  made  few  MCAs  and  were  diverting  substantial
investor money, the MJ Companies were not earning anywhere near the revenue needed to pay the
promised returns to investors.
29. From  June  2020  through  August  2021,  the  MJ  Companies  paid  at  least  $108.9
million in purported returns to investors. However, instead of paying investors out of the revenue
of the business, the MJ Companies used new investor money to pay returns to existing investors.
30. The investments in the MJ Companies were not secure. To the contrary, the only
way  the  MJ  Companies  could  honor  their  obligations  to  investors  would  be  by  successful
continuation of their fraudulent scheme. Once the supply of new investors was exhausted, the MJ
Companies would be unable to pay the promised returns to existing investors.

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C.        Fernandez’s        Material        Misrepresentations to Investors, and Offer and Sale of
Securities in Unregistered Transactions________________________________

31. Fernandez played a significant role in the MJ Companies’ Ponzi scheme. She is a
licensed Florida attorney, and was a manager for MJ Capital and ran a team of over 64 sales agents
who solicited investors nationwide on behalf of the MJ Companies.
32. From  at  least  November  2020  until  August  2021,  Fernandez  personally  solicited
and raised approximately $891,000 from about 89 investors on behalf of the MJ Companies. She
and her sales team told investors and prospective investors that their money would be used to fund
MCAs.  In return, she and her sales agents told investors and prospective investors that they would
receive returns of 10% per month, along with their principal investment upon maturity.
33. Fernandez  solicited  investors  and  prospective  investors  through  Zoom  meetings,
and postings and live meetings on her Instagram page titled “Entrepreneur | Lawyer on Instagram.”
For  example,  in  a  2021  live  video  Fernandez  posted  on  her  Instagram  page  in  order  to  pique
investors’  interest  in  MJ  Capital,  she  explained  how  investors  could  turn  a  $6,000  investment,
generating  10%  per  month,  into  over  $100,000  in  three  years.  She  said  that  those  interested  in
learning about the investment could direct message her to set up a call so she could get them “on
the right track to financial freedom.” She would then lead those who contacted her to a weekly
Zoom informational call about MJ Capital.
34. In  another  2021  live  video  Fernandez  posted on her Instagram page,  she  boasted
that she recently became part of an investment opportunity that was “absolutely amazing.”  She
explained that she was able to use the money she made from this investment and put it into her
other investments, and grow her investment portfolio “to the point where [she] was able to leave
[her] job as an attorney.”  Fernandez told viewers that if they direct message her, she would get on
a call with them to explain this investment that can put “[their] money to work for [them].”  When

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any prospective investor did direct message Fernandez, she told them that she was describing the
MJ Capital investment opportunity. She also sent them the Zoom link to a weekly informational
call about MJ Capital.
35. Fernandez should have known that the statements she made in this Instagram video
were false and misleading.  She based her claim – that she was able to leave her job as an attorney
– on the commissions she received from selling MJ Capital’s securities and her parents covering
her living expenses – not on her investment portfolio as she stated in the video. In fact, at the time
she posted the video, Fernandez had only invested $4,000 with MJ Capital, which provided for a
monthly “return” of 10%, or $400 a month.
36. Fernandez continued to make false and misleading statements about MJ Capital’s
business.  In  May  2021,  Fernandez  created  and  sent  a  video  to  her  sales  agents  through  either  a
Telegram  or  WhatsApp  chat  stating  that  MJ  Capital  was  not  operating  a  Ponzi  scheme  and
explaining why it was not doing so. She sent this video to her sales team because some of them
asked her whether MJ Capital was a Ponzi scheme. Fernandez explained in the video that “most
Ponzi schemes give a statement to the individual who puts their money in” and promise to give
the money back “at the end”, but MJ Capital “gives you a check every single month”, which is
“one of the ways that you can rest assured that [MJ Capital] [is] not a Ponzi scheme.” She further
reassured them that MJ Capital does not “take money from Peter to pay Paul,” but vets companies
that seek to borrow from it and then lends money to those companies at high interest rates. She
said that when companies pay, MJ Capital takes its cut of 5% or more and then pays investors their
10% monthly return.
37. Fernandez’s  statements  in  this  video  were  false  and  misleading.  Contrary  to
Fernandez’s representations, MJ Capital was in fact operating a massive Ponzi scheme. Investor

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funds  were  rarely  used  to  fund  MCAs.  Instead,  the  MJ  Defendants  and  others  misused  and
misappropriated investor funds.
38. Fernandez negligently made the false and misleading statements in this video. She
failed  to  exercise  reasonable  care  to  determine  whether  MJ  Capital  was  vetting  merchants  and
generating sufficient revenue from MCAs to fund investor returns, particularly when sales agents
and investors were questioning whether investor returns were really Ponzi payments. Rather, she
based her statement that MJ Capital was not a Ponzi scheme on her supposed conversations with
“reliable sources” at MJ Capital and research into what a Ponzi scheme is.
39. Fernandez also should have known that the statements in this video could be passed
along to investors and prospective investors.  The video did not have forward restrictions and was
not password-protected.  In fact, she concludes the video by stating that if you have more questions,
“reach out to the individual who sent you this video, and I’m happy to jump on a call with you.”
40. Additionally,  Fernandez  profited  from  the  Ponzi  scheme.  She  received  about
$362,000 in commission payments from MJ Capital, of which she received at least $132,000 in
cash  and  approximately  $230,000  paid  to  her  personally  and  through  her  company,  KNF
International LLC.
VI. CLAIMS FOR RELIEF
COUNT 1
Violations of Sections 5(a) and (c) of the Securities Act
41. The Commission adopts by reference paragraphs 1 through 40 of this Complaint.
42. No registration statement was filed or in effect with the Commission pursuant to
the  Securities  Act  with  respect  to  the  securities  and  transactions  issued  by  the  MJ  Companies

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described  in  this  Complaint  and  no  exemption  from  registration  existed  with  respect  to  these
securities and transactions.
43. From at least as early as November 2020 through August 2021, Defendant directly
and indirectly:
(a) made use of any means or instruments of transportation or communication
in interstate commerce or of the mails to sell securities, through the use or medium
of a prospectus or otherwise;

(b) carried or caused to be carried securities through the mails or in interstate
commerce, by any means or instruments of transportation, for the purpose of sale
or delivery after sale; or

(c) made use of any means or instruments of transportation or communication
in interstate commerce or of the mails to offer to sell or offer to buy through the use
or medium of any prospectus or otherwise any security,

without a registration statement having been filed or being in effect with the Commission as to
such securities.
44. By reason of the foregoing, Defendant, directly or indirectly, violated and, unless
enjoined, is reasonably likely to continue to violate Sections 5(a) and 5(c) of the Securities Act, 15
U.S.C. §§ 77e(a) and 77e(c).
COUNT 2

Violations of Section 17(a)(2) of the Securities Act
45. The Commission adopts by reference paragraphs 1 through 40 of this Complaint.
46. From at least as early as November 2020 through August 2021, Defendant, in the
offer or sale of securities by use of any means or instruments of transportation or communication
in interstate commerce or by use of the mails, directly or indirectly, negligently obtained money
or property by means of untrue statements of material facts and omissions to state material facts

13
necessary in order to make the statements made, in the light of the circumstances under which they
were made, not misleading.
47. By reason of the foregoing, Defendant, directly or indirectly, violated and, unless
enjoined,  is  reasonably  likely  to  continue  to  violate  Section  17(a)(2)  of  the  Securities  Act,  15
U.S.C. § 77q(a)(2).
COUNT 3
Violations of Section 17(a)(3) of the Securities Act
48. The Commission adopts by reference paragraphs 1 through 40 of this Complaint.
49. From at least as early as November 2020 through August 2021, Defendant, in the
offer or sale of securities by use of any means or instruments of transportation or communication
in  interstate  commerce  or  by  use  of  the  mails,  directly  or  indirectly,  negligently  engaged  in
transactions, practices, or courses of business which operated or would have operated as a fraud
or deceit upon the purchasers.
50. By reason of the foregoing, Defendant, directly or indirectly, violated and, unless
enjoined,  is  reasonably  likely  to  continue  to  violate  Section  17(a)(3)  of  the  Securities  Act,  15
U.S.C. § 77q(a)(3).
COUNT 4
Violations of Section 15(a)(1) of the Exchange Act

51. The Commission adopts by reference paragraphs 1 through 40 of this Complaint.
52. From at least as early as November 2020 through August 2021, Defendant, directly
or  indirectly,  by  the  use  of  the  mails  or  any  means  or  instrumentality  of  interstate  commerce
effected transactions in, or induced or attempted to induce the purchase or sale of securities, while

14
she was not registered with the Commission as a broker or dealer or not associated with an entity
registered with the Commission as a broker-dealer.
53. By reason of the foregoing, Defendant, directly or indirectly, violated and, unless
enjoined,  is  reasonably  likely  to  continue  to  violate  Section  15(a)(1)  of  the  Exchange  Act,  15
U.S.C. § 78o(a)(1).
VII.     RELIEF     REQUESTED
            WHEREFORE, the Commission respectfully requests that the Court find that Defendant
committed the violations of the federal securities laws alleged herein and:
 A. Permanent Injunctive Relief
  Issue  a  Permanent  Injunction  enjoining  Defendant  from  violating  Sections  5(a),  5(c),
17(a)(2), and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77e(a), 77e(c), 77q(a)(2), 77q(a)(3), and
Section 15(a)(1) of the Exchange Act, 15 U.S.C. § 78o(a)(1).
 B.        Disgorgement
 Issue an Order directing Defendant to disgorge all ill-gotten gains, including prejudgment
interest, resulting from the acts or courses of conduct alleged in this Complaint.
C.        Civil        Penalty
Issue an Order directing Defendant to pay civil money penalties pursuant to Section 20(d)
of  the  Securities  Act,  15  U.S.C.  §  77t(d),  and  Section  21(d)  of  the  Exchange  Act,  15  U.S.C.  §
78(d).
D.        Further        Relief
Grant such other and further relief as may be necessary and appropriate.

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E. Retention of Jurisdiction
The  Commission  respectfully  requests  the  Court  retain  jurisdiction  over  this  action  and
over Defendant in order to implement and carry out the terms of all orders and decrees that may
hereby  be  entered,  or  to  entertain  any  suitable  application  or  motion  by  the  Commission  for
additional relief within the jurisdiction of this Court.
DEMAND FOR JURY TRIAL
The  Commission  hereby  demands  a  trial  by  jury  on  any  and  all  issues  in  this  action  so
triable.

September 24, 2024        Respectfully submitted,

     By: /s/ Stephanie N. Moot
Stephanie N. Moot
Senior Trial Counsel
Fla. Bar No. 30377
Direct Dial:  (305) 982-6313
      Email:  [email protected]

Attorney for Plaintiff
      SECURITIES AND EXCHANGE
      COMMISSION
                                                                        801            Brickell            Avenue,            Suite            1950
     Miami, Florida 33131
                                                            Telephone:                        (305)            982-6300
                                                            Facsimile:                        (305)            536-4146

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF FLORIDA 

 
CASE NO.: 

 
SECURITIES AND EXCHANGE COMMISSION, ) 
        ) 
     Plaintiff,  ) 
        ) 
v.        ) 
        ) 
KARINA N. FERNANDEZ,    ) 
        ) 
     Defendant.  ) 
________________________________________________) 
 

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF AND  
DEMAND FOR JURY TRIAL 

 
Plaintiff Securities and Exchange Commission (the “Commission”) alleges: 

I. INTRODUCTION 
 

1. From at least November 2020 through August 2021, Defendant Karina N. 

Fernandez (“Fernandez”) personally solicited and raised at least $891,000 from about 89 investors 

nationwide on behalf of MJ Capital Funding, LLC (“MJ Capital”) and its affiliate MJ Taxes and 

More, Inc. (“MJ Taxes”) (collectively, the “MJ Companies”) in an unregistered fraudulent 

securities offering. Fernandez, a licensed Florida attorney and MJ Capital manager, ran a team of 

over 64 sales agents and made false and misleading statements to investors, prospective investors, 

and sales agents about MJ Capital’s business and her purported returns from her investment in MJ 

Capital. 

2. The MJ Companies and their owner, chief executive officer, and president, Johanna 

M. Garcia (“Garcia”), operated the MJ Companies as a Ponzi scheme, which, from at least June 

2020 through August 2021, raised over $196 million from more than 15,500 investors nationwide 

through an unregistered fraudulent securities offering. Garcia and the MJ Companies tricked 

Case 0:24-cv-61774-DSL   Document 1   Entered on FLSD Docket 09/24/2024   Page 1 of 15



 2

investors into thinking their investment would be used to fund small business loans called 

Merchant Cash Advances (“MCAs”) in exchange for a percentage of the business’ income over a 

specified period of time. In reality, investors’ outsize annualized “returns” of 120% – 180% were 

funded with money obtained from new investors. 

3. The Ponzi scheme collapsed once the Commission filed its emergency action to 

stop this ongoing fraud on August 9, 2021, against Garcia and the MJ Companies (collectively, 

the “MJ Defendants”). SEC v. MJ Capital Funding, LLC, et al., Case No.: 21-61644-CIV-AHS 

(S.D. Fla.). On August 11, 2021, the Court granted the Commission’s motions for an asset freeze 

and injunctive relief against the MJ Defendants and the appointment of a receiver over the MJ 

Companies. 

4.  Fernandez played a significant role in perpetrating the Ponzi scheme. Fernandez 

and her sales agents that she supervised told investors and prospective investors that MJ Capital’s 

offering proceeds would be used to make cash advance loans to merchants and, in return, they 

would receive returns of 10% per month and their principal investment upon maturity. Fernandez 

also promoted MJ Capital in a series of videos replete with false and misleading statements about 

MJ Capital’s business and her purported returns from her investment in MJ Capital.  In one video, 

she falsely claimed that MJ Capital was not operating a Ponzi scheme and went on to explain the 

reasons why it was not doing so. In another, she misrepresented that she was able to grow her 

investment portfolio and leave her job as an attorney because of her investment in MJ Capital.   

5. Furthermore, at all relevant times, Fernandez held no securities licenses, was not 

registered with the Commission, and was not associated with a registered broker-dealer. The MJ 

Companies’ securities were not registered with the Commission, nor did they qualify for an 

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exemption from registration. Fernandez thus was not permitted to sell the MJ Companies’ 

securities. 

6. By engaging in this conduct, Fernandez violated Sections 5(a), 5(c), 17(a)(2), and 

17(a)(3) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 77e(a), 77e(c), 77q(a)(2), 

77q(a)(3); and Section 15(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”), 15 

U.S.C. § 78o(a)(1). 

II. DEFENDANT 

7. Fernandez is a resident of Miami, Florida. She was a lead sales agent and 

“manager” of MJ Capital. She is a Florida attorney and has been member of the bar since October 

2019. 

III. OTHER RELEVANT ENTITIES AND INDIVIDUAL 

8. MJ Capital is a Florida limited liability company located in Pompano Beach, Florida.  

Garcia formed MJ Capital in June 2020 and is its Manager, an Authorized Member, and President.  

MJ Capital purports to be in the business of providing merchant cash advances to businesses 

located in Florida and throughout the United States. MJ Capital claimed to fund millions of dollars 

in merchant capital loans to small business owners in exchange for a percentage of the business’ 

income over a specified period of time, with the amount of such funding having steadily increased 

every month since its inception in 2020. The total amount to be repaid is supposedly calculated by 

a factor rate, a multiplier generally based on a business’ financial status. The Court appointed the 

Receiver over MJ Capital on August 11, 2021, and entered a Judgment for Permanent Injunctive 

Relief against MJ Capital on October 1, 2021. 

9. MJ Taxes is a Florida corporation located in the same office as MJ Capital in 

Pompano Beach. Garcia incorporated MJ Taxes in December 2016 as MJ Tax Services & More 

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Inc. and is its President. In March 2020, Garcia changed the company’s name to MJ Taxes and 

More Inc. The Court appointed the Receiver over MJ Taxes on August 11, 2021, and entered a 

Judgment for Permanent Injunctive Relief against MJ Taxes on October 1, 2021. 

10. Garcia is a resident of North Lauderdale, Florida. Garcia controlled the MJ Companies 

prior to their going into receivership. On September 8, 2021, the Court, by consent, entered a 

preliminary injunction against Garcia. On August 24, 2023, Garcia was indicted on charges for 

conspiracy to commit wire fraud and mail fraud, 18 U.S.C. § 1349, wire fraud, 18 U.S.C. § 1343, 

and mail fraud, 18 U.S.C. § 1341, based on the conduct alleged herein. United States v. Garcia, 

Case No. 23-cr-20350-JEM (S.D. Fla.). On July 16, 2024, Garcia pled guilty to conspiracy to 

commit wire fraud and mail fraud (18 U.S.C. § 1349). Id. at DE 43. She is currently awaiting 

sentencing. Id. at DE 53. 

IV. JURISDICTION AND VENUE 

11. The Court has jurisdiction over this action pursuant to Sections 20(b) and 22(a) of 

the Securities Act, 15 U.S.C. §§ 77t(b) and 77v(a); and Sections 21(d), 21(e), and 27 of the 

Exchange Act, 15 U.S.C. §§ 78u(d), 78u(e), and 78aa. 

12. This Court has personal jurisdiction over Fernandez, and venue is proper in the 

Southern District of Florida, because many of Fernandez’s acts and transactions constituting 

violations of the Securities Act and the Exchange Act occurred in the Southern District of Florida, 

where Fernandez resides and conducts business. 

13. In connection with the conduct alleged in this Complaint, Fernandez, directly and 

indirectly, made use of the means or instrumentalities of interstate commerce, the means or 

instruments of transportation and communication in interstate commerce, and the mails. 

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V. FACTS 

A. The MJ Defendants’ Securities and Solicitation of Investor Funds 
 

14. Since at least June 2020, MJ Taxes began soliciting investments, agreeing to pay 

annual returns of varying amounts, typically 120%, for six-month investments. Between June 2020 

and September 2020, MJ Taxes and investors entered into written agreements, signed by Garcia 

on behalf of MJ Taxes, called a Loan Agreement. These agreements refer to the investor as 

“Investor” or “Lender” and MJ Taxes as the “Facilitator” or “Borrower.” 

15. Beginning at least as early as October 2020, MJ Capital became the primary 

investment vehicle for raising funds from investors. From October 2020 until the Ponzi scheme 

collapsed in August 2021, MJ Capital entered into written agreements with investors called a 

Merchant Cash Advance Agreement. These agreements refer to the investor as the “Purchaser,” 

and MJ Capital agrees that it will use the investor’s money to fund an MCA. MJ Capital promises 

an annual return of varying amounts, typically 120%, with MJ Capital guaranteeing repayment of 

principal if the merchant defaults. The term of the investment is either 6 months, 9 months, 12 

months or 6 months with an option by the investor to extend the term for an additional 6 months. 

16. In addition to the written agreement, MJ Capital required investors to sign:  a Non-

Disclosure Agreement, where the investor would agree not to disclose confidential information 

about MJ Capital; a Purchaser Non-Compete Agreement, where the investor would agree not to 

engage in any business that would compete with MJ Capital for two years; an IRS W-9 form; and 

a Referral Program Agreement, which allowed an investor to receive a one-time referral bonus of 

an unspecified amount for each referred person who invests with MJ Capital. 

17. The MJ Companies solicited investors through its own employees, external sales 

agents, and word-of-mouth.  

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18. MJ Capital employed a multi-tiered sales team to solicit investors and a complex 

payment system to pay these agents. The sales team hierarchy was as follows: Board Member, 

Manager, Team Leader, and Account Representative. Multiple undisclosed commission payments, 

which came out of the offering proceeds, were paid to each agent in this hierarchy based on each 

investment. 

19.   MJ Capital also solicited investors through its website and social media. MJ 

Capital’s then website, www.mjcapitalfunds.com (the “Website”), whose domain name was 

registered on July 29, 2020, represented that MJ Capital was in the business of funding MCAs and 

that investor money would be used for this purpose. The Website provided background 

information on how MJ Capital can assist small businesses with merchant cash advances and 

further invited business owners to fill out an online application for funding. For example, the 

Website stated that MJ Capital could provide “an alternative option to satisfy a business’s financial 

needs”, and that it had a “pipeline of investors” from whom the business could expect “cash of up 

to $200,000 to fulfill [its] needs . . . .” 

20. At least as early as May 12, 2021, the Website’s “blog” section stated: “[MJ 

Capital] has grown to an extent where there is a team of underwriters who qualify every company 

that seeks funds from MJ Capital. There are no exceptions to this! The process consists of checking 

6 months’ worth of bank statements, last year’s tax returns, and [the merchant’s] profit and loss 

sheet for the last year.”   

21. Additionally, at least as early as May 12, 2021, MJ Capital represented through 

social media that it is in the business of funding MCAs and offers “quick approvals,” “fast 

funding,” “flexible terms” and “help[s] small businesses”. Its then Twitter page touted: “MJ 

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Capital specializes in MCA funding for businesses, our goal is to help you and your business thrive 

during uncertain times by working with our team.”   

22. In or around June 2021, an undercover Federal Bureau of Investigation agent 

(“UC”) posing as a prospective investor spoke with MJ Capital’s office manager at MJ Capital’s 

office in Pompano Beach. The office manager explained, among other things, that MJ Capital 

would use the UC’s funds to purchase future sales or profits of companies and the UC would make 

a 10% monthly return, an underwriting team determines a merchant’s ability to repay, and MJ 

Capital has liens on a merchant’s projects as further security.   

23. The Loan Agreements and Merchant Cash Advance Agreements (the 

“Agreements”) are investment contracts. Investors looked solely to the MJ Companies to produce 

returns, and the MJ Companies’ ability to do so depended entirely on their ability to either fund 

profitable MCAs or attract new investors to cover payments to existing investors. The Agreements 

are also notes. As investment contracts and/or notes, the Agreements are securities within the 

meaning of the Securities Act and the Exchange Act. These securities have not been registered 

with the Commission. 

B. The MJ Defendants’ Material Misrepresentations to Investors and Misuse and 
Misappropriation of Investor Funds___________________________________ 

 
24. The representations that the MJ Companies were using investor money to fund 

MCAs and that their money was secure were lies. In fact, the MJ Companies made very few MCAs, 

they did not file liens in connection with the few MCAs they did make, and investors’ ability to 

receive the promised returns and repayment of principal was dependent on the MJ Defendants’ 

ability to continue to raise new investor money and convince existing investors to extend the term 

of their agreements. 

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25. From June 2020 through August 2021, the MJ Companies received at least $196 

million in investor funds from investors in Florida and several other states. However, the MJ 

Companies only made approximately $923,000 in MCAs. During that same time period, the MJ 

Companies received approximately $316,500 in repayment for those MCAs. 

26. From June 2020 through August 2021, the MJ Companies misused investor funds 

by making payments totaling at least $62.3 million to sales agents for promoting investments in 

the MJ Companies. The MJ Companies also misused investor funds by making payments on loans 

owed by MJ Taxes via transfers to MJ Taxes’ bank account. 

27. From June 2020 through August 2021, Garcia and the MJ Companies also 

misappropriated at least $7.35 million of investor funds on a variety of purchases unrelated to the 

business, including credit card payments, travel, entertainment, restaurants, and luxury goods and 

clothing. 

28. Because the MJ Companies made few MCAs and were diverting substantial 

investor money, the MJ Companies were not earning anywhere near the revenue needed to pay the 

promised returns to investors. 

29. From June 2020 through August 2021, the MJ Companies paid at least $108.9 

million in purported returns to investors. However, instead of paying investors out of the revenue 

of the business, the MJ Companies used new investor money to pay returns to existing investors.  

30. The investments in the MJ Companies were not secure. To the contrary, the only 

way the MJ Companies could honor their obligations to investors would be by successful 

continuation of their fraudulent scheme. Once the supply of new investors was exhausted, the MJ 

Companies would be unable to pay the promised returns to existing investors. 

 

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C. Fernandez’s Material Misrepresentations to Investors, and Offer and Sale of 
Securities in Unregistered Transactions________________________________  

 
31. Fernandez played a significant role in the MJ Companies’ Ponzi scheme. She is a 

licensed Florida attorney, and was a manager for MJ Capital and ran a team of over 64 sales agents 

who solicited investors nationwide on behalf of the MJ Companies. 

32. From at least November 2020 until August 2021, Fernandez personally solicited 

and raised approximately $891,000 from about 89 investors on behalf of the MJ Companies. She 

and her sales team told investors and prospective investors that their money would be used to fund 

MCAs.  In return, she and her sales agents told investors and prospective investors that they would 

receive returns of 10% per month, along with their principal investment upon maturity.   

33. Fernandez solicited investors and prospective investors through Zoom meetings, 

and postings and live meetings on her Instagram page titled “Entrepreneur | Lawyer on Instagram.”  

For example, in a 2021 live video Fernandez posted on her Instagram page in order to pique 

investors’ interest in MJ Capital, she explained how investors could turn a $6,000 investment, 

generating 10% per month, into over $100,000 in three years. She said that those interested in 

learning about the investment could direct message her to set up a call so she could get them “on 

the right track to financial freedom.” She would then lead those who contacted her to a weekly 

Zoom informational call about MJ Capital.   

34. In another 2021 live video Fernandez posted on her Instagram page, she boasted 

that she recently became part of an investment opportunity that was “absolutely amazing.”  She 

explained that she was able to use the money she made from this investment and put it into her 

other investments, and grow her investment portfolio “to the point where [she] was able to leave 

[her] job as an attorney.”  Fernandez told viewers that if they direct message her, she would get on 

a call with them to explain this investment that can put “[their] money to work for [them].”  When 

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any prospective investor did direct message Fernandez, she told them that she was describing the 

MJ Capital investment opportunity. She also sent them the Zoom link to a weekly informational 

call about MJ Capital.   

35. Fernandez should have known that the statements she made in this Instagram video 

were false and misleading.  She based her claim – that she was able to leave her job as an attorney 

– on the commissions she received from selling MJ Capital’s securities and her parents covering 

her living expenses – not on her investment portfolio as she stated in the video. In fact, at the time 

she posted the video, Fernandez had only invested $4,000 with MJ Capital, which provided for a 

monthly “return” of 10%, or $400 a month. 

36. Fernandez continued to make false and misleading statements about MJ Capital’s 

business. In May 2021, Fernandez created and sent a video to her sales agents through either a 

Telegram or WhatsApp chat stating that MJ Capital was not operating a Ponzi scheme and 

explaining why it was not doing so. She sent this video to her sales team because some of them 

asked her whether MJ Capital was a Ponzi scheme. Fernandez explained in the video that “most 

Ponzi schemes give a statement to the individual who puts their money in” and promise to give 

the money back “at the end”, but MJ Capital “gives you a check every single month”, which is 

“one of the ways that you can rest assured that [MJ Capital] [is] not a Ponzi scheme.” She further 

reassured them that MJ Capital does not “take money from Peter to pay Paul,” but vets companies 

that seek to borrow from it and then lends money to those companies at high interest rates. She 

said that when companies pay, MJ Capital takes its cut of 5% or more and then pays investors their 

10% monthly return.     

37. Fernandez’s statements in this video were false and misleading. Contrary to 

Fernandez’s representations, MJ Capital was in fact operating a massive Ponzi scheme. Investor 

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funds were rarely used to fund MCAs. Instead, the MJ Defendants and others misused and 

misappropriated investor funds.  

38. Fernandez negligently made the false and misleading statements in this video. She 

failed to exercise reasonable care to determine whether MJ Capital was vetting merchants and 

generating sufficient revenue from MCAs to fund investor returns, particularly when sales agents 

and investors were questioning whether investor returns were really Ponzi payments. Rather, she 

based her statement that MJ Capital was not a Ponzi scheme on her supposed conversations with 

“reliable sources” at MJ Capital and research into what a Ponzi scheme is. 

39. Fernandez also should have known that the statements in this video could be passed 

along to investors and prospective investors.  The video did not have forward restrictions and was 

not password-protected.  In fact, she concludes the video by stating that if you have more questions, 

“reach out to the individual who sent you this video, and I’m happy to jump on a call with you.”   

40. Additionally, Fernandez profited from the Ponzi scheme. She received about 

$362,000 in commission payments from MJ Capital, of which she received at least $132,000 in 

cash and approximately $230,000 paid to her personally and through her company, KNF 

International LLC. 

VI. CLAIMS FOR RELIEF 

COUNT 1 

Violations of Sections 5(a) and (c) of the Securities Act 

41. The Commission adopts by reference paragraphs 1 through 40 of this Complaint. 

42. No registration statement was filed or in effect with the Commission pursuant to 

the Securities Act with respect to the securities and transactions issued by the MJ Companies 

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described in this Complaint and no exemption from registration existed with respect to these 

securities and transactions. 

43. From at least as early as November 2020 through August 2021, Defendant directly 

and indirectly: 

(a) made use of any means or instruments of transportation or communication 
in interstate commerce or of the mails to sell securities, through the use or medium 
of a prospectus or otherwise; 
 
(b) carried or caused to be carried securities through the mails or in interstate 
commerce, by any means or instruments of transportation, for the purpose of sale 
or delivery after sale; or 
 
(c) made use of any means or instruments of transportation or communication 
in interstate commerce or of the mails to offer to sell or offer to buy through the use 
or medium of any prospectus or otherwise any security, 
 

without a registration statement having been filed or being in effect with the Commission as to 

such securities. 

44. By reason of the foregoing, Defendant, directly or indirectly, violated and, unless 

enjoined, is reasonably likely to continue to violate Sections 5(a) and 5(c) of the Securities Act, 15 

U.S.C. §§ 77e(a) and 77e(c). 

COUNT 2 
 

Violations of Section 17(a)(2) of the Securities Act 

45. The Commission adopts by reference paragraphs 1 through 40 of this Complaint. 

46. From at least as early as November 2020 through August 2021, Defendant, in the 

offer or sale of securities by use of any means or instruments of transportation or communication 

in interstate commerce or by use of the mails, directly or indirectly, negligently obtained money 

or property by means of untrue statements of material facts and omissions to state material facts 

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necessary in order to make the statements made, in the light of the circumstances under which they 

were made, not misleading. 

47. By reason of the foregoing, Defendant, directly or indirectly, violated and, unless 

enjoined, is reasonably likely to continue to violate Section 17(a)(2) of the Securities Act, 15 

U.S.C. § 77q(a)(2). 

COUNT 3 

Violations of Section 17(a)(3) of the Securities Act 

48. The Commission adopts by reference paragraphs 1 through 40 of this Complaint. 

49. From at least as early as November 2020 through August 2021, Defendant, in the 

offer or sale of securities by use of any means or instruments of transportation or communication 

in interstate commerce or by use of the mails, directly or indirectly, negligently engaged in 

transactions, practices, or courses of business which operated or would have operated as a fraud 

or deceit upon the purchasers. 

50. By reason of the foregoing, Defendant, directly or indirectly, violated and, unless 

enjoined, is reasonably likely to continue to violate Section 17(a)(3) of the Securities Act, 15 

U.S.C. § 77q(a)(3). 

COUNT 4 

Violations of Section 15(a)(1) of the Exchange Act 
 

51. The Commission adopts by reference paragraphs 1 through 40 of this Complaint.   

52. From at least as early as November 2020 through August 2021, Defendant, directly 

or indirectly, by the use of the mails or any means or instrumentality of interstate commerce 

effected transactions in, or induced or attempted to induce the purchase or sale of securities, while 

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she was not registered with the Commission as a broker or dealer or not associated with an entity 

registered with the Commission as a broker-dealer.   

53. By reason of the foregoing, Defendant, directly or indirectly, violated and, unless 

enjoined, is reasonably likely to continue to violate Section 15(a)(1) of the Exchange Act, 15 

U.S.C. § 78o(a)(1). 

VII. RELIEF REQUESTED 

 WHEREFORE, the Commission respectfully requests that the Court find that Defendant 

committed the violations of the federal securities laws alleged herein and: 

 A. Permanent Injunctive Relief 

 Issue a Permanent Injunction enjoining Defendant from violating Sections 5(a), 5(c), 

17(a)(2), and 17(a)(3) of the Securities Act, 15 U.S.C. §§ 77e(a), 77e(c), 77q(a)(2), 77q(a)(3), and 

Section 15(a)(1) of the Exchange Act, 15 U.S.C. § 78o(a)(1). 

 B. Disgorgement 

 Issue an Order directing Defendant to disgorge all ill-gotten gains, including prejudgment 

interest, resulting from the acts or courses of conduct alleged in this Complaint. 

C. Civil Penalty 

Issue an Order directing Defendant to pay civil money penalties pursuant to Section 20(d) 

of the Securities Act, 15 U.S.C. § 77t(d), and Section 21(d) of the Exchange Act, 15 U.S.C. § 

78(d). 

D. Further Relief 

Grant such other and further relief as may be necessary and appropriate. 

 

 

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E. Retention of Jurisdiction 

The Commission respectfully requests the Court retain jurisdiction over this action and 

over Defendant in order to implement and carry out the terms of all orders and decrees that may 

hereby be entered, or to entertain any suitable application or motion by the Commission for 

additional relief within the jurisdiction of this Court. 

DEMAND FOR JURY TRIAL 

The Commission hereby demands a trial by jury on any and all issues in this action so 

triable. 

 
September 24, 2024    Respectfully submitted, 
 
     By: /s/ Stephanie N. Moot  

Stephanie N. Moot 
Senior Trial Counsel 
Fla. Bar No. 30377 
Direct Dial:  (305) 982-6313 

      Email:  [email protected] 
   

Attorney for Plaintiff 
      SECURITIES AND EXCHANGE 
      COMMISSION 
      801 Brickell Avenue, Suite 1950 

     Miami, Florida 33131 
     Telephone:  (305) 982-6300 
     Facsimile:  (305) 536-4146 

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