2026-02-24 sec-litreleases complaint 170 KB 20,063 chars

SEC v. Joel Castellanos, No. 0:26-cv-60495-AHS, Southern District of Florida (Feb. 24, 2026) — Complaint

raw: Securities and Exchange Commission v. Joel Castellanos

Securities and Exchange Commission v. Joel Castellanos, No. 0:26-cv-60495-AHS (Feb. 24, 2026)

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Scheme: ponzi (99%)
Court: Southern District of Florida
Case No.: 0:26-cv-60495-AHS
Outcome: pleaded · 2024-07-16
Victim loss: $923,000
Victims: 1,222
Entity: Joel Castellanos

Classified ponzi(confidence 99%). EDGAR detection: forms Form D· recall 35% / precision 15%. detection rule →

Extracted insights

Dollar amounts 11

$196.00M $196 million $100M–$1B
$62.30M $62.3 million $10M–$100M
$25.20M $25.2 million $10M–$100M
$7.35M $7.35 million $1M–$10M
$923K $923,000 $100K–$1M
$317K $316,500 $100K–$1M
$200K $200,000 $100K–$1M
$131K $130,854 $100K–$1M
$93K $92,581 $10K–$100K
$38K $38,273 $10K–$100K
$109 $108.9 <$10K

Entities 5

person Joel Castellanos
person johanna m. garcia
organization MJ Capital Funding, LLC
organization MJ Companies
organization MJ Taxes And More, Inc.

Triples 9

Joel Castellanos Solicited and Raised At Least $25.2 Million from At Least 1,222 Investors on Behalf of MJ Capital Funding, LLC and MJ Taxes and More, Inc.
MJ Companies and Johanna M. Garcia Operated The MJ Companies as a Ponzi Scheme
They Raised Over $196 Million from More Than 15,500 Investors
The Commission Filed Emergency Action to Stop Ongoing Fraud on August 9, 2021
The Court Granted Commission’s Motions for Asset Freeze and Injunctive Relief
Castellanos Told Investors Their Money Would Fund MJ Companies’ MCA Business
Castellanos Served MJ Capital Board Member
Castellanos Ran Team of About 42 Sales Agents
Castellanos Held No Securities Licenses

PDF

Securities and Exchange Commission v. Joel Castellanos · Source

Text layers

Extracted body text (20,063c)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

CASE NO.:

SECURITIES AND EXCHANGE COMMISSION, )
)
Plaintiff, )
)
v. )
)
JOEL CASTELLANOS, )
)
Defendant. )
________________________________________________)

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF

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

I. INTRODUCTION

1. From at least June 2020 until August 2021, Defendant Joel Castellanos

(“Castellanos”) personally, and through his team of sales agents, solicited and raised at least $25.2

million from at least 1,222 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”).

2. The MJ Companies and Johanna M. Garcia (“Garcia”), who was their owner, chief

executive officer and president, operated the MJ Companies as a Ponzi scheme. From at least June

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

and internationally through an unregistered fraudulent securities offering. Garcia and the MJ

Companies tricked investors into thinking their investment would be used to fund small business

loans called Merchant Cash Advances (“MCAs”) and that their returns would derive from the

income MJ Capital earned through a business’s repayment of their MCA loan 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. Castellanos played a significant role in soliciting and raising money from investors

for the MJ Companies. He told investors that their money would be used to fund the MJ

Companies’ purported MCA business and, in exchange, they would receive returns of 10% or

more per month along with the return of their principal investment upon maturity. He also served

as an MJ Capital “board member,” was responsible for “team & employee relations/charity events

& office events,” and ran a team of about 42 sales agents who solicited money from investors

nationwide on behalf of the MJ Companies.

5. But only a small fraction of investor funds was used to make MCAs. Instead, most

of the investor funds were used to pay fictitious returns to existing investors, undisclosed

commissions to sales agents who promoted investments in the MJ Companies, and personal

expenses for insiders of the MJ Companies. As such, investors’ ability to receive the promised

returns and repayment of principal was dependent on a rising stream of funds from new investors,

and by convincing existing investors to renew their existing investments, thus deferring the MJ

Companies’ need to repay investors their principal investment.

6. Furthermore, at all relevant times, Castellanos 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

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

securities.

7. By engaging in this conduct, Castellanos violated Sections 5(a), 5(c) of the

Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 77e(a) and 77e(c); and Section 15(a)(1) of

the Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. § 78o(a)(1).

II. DEFENDANT

8. Castellanos is a resident of Tamarac, Florida. Castellanos was a lead sales agent

and “board member” of MJ Capital.

III. OTHER RELEVANT ENTITIES AND INDIVIDUAL

9. 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.

10. 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

Inc., and at all relevant times was 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.

11. At all relevant times, Garcia was 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, 45 and

46.

IV. JURISDICTION AND VENUE

12. 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.

13. This Court has personal jurisdiction over Castellanos. Venue is proper in the

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

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

where Castellanos resides and conducts business.

14. In connection with the conduct alleged in this Complaint, Castellanos, 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.

V. FACTS

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

15. 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.”

16. 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.

17. 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.

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

agents, and word-of-mouth.

19. MJ Capital employed a multi-tiered sales team to solicit investors as well as 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.

20. 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 . . . .”

21. 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.”

22. 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

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.”

23. 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 to the UC, 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.

24. 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

25. The representations by Garcia and other MJ Companies representatives 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.

26. From in or around June 2020 through in or around August 2021, the MJ Companies

received at least $196 million in investor funds from investors in Florida, several other states, and

internationally. 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.

27. 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.

28. 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.

29. 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.

30. 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.

31. 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.

C. Castellanos’ Offer and Sale of Securities in Unregistered Transactions and
While Acting As An Unregistered Broker

32. Castellanos played a significant role in raising money from investors for the MJ

Companies. He was an MJ Capital board member and ran a team of about 42 sales agents.

33. From at least July 2020 until August 2021, Castellanos personally, and through his

team of sales agents, solicited and raised at least $25.2 million from at least 1,222 investors

nationwide on behalf of the MJ Companies.

34. Castellanos represented to investors and prospective investors that their funds

would be used to make MCAs, and that they would receive returns of 10% or more per month and

the return of their principal upon maturity.

35. Castellanos instructed investors to send their money directly to MJ Capital through

wire transfers, checks, or in cash. After investing through Castellanos or his team, investors

received a signed MCA Agreement from MJ Capital, which bore the signature of either Castellanos

or someone on his team, as authorized representative of MJ Capital.

36. During the relevant period, Castellanos and his sales team received about $6.4

million in commission payments from MJ Capital, at least $130,854 of which was paid to

Castellanos. The total commission amount Castellanos received includes about $38,273 in checks

and Cash App payments, and about $92,581 in personal charges he made on the MJ Capital

corporate American Express credit card.

VI. CLAIMS FOR RELIEF

COUNT 1

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

37. The Commission adopts by reference paragraphs 1 through 36 of this Complaint.

38. 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

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

securities and transactions.

39. From at least as early as June 2020 through August 2021, Castellanos 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.

40. By reason of the foregoing, Castellanos, 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 15(a)(1) of the Exchange Act

41. The Commission adopts by reference paragraphs 1 through 36 of this Complaint.

42. From at least as early as June 2020 through August 2021, Castellanos, 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 he 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.

43. By reason of the foregoing, Castellanos, 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 Castellanos

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

A. Permanent Injunctive Relief

Issue a Permanent Injunction enjoining Castellanos from violating Sections 5(a) and 5(c)

of the Securities Act, 15 U.S.C. §§ 77e(a), 77e(c), and Section 15(a)(1) of the Exchange Act, 15

U.S.C. § 78o(a)(1).

B. Disgorgement

Issue an Order directing Castellanos to disgorge all ill-gotten gains or proceeds received

with prejudgment interest thereon, resulting from the acts and/or courses of conduct alleged in this

Complaint, pursuant to Sections 21(d)(3), (d)(5) and (d)(7) of the Exchange Act, 15 U.S.C. §

78(d)(3), (5) and (7) .

C. Civil Penalty

Issue an Order directing Castellanos to pay a civil money penalty 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.

E. Retention of Jurisdiction

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

over Castellanos 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.

February 23, 2026 Respectfully submitted,

By: /s/ Christine Nestor

Christine Nestor
Senior Trial Counsel
Fla. Bar No. 597211
Direct Dial: (305) 982-6367

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

OCR text (21,497c · textlayer · 95% conf)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

CASE NO.:

SECURITIES AND EXCHANGE COMMISSION, )
)
Plaintiff, )
)
v. )
)
JOEL CASTELLANOS, )
)
Defendant. )
________________________________________________)

COMPLAINT FOR INJUNCTIVE AND OTHER RELIEF

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

I. INTRODUCTION

1. From at least June 2020 until August 2021, Defendant Joel Castellanos

(“Castellanos”) personally, and through his team of sales agents, solicited and raised at least $25.2

million from at least 1,222 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”).

2. The MJ Companies and Johanna M. Garcia (“Garcia”), who was their owner, chief

executive officer and president, operated the MJ Companies as a Ponzi scheme. From at least June

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

and internationally through an unregistered fraudulent securities offering. Garcia and the MJ

Companies tricked investors into thinking their investment would be used to fund small business

loans called Merchant Cash Advances (“MCAs”) and that their returns would derive from the

income MJ Capital earned through a business’s repayment of their MCA loan over a specified

Case 0:26-cv-60495-XXXX Document 1 Entered on FLSD Docket 02/23/2026 Page 1 of 12

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. Castellanos played a significant role in soliciting and raising money from investors

for the MJ Companies. He told investors that their money would be used to fund the MJ

Companies’ purported MCA business and, in exchange, they would receive returns of 10% or

more per month along with the return of their principal investment upon maturity. He also served

as an MJ Capital “board member,” was responsible for “team & employee relations/charity events

& office events,” and ran a team of about 42 sales agents who solicited money from investors

nationwide on behalf of the MJ Companies.

5. But only a small fraction of investor funds was used to make MCAs. Instead, most

of the investor funds were used to pay fictitious returns to existing investors, undisclosed

commissions to sales agents who promoted investments in the MJ Companies, and personal

expenses for insiders of the MJ Companies. As such, investors’ ability to receive the promised

returns and repayment of principal was dependent on a rising stream of funds from new investors,

and by convincing existing investors to renew their existing investments, thus deferring the MJ

Companies’ need to repay investors their principal investment.

Case 0:26-cv-60495-XXXX Document 1 Entered on FLSD Docket 02/23/2026 Page 2 of 12