SEC Charges Purported Underwriter for His Role in Alleged Ponzi Scheme
Litigation Release No. 25527 / September 27, 2022
Securities and Exchange Commission v. Christian J. Gonzalez, Case No. 0:22-cv-61824 (S.D. Fla. filed September 27, 2022)
The Securities and Exchange Commission today charged Christian J. Gonzalez, a purported loan underwriter for MJ Capital Funding, LLC, for his role in an alleged $196 million fraud perpetrated by the company.
The SEC previously charged MJ Capital and an affiliated company, MJ Taxes and More, Inc., and their principal officer, Johanna M. Garcia, on August 9, 2021 for allegedly engaging in a fraudulent securities offering and Ponzi scheme. MJ Capital and MJ Taxes are currently under a court-appointed receivership.
According to the SEC's complaint against Gonzalez, which was filed in the federal district court in the Southern District of Florida, from at least February 2021 until August 2021, Gonzalez acted as MJ Capital's loan "underwriter" and the person responsible for its merchant cash advance "Funding Department." The complaint alleges that Gonzalez made material misstatements and omissions to MJ Capital sales agents during a presentation on a video conference call. Specifically, as alleged, Gonzalez told the sales agents that MJ Capital made 30 to 50 merchant cash advance loans per month, the company had funded "hundreds" of loans to date, and almost all of the investor funds raised so far had been lent out to merchants. In reality, according to the complaint, of the $196 million raised from investors, MJ Capital only used about $895,000 of investor funds to make 13 cash advance loans to merchants, and during the entire time Gonzalez worked at MJ Capital, the company only made seven loans to merchants. The complaint alleges that Gonzalez knew his misstatements would be communicated to investors and, in fact, the video of the call was posted on YouTube for public viewing. The SEC's complaint also alleges that Gonzalez misused $200,000 in investor funds, which was earmarked to build a platform for underwriting MJ Capital's purported merchant cash advance loans, by failing to use this money to create the platform.
The SEC's complaint charges Gonzalez with violating the antifraud and securities registration provisions of the federal securities laws. Specifically, the complaint alleges that Gonzalez violated Sections 5(a) and 5(c) of the Securities Act of 1933, and violated or aided and abetted violations of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks permanent injunctive relief, disgorgement plus prejudgment interest, and a civil penalty against Gonzalez.
The SEC's investigation, which is continuing, is being conducted by Raynette R. Nicoleau and Julia D'Antonio in the Miami Regional Office, and supervised by Chedly C. Dumornay, Fernando Torres, and Glenn S. Gordon. The SEC's litigation is being led by Stephanie Moot under the supervision of Teresa Verges.