Joel Castellanos, a resident of Tamarac, Florida, and a board member of MJ Capital Funding LLC, has settled Securities and Exchange Commission charges for his role in recruiting more than 1,200 investors into a $196M South Florida Ponzi scheme operated by Johanna M. Garcia, who is currently serving a 20-year federal prison sentence for leading one of the largest fraud operations the Southern District of Florida has prosecuted in recent years. From at least June 2020 through August 2021, Castellanos personally and through a tiered sales team of approximately 42 agents solicited and raised at least $25.2M from at least 1,222 investors, telling them their money would be used to fund merchant cash advances to small businesses and that they would earn returns of 10% or more per month plus the return of their principal at maturity.
None of this was accurate. Castellanos held no securities license at any relevant time, was not registered with the SEC, and was not associated with any registered broker-dealer. Without admitting or denying the allegations, Castellanos consented to a final judgment ordering him to pay a $150,000 civil penalty, with the disgorgement and prejudgment interest amounts deemed satisfied by recoveries from the court-appointed receiver already managing the collapsed MJ Capital entities.
MJ Capital Raised $196M in 14 Months by Promising Returns Its Business Could Never Generate
MJ Capital Funding and its affiliate MJ Taxes and More were presented to investors as a merchant cash advance operation, a financing model in which a company advances money to small businesses in exchange for a share of future revenues. Garcia told investors their money would fund these advances and that the profits would generate returns of 120% to 180% annually, or 10% or more per month. The pitch was specifically tailored to attract investors who wanted exposure to alternative income without accessing traditional financial markets.
The business never generated the returns it promised because the business barely existed as described. According to the SEC’s original emergency action filed in August 2021, MJ Capital made at most $2.9M in actual merchant cash advances out of the $196M it raised. Virtually all investor returns were funded not by business profits but by money from new investors, the defining structure of a Ponzi scheme. Of the nearly $200M raised between October 2020 and August 2021, investors ultimately lost nearly $90M. More than 15,500 investors participated in the scheme across both the primary MJ Capital operation and a successor scheme Garcia launched under new entity names after MJ Capital was shut down by the FBI and SEC in late 2021.
Castellanos Led a 42-Agent Sales Operation and Personally Received $130K in Commissions Without a License
Castellanos’s role was structural rather than operational. He was not Garcia’s co-founder or the architect of the fraud. He was a distributor — a board member who ran a multi-tiered sales network that fed investor money into the scheme and collected commissions on the inflow. His team of approximately 42 agents told investors their funds would be used for merchant cash advances and that the promised returns were supported by a real business. The SEC charges him with operating as an unregistered broker and selling unregistered securities, violations that do not require proof of fraud but reflect the regulatory framework that exists precisely to prevent unlicensed individuals from channeling public money into unvetted investment vehicles.
During the relevant period, Castellanos and his sales team collectively received approximately $6.4M in commissions from MJ Capital. Castellanos personally received at least $130,854, broken down as approximately $38,273 in checks and Cash App payments and approximately $92,581 charged to MJ Capital’s corporate American Express card. Investors were directed to send money to MJ Capital via wire transfer, check, or cash. Castellanos held no securities licenses at any point during his involvement.
Garcia Got 20 Years and Pavel Ruiz Got 9 as the Criminal Prosecutions Ran Alongside the SEC’s Civil Action
The Castellanos settlement is the latest civil action in a case that has been running on multiple tracks since August 2021. Garcia was criminally indicted in August 2023, pleaded guilty to conspiracy to commit wire fraud and mail fraud in July 2024, and was sentenced to 20 years in federal prison on December 3, 2024, receiving the maximum possible sentence. Pavel Ramon Ruiz Hernandez, another MJ Capital board member whose 70-agent sales team raised at least $46M from more than 5,100 investors, pleaded guilty in April 2023 and was sentenced in September 2023 to nine years and two months. Ruiz had also diverted $7.7M directly into personal accounts, using some of the money to purchase cryptocurrency and a luxury vehicle.
MJ Capital’s banking relationship with Wells Fargo also produced separate litigation. Investors filed a lawsuit alleging the bank had facilitated the fraud by failing to follow its own anti-money-laundering policies. Wells Fargo settled those claims for $26.6M in March 2023. MJ Capital and MJ Taxes remain under court-appointed receivership managed by Bernice Lee in the Southern District of Florida.
The Castellanos Settlement Closes the Civil Case Against a Key Distributor Five Years After the Scheme Collapsed
The SEC’s settled action against Castellanos was filed February 23, 2026, and is subject to court approval. The final judgment permanently enjoins him from future violations of the registration provisions of Sections 5(a) and 5(c) of the Securities Act and Section 15(a)(1) of the Exchange Act. The disgorgement of $46,861.94 plus prejudgment interest of $13,084.42 is deemed satisfied by the receiver’s prior collections, meaning the $150,000 civil penalty is the only new financial obligation. Garcia’s civil consent judgment was entered May 2, 2025, with her disgorgement deemed satisfied by her criminal forfeiture order. The SEC’s investigation was conducted by Raynette R. Nicoleau and Crystal Ivory of the Miami Regional Office.
Conclusion
The MJ Capital case illustrates how Ponzi schemes scale: a central operator provides the product and the narrative, and a distribution layer of unlicensed salespeople recruits the investors without whom the scheme cannot sustain itself. Castellanos ran 42 agents without a securities license for over a year, raised $25.2M from 1,222 investors on promises of 10% monthly returns, and personally collected over $130,000 in commissions on money that was funding a fraud rather than merchant loans. Garcia is serving 20 years. Ruiz is serving over nine. Castellanos pays $150,000 and is permanently barred from the securities markets. The investor losses of nearly $90M remain the central fact of the case, still being recovered, piece by piece, through the receivership.
