SEC v. Leonela M. Duarte, 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.        )
        )
LEONELA            M.            DUARTE,                                                            )
        )
     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  September  2020  until  August  2021,  Defendant  Leonela  M.  Duarte
(“Duarte”)  personally  raised  at  least  $1.8  million  from  about  90  investors  nationwide  and
internationally 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 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  until  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
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.

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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. For Duarte’s part, she told investors that their money would be used to fund the MJ
Companies’ purported MCA business and, in exchange, they would receive monthly returns on
their  investment.  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.
5. Furthermore,  at  all  relevant  times,  Duarte  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. Duarte thus was not permitted to sell the MJ Companies’ securities.
6. By engaging in this conduct, Duarte 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).

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II.        DEFENDANT
7. Duarte is a resident of Doral, Florida. Duarte was a sales agent of MJ Capital.
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
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,

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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  Duarte,  and  venue  is  proper  in  the
Southern District of Florida, because many of Duarte’s acts and transactions constituting violations
of  the  Securities  Act  and  the  Exchange  Act  occurred  in  the  Southern  District  of  Florida,  where
Duarte resides and conducts business.
13. In  connection  with  the  conduct  alleged  in  this  Complaint,  Duarte,  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

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

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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.
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

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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
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

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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.
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

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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.
C. Duarte’s Offer and Sale of Securities in Unregistered Transactions and While
Acting As An Unregistered Broker____________________________________

31. Duarte  played  a  significant  role  in  raising  money  from  investors  for  the  MJ
Companies.  From  at  least  September  2020  through  August  2021,  Duarte  solicited  and  raised  at
least  $1.8  million  from  about  90  investors  nationwide  and  internationally  on  behalf  of  the  MJ
Companies.
32. Duarte represented to investors and prospective investors that their funds would be
used to make MCAs, and that they would receive monthly returns on their investment. She often
met in person with prospective investors to tell them about the MJ Capital investment opportunity.
33. Duarte sometimes directly received investments from investors, including through
checks  and  wire  transfers,  which  she  later  delivered  to  MJ  Capital.  Other  times,  investors  who
invested through Duarte sent their money directly to MJ Capital through wire transfers and checks.

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After  investing  through  Duarte,  investors  received  a  signed  MCA  Agreement  from  MJ  Capital,
which was signed by an authorized representative of MJ Capital.
34. During  the  relevant  period,  Duarte  received  about  $1.6  million  in  commission
payments from MJ Capital. She received these payments individually and through her companies
HAMN LLC, Le Duarte USA, LLC, and Leduarte, Corp.
VI. CLAIMS FOR RELIEF
COUNT 1
Violations of Sections 5(a) and (c) of the Securities Act
35. The Commission adopts by reference paragraphs 1 through 34 of this Complaint.
36. 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.
37. From at least as early as September 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.

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38. 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 15(a)(1) of the Exchange Act

39. The Commission adopts by reference paragraphs 1 through 34 of this Complaint.
40. From at least as early as September 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
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.
41. 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) 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).

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 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.
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.

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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.        ) 
        ) 
LEONELA M. DUARTE,     ) 
        ) 
     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 September 2020 until August 2021, Defendant Leonela M. Duarte 

(“Duarte”) personally raised at least $1.8 million from about 90 investors nationwide and 

internationally 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 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 until 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 

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. 

Case 0:24-cv-61772-WPD   Document 1   Entered on FLSD Docket 09/24/2024   Page 1 of 12



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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. For Duarte’s part, she told investors that their money would be used to fund the MJ 

Companies’ purported MCA business and, in exchange, they would receive monthly returns on 

their investment. 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.  

5. Furthermore, at all relevant times, Duarte 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. Duarte thus was not permitted to sell the MJ Companies’ securities. 

6. By engaging in this conduct, Duarte 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).  

 

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II. DEFENDANT 

7. Duarte is a resident of Doral, Florida. Duarte was a sales agent of MJ Capital. 

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 

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 0:24-cv-61772-WPD   Document 1   Entered on FLSD Docket 09/24/2024   Page 3 of 12



 4

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 Duarte, and venue is proper in the 

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

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

Duarte resides and conducts business. 

13. In connection with the conduct alleged in this Complaint, Duarte, 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 
 

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 

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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.  

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 

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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 

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 

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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. 

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 

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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. 

C. Duarte’s Offer and Sale of Securities in Unregistered Transactions and While 
Acting As An Unregistered Broker____________________________________ 

 
31. Duarte played a significant role in raising money from investors for the MJ 

Companies. From at least September 2020 through August 2021, Duarte solicited and raised at 

least $1.8 million from about 90 investors nationwide and internationally on behalf of the MJ 

Companies. 

32. Duarte represented to investors and prospective investors that their funds would be 

used to make MCAs, and that they would receive monthly returns on their investment. She often 

met in person with prospective investors to tell them about the MJ Capital investment opportunity. 

33. Duarte sometimes directly received investments from investors, including through 

checks and wire transfers, which she later delivered to MJ Capital. Other times, investors who 

invested through Duarte sent their money directly to MJ Capital through wire transfers and checks.  

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After investing through Duarte, investors received a signed MCA Agreement from MJ Capital, 

which was signed by an authorized representative of MJ Capital.   

34. During the relevant period, Duarte received about $1.6 million in commission 

payments from MJ Capital. She received these payments individually and through her companies 

HAMN LLC, Le Duarte USA, LLC, and Leduarte, Corp. 

VI. CLAIMS FOR RELIEF 

COUNT 1 

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

35. The Commission adopts by reference paragraphs 1 through 34 of this Complaint. 

36. 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. 

37. From at least as early as September 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. 

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38. 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 15(a)(1) of the Exchange Act 
 

39. The Commission adopts by reference paragraphs 1 through 34 of this Complaint.   

40. From at least as early as September 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 

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.   

41. 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) 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). 

 

 

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 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. 

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. 

  

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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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