Karina N. Fernandez; Marco A. Rosas; Bryant Guayara; Erick M. Ruiz; Leonela M. Duarte
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26130 / September 26, 2024
Securities and Exchange Commission v. Karina N. Fernandez, Case No. 0:24-cv-61774 (S.D. Fla filed Sept. 24, 2024)
Securities and Exchange Commission v. Marco A. Rosas, Case No. 0:24-cv-61769 (S.D. Fla filed Sept. 24, 2024)
Securities and Exchange Commission v. Bryant Guayara, Case No. 0:24-cv-61770 (S.D. Fla filed Sept. 24, 2024)
Securities and Exchange Commission v. Erick M. Ruiz, Case No. 0:24-cv-61768 (S.D. Fla filed Sept. 24, 2024)
Securities and Exchange Commission v. Leonela M. Duarte, Case No. 0:24-cv-61772 (S.D. Fla filed Sept. 24, 2024)
SEC Charges Additional Persons for Their Roles in a South Florida $196 Million Ponzi Scheme
On September 24, 2024, the Securities and Exchange Commission filed actions against five individuals, Karina N. Fernandez, Marco A. Rosas, Bryant Guayara, Erick M. Ruiz, and Leonela M. Duarte, for their roles in the alleged $196 million securities fraud perpetrated by MJ Capital Funding, LLC (MJ Capital). The SEC’s complaints against Fernandez, Rosas, Guayara, Ruiz, and Duarte were filed in U.S. District Court for the Southern District of Florida.
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 perpetrating a fraudulent securities offering and Ponzi scheme. An amended complaint was filed by the SEC on February 22, 2022. MJ Capital and MJ Taxes are currently under a court-appointed receivership. On November 15, 2022, Garcia consented to, without admitting or denying the Commission’s allegations, a permanent injunction from violating the registration and anti-fraud provisions of the federal securities laws, with penalties and disgorgement amounts to be determined at a later date.
According to the SEC’s complaint against Fernandez, a Florida licensed attorney and former manager and sales agents for MJ Capital, Fernandez managed a team of over 60 sales agents who solicited investors nationwide on behalf of MJ Capital and MJ Taxes. The SEC’s complaint also alleges that between November 2020 and August 2021, Fernandez personally raised at least $891,000 from about 89 investors and received approximately $362,000 in commission payments from MJ Capital for these sales of securities, which commissions were paid using investor money. As alleged in the complaint, Fernandez solicited investors through Zoom meetings, and postings and live meetings on her Instagram page. The SEC’s complaint alleges that Fernandez negligently made materially false and misleading statements in two videos she created and disseminated to prospective investors and to the sales agents on her team. Specifically, the SEC alleges that Fernandez falsely claimed that MJ Capital was not operating a Ponzi scheme and that she made misleading statements about her own investment in MJ Capital’s securities offering. The complaint against Fernandez further alleges that she illegally acted as an unregistered broker while offering and selling MJ Capital and MJ Taxes’ unregistered securities to the public.
The SEC’s complaints against Rosas, Guayara, Ruiz, and Duarte, four of MJ Capital’s top-selling sales agents, allege that they collectively offered and sold at least $18 million in MJ Capital’s unregistered securities to at least 1,427 investors. According to the complaints, the defendants marketed the securities to investors and collectively earned millions of dollars in commissions on their sales, even though they were not registered as broker-dealers or associated with registered broker dealers.
The SEC charges Fernandez with violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933, the antifraud provisions of Sections 17(a)(2) and 17(a)(3) of the Securities Act, and the broker-dealer registration provision of Section 15(a) of the Securities Exchange Act of 1934. The SEC also charges Rosas, Guayara, Ruiz, and Duarte with violating Sections 5(a) and 5(c) of the Securities Act and Section 15(a) of the Exchange Act. The SEC seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties against Fernandez, Rosas, Guayara, Ruiz, and Duarte.
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 N. Moot under the supervision of Teresa Verges.