|Phone: 877-651-8110 (option 2)
MJ Capital Funding investors holding out hope that a return to business as usual could be in the cards for the company accused of being a ponzi scheme, might find that outcome a little less likely.
The Receiver has agreed to auction off all of the assets at the company’s Pompano Beach offices on September 28, and everything must go, from the 60″ TV to the garbage cans to the houseplant.
Such powers afforded to the Receiver, a law firm partner named Corali Lopez-Castro, also gives her the ability to enter into binding legal agreements on behalf of the company, the latest ones being Consent Agreements with the SEC. In doing this, the two MJ companies (MJ Capital Funding, LLC and MJ Taxes and More Inc.), have agreed to disgorge of “ill-gotten gains,” accept a civil penalty, and be permanently restrained from continuing its former business. Such an arrangement is standard fare when companies are thrust into forced Receiverships like this one. The Receiver’s job will be to collect as much money as possible so that it can be distributed to afflicted investors.
The MJ Capital Funding Website has also been shut down. It now forwards to law firm Kozyak, Tropin, Throckmorton. Regular updates on the case are available for free at: https://kttlaw.com/mjcapital/.
The consent orders do not apply to former CEO Johanna M. Garcia individually, who lost control of the company and ability to act on the company’s behalf when it was placed into Receivership.
An astounding 3,160 people have signaled their support for Garcia in this case. That’s the number of signatures on the online petition for her located on change.org.
“Our goal with this petition is to get those funds unfrozen as soon as possible,” it says. “This is Johanna’s desire as well proving once again Johanna’s unwavering support for us and in building a strong team and community. Johanna has helped countless amounts of people and charities with the work she does local and worldwide.”
The CEO of MJ Capital Funding, the Florida-based finance company accused by the SEC of being a ponzi scheme, formally lodged an answer to the lawsuit on Thursday. In it, her attorneys state that she has no choice but to assert her Fifth Amendment rights on the basis that a parallel federal criminal investigation is currently being conducted, but “that no negative inference should be drawn from her exercise” of these rights.
Notably, her lawyers say that she might change her mind later if she believes it is appropriate to do so, which would include an event that “she obtains immunity from the US Attorney […] or otherwise receives appropriate safeguards to protect her against criminal prosecution.”
That’s the substance of the response, which at this stage would only require that a defendant admit or deny a list of itemized facts stated by the plaintiff.
More than 2,800 people have come out in support of the accused CEO via a petition on change.org.
A court hearing is scheduled for September 8th at 1:30pm ET via Zoom. Update 9/8: the hearing has been cancelled.
A class action lawsuit filed in the Southern District of Florida on behalf of MJ Capital Funding’s investors is alleging that Wells Fargo knew that the company was a ponzi scheme.
“Wells Fargo knew based on its Know Your Customer inquiries that the MJ Companies were supposed to use investor monies to lend to small merchants, which would then repay the loans, the proceeds of which would be used to pay back investors. Wells Fargo monitored the MJ Companies’ accounts and saw that’s not what happened. Very little money that left the MJ Companies’ accounts went to merchants. Millions instead went to [the CEO’s] personal account at Wells Fargo, to MJ Companies’ sales agents or back to other investors.
Despite this knowledge, Wells Fargo substantially assisted the MJ Companies by allowing them to continue operating with Wells Fargo accounts, commingle investor funds and make payments via wire, transfer and check. Garcia and the MJ Companies’ banking activities at Wells Fargo were integral to her scheme to defraud investors.”
The claims are for aiding and abetting fraud, aiding and abetting breach of fiduciary duty, and unjust enrichment.
MJ Capital is estimated to have raised between $70M and $128M from investors over roughly one years time. The company is being sued by the SEC for securities fraud and its assets have been frozen pursuant to a court order.
The case # is: 0:21-cv-61749-RAR
Coming in at rank #1,044 on the 2021 Inc 5000 list was a small business finance provider with a whimsical name, Capital Dude. Having some common ownership overlap with another Inc ranked company, Central Diligence Group (#2,893), the Dude told deBanked that they didn’t shut down or pause funding throughout 2020. In fact, they continued to grow.
“We really have to attribute the company’s growth to our hardworking and efficient team that made sure we didn’t miss a beat while having to work remote,” said company partner Andrew Hernandez.
The name, Capital Dude, was chosen to convey an easy process to their partners and clients, the company says, while at the same time being compatible with a mascot they had in mind. The Capital Dude himself is a superhero in a green suit with the letters “CD” emblazoned on his chest. He’s also got a red cape and a flashy smile.
Behind the optics, however, is a seasoned team.
“We got started in the industry during the ’08 – ’09 recession,” Hernandez said, “so when you experience getting started during a downturn, you quickly realize that the only way to keep going is to stick to your principles while continuously taking inventory of the ongoing situation and making any necessary changes quickly in order to protect the portfolio. While both downturns were very different in how they played out, applying that previous experience to the past 18 months has been interesting as we have seen a lot of similarities that are very measurable.”
Central Diligence Group, meanwhile, has gotten repeat recognition on the Inc 5000 list.
“CDG offers consulting and underwriting services to other alternative financing companies in the industry,” Hernandez explained. The “short term plan is to scale out this portion of the business in 2022 via licensing of our platform to funders, funds, accredited investors, etc.”
The companies are currently in the process of moving to a new office and they expressed that they are “very bullish on the future” and plan to increase their headcount and continue to grow.
Shopify Capital originated $363M between merchant cash advance and business loans in Q2, bringing the first half total to $671.6M.
“Not only does Shopify Capital help fuel our merchants’ growth,” said Shopify President Harley Finkelstein in the quarterly earnings call, “our data tells us that merchants that accept Capital stay with Shopify longer as they succeed on the platform and take more of Shopify’s other solutions, namely Shopify shipping, apps, themes and domains and maybe most importantly, extending capital when their business needs it, reinforces the trusted relationship that we have with our merchants, one that goes beyond what they have with their bank or any other vendor. When we talk about Shopify’s flywheel, this is exactly what we mean.”
Shopify Capital is in the same league as rivals Square and Enova in terms of small business financing volume. Square Loans originated $1B for the first half, for example, while Enova has originated $722M.
Velocity Capital Group is bullish on crypto as a means of payment. Company President and CEO Jay Avigdor told deBanked that the company is officially incorporating cryptocurrency in two ways:
(1) Brokers can now choose to get paid commissions in cryptocurrency instead of cash.
(2) Merchants can now choose to get funded via cryptocurrency instead of cash.
In both cases, Avigdor touted the speed in which cryptocurrency can change hands versus waiting around for an ACH or a wire.
“Our goal since day 1 of VCG, was to give ISOs and merchants the ability to access capital as fast as possible,” Avigdor said. “With VCG’s proprietary technology, we have been able to change that mindset from ‘as fast as possible’ to ‘the FASTEST possible.'”
The company says it will use stable coins (USD Coin and DAI) to conduct these transactions “in order to limit market volatility” but that depending on the merchant or ISO relationship, they would be open to transmitting Bitcoin, Ethereum, etc.
Merchants getting funded with crypto would still have their future receivables collected via ACH so that part of the arrangement would not change. The underlying business is the same.
VCG alluded to there also being potential tax benefits of taking payment in crypto.
Avigdor believes that among industry peers, VCG is the first to offer commissions in crypto. He further explained that this is only one piece of the puzzle and that there are plans to integrate the company’s technology in a way that will allow merchants to access funding in less than 20 minutes from the time of submission to funds actually being received.
Miami-based Greenbox Capital, a small business finance provider, has acquired Level Up Funding.
Level Up, which focuses on small business lines of credit, was co-founded in 2019 by industry veterans Maciej Bykowski, once the Director of Sales for OnDeck, and Drew Batiato, the former Chief Credit Officer of Idea Financial. Level Up was based in Denver and relocated to Miami, nearby to where Greenbox is.
In an official announcement, Greenbox Capital CEO Jordan Fein, said “We are thrilled to have Level Up Funding join our organization. Their founders and key staff are a wealth of industry knowledge. The acquisition will immediately impact growth and the unique selling proposition that we offer our clients.”
Fein says to expect more such deals in the future:
“We’ll continue to make strategic moves to scale, which includes synergistic acquisitions to further distance ourselves from our competitors,” he said. “Level Up is the first of many to come.”
Bykowski of Level Up said, “Our mission has always been driven by a consumer first perspective. Having a shared vision for the future of alternative lending, we are excited to work together to leverage technology to enhance Greenbox Capital’s product offering and create a seamless customer experience.”
“We’re very excited for our future here at Greenbox. We will have the opportunity to develop new products that will aid clients across the US and abroad with their business growth,” said Level Up’s Drew Batiato.
As the pandemic raged, word on the street was that fintechs were mulling a Manhattan exodus. Expensive midtown offices didn’t look great compared to Miami beaches.
But according to research by Bloomberg, there were no crowds of fleeing New Yorkers like it may have seemed. Only 2,246 people filed a permanent address change from Manhattan to Miami-Dade County, and 1,741 went to Palm Beach County.
3,987 NYC-area residents packed up shop and flew south for the Covid winter, never to return- But that’s only ~5.6% of the total 70,000 people that moved from NY state last year, according to Unicast, a real estate location analytics firm.
“The main problem with moving to Florida is that you have to live in Florida,” Jason Mudrick, a hedge fund manager, told Bloomberg.
In 2019, the US Census Bureau estimated a net 38,512 Greater New York State residents moved to the Sunshine State, suggesting that what was experienced in 2020 may have been nothing more than the routine annual migration. 2020’s Census data is not yet available so it’s difficult to say.
“We’re going to keep going with New York City if that’s all right with you,” Jerry Seinfeld wrote in an August 2020 NY Times Op-ed, “and it will sure as hell be back.”
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