Broward Woman Convicted Of Fraud After Small Business Loan Investment Scheme
The good news about Ponzi schemes is that they are not as insidious as pyramid schemes. In a Ponzi scheme, the person soliciting payment misleads others into believing that they are paying money to him or her for an investment, in which the payors will eventually receive a return, whereas the speaker knows that they will not, because he or she does not intend to invest the money. In a pyramid scheme, the speaker also leads the payors to believe that they must recruit other participants as a prerequisite for receiving payment. Sometimes the line between a Ponzi scheme or pyramid scheme can be blurry; some legal business activities resemble these types of fraud. For example, multilevel marketing (MLM) businesses require participants to recruit others as sellers, but regulators do not consider them pyramid schemes because they sell products in addition to recruiting other participants. Likewise, all investments involve risk. Therefore, just because someone made an investment based on your advice and did not receive the anticipated return, it does not always mean that it was a Ponzi scheme. If you are facing criminal charges for allegedly orchestrating a Ponzi scheme, contact a West Palm Beach white collar crime lawyer.
A Ponzi Scheme in the Era of COVID Relief Fraud
In December 2024, Johanna Michely Garcia of Broward County received a prison sentence after pleading guilty to conspiracy to commit wire fraud and mail fraud. Garcia and other conspirators not named in the Department of Justice press release persuaded investors to contribute money to provide loans to small businesses. The operation began in October 2020 and lasted until August 2021, at a time where small businesses were scrambling for funding to help them stay open during the shutdowns and uncertainty associated with the COVID-19 pandemic. Investors jumped at the opportunity to contribute to a project that would provide funding for small businesses. By August 2021, Garcia and the other defendants had collected a total of $200 million in investments from numerous investors. The collective losses incurred by the investors was $90 million. The operation never provided loans for small businesses. Instead, the defendants paid some money from later investors to early investors to make them believe that they were getting a return on their investment, in order to gain investors’ trust in the operation.
The Securities Exchange Commission (SEC) shut down the first investment scheme in August 2021 but did not charge Garcia at that time. Several months later, she and other defendants began operating a new investment scheme, similar to the first one, which continued to operate until 2023. The second scheme remained in operation even after Garcia’s arrest and while the criminal case against her was pending.
Contact a West Palm Beach Criminal Defense Lawyer Today
Attorney William Wallshein has more than 41 years of experience, including five years as a prosecutor in Palm Beach County. Contact William Wallshein P.A. in West Palm Beach, Florida to discuss your case.
Sources:
justice.gov/usao-sdfl/pr/leader-200-million-ponzi-scheme-sentenced-20-years-prison
msn.com/en-us/money/savingandinvesting/a-south-florida-woman-was-sentenced-to-20-years-for-leading-a-190-7m-ponzi-scheme-victims-were-blindsided-and-devastated-here-s-how-it-worked-and-how-to-spot-similar-scams/ar-BB1rmQsI?ocid=msedgntp&pc=ACTS&cvid=9d726c0b415d40d388d96d80ab7db486&ei=32
