A 30-year-old Broward County man was sentenced to 110 months, just over nine years, in federal prison Tuesday after pleading guilty to conspiracy to commit wire fraud for his role in an investment Ponzi scheme run through a Pompano Beach business, federal prosecutors say.
Pavel Ramon Ruiz Hernandez, 30, learned of the investment fraud in 2021 through a person who is identified in Hernandez’s factual proffer as co-conspirator one, who ran the scheme through MJ Capital Funding LLC since at least June 2020. Federal prosecutors said the business was headquartered in Pompano Beach.
Hernandez’s co-conspirator managed the company, which sought investments from the public under the terms that their money would go toward funding small business loans and guaranteed returns, usually about 10% each month, and repayment of investment principal, the factual proffer said. Hernandez entered into an investment contract with the company and began seeking new investors in exchange for commissions.
He grew into a director position in the company’s hierarchy, overseeing managers and account representatives who sought investors and were paid commissions in return. Those who sought investors through account representatives, social media and and the company’s website made the same pitch: that their money would fund the small business loans and they’d receive payments from a share of the loans’ returns, the proffer said.
“The representations that the MJ Companies were using investor money to fund MCAs, that MCAs generated revenue from which investor returns were paid, and that investor money was secure were lies,” the proffer said. “In fact, the MJ Companies earned little revenue from MCAs and, with rare exceptions, the MJ Companies did not use investor funds to make MCA loans.”
Federal prosecutors said the company “failed to earn anywhere near the profits it needed to pay” to investors.
“As a result, Ruiz Hernandez and his co-conspirators paid investor returns by running a large Ponzi fraud scheme, paying existing investors using new investor funds while misappropriating millions of investor dollars for their own personal use and benefit,” prosecutors said.
Hernandez knew by at least March 2021 that the company was running an investment scheme, the proffer said, but he “willfully joined” his co-conspirator in the conspiracy “to continue making money for himself.” In early March that year, Hernandez set up a limited liability company in his name “in order to facilitate the receipt and handling of fraudulently obtained investors proceeds.”
The factual proffer said Hernandez helped keep the scheme running by raising funds from new investors, overseeing staff in his group recruiting new investors, accepting large sums of cash and promoting the company to investors and account representatives. He received through the scheme more than $42.9 million and bought a new Audi R27 with some of the money and used investor funds for travelling, luxury goods and social outings while promoting the company’s lifestyle.
After his sentence, Hernandez will be on supervised release for three years, according to his sentencing judgment.
