The owner of an advisory firm based in Boca Raton, Fla. has been charged by the Securities and Exchange Commission (SEC) with defrauding nearly two dozen investors out of $2.1 million.
David Kushner, president and sole owner of La Mancha Funding Corp., allegedly misused funds raised through private securities offerings intended to finance short-term loans, including to professional athletes and sports agents.
According to the SEC’s complaint, Kushner and La Mancha raised $10.5 million from investors through a series of limited liability companies (LLCs), promising high returns by lending money to NFL players and other borrowers. However, the SEC alleges that Kushner secretly siphoned hundreds of thousands of dollars in undisclosed “fees” for personal use.
In addition to the hidden fees, Kushner allegedly misappropriated nearly $1.5 million in loan repayments that should have been returned to investors per the LLC agreements. These funds reportedly funded Kushner’s lavish lifestyle, including payments for personal credit card bills, college tuition, country club dues, luxury vacations, a Mercedes Benz, and a rental home in the Hamptons.
“Kushner lied to investors and simply stole the money that would have given them at least some of the investment returns he had promised,” said Sheldon L. Pollock, Associate Director of the SEC’s New York Regional Office. “The Commission continues to scrutinize private investment opportunities where defendants fail to follow through on their commitments to investors.”
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, accuses Kushner and La Mancha of violating multiple federal securities laws, including antifraud provisions of the Securities Act of 1933 and the Investment Advisers Act of 1940. The agency seeks a permanent injunction, civil penalties, and restitution for the defrauded investors. It also requests a conduct-based injunction and a bar prohibiting Kushner from serving as an officer or director in the future.
The SEC acknowledged the assistance of the Manhattan District Attorney’s Office, which has filed parallel criminal charges against Kushner. The case is being investigated and litigated by the SEC’s New York Regional Office.
This case highlights the risks associated with private investment opportunities and reinforces the SEC’s commitment to holding individuals accountable for financial misconduct.
