Advisory Firm La Mancha and Owner Charged with $2.1 Million Fraud by SEC

The U.S. Securities and Exchange Commission (SEC) has filed a complaint in the U.S. District Court for the Southern District of New York, charging La Mancha Funding Corp. and its president and sole owner, David Kushner, with defrauding nearly two dozen investors out of approximately $2.1 million through a series of private securities offerings.

According to the SEC's complaint, Kushner and La Mancha raised approximately $10.5 million from investors by forming a series of limited liability companies (LLCs) for the purpose of investing in short-term loans made to, among others, sports agents and professional athletes, including current and former NFL players. However, Kushner and La Mancha allegedly made material misrepresentations to the investors about the use of their funds, secretly taking hundreds of thousands of dollars in undisclosed “fees” for themselves out of the intended loan proceeds. 

The complaint further alleges that the defendants misappropriated nearly $1.5 million of loan repayments that were supposed to be returned to investors according to the terms of the LLC operating agreements. Instead, Kushner is accused of using these misappropriated funds, along with the undisclosed fees, to cover personal expenses, including credit card bills, college tuition, country club dues, a luxury vacation, a Mercedes-Benz, and a rental home in the Hamptons.

“As we allege, 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 seeks a permanent injunction, disgorgement plus prejudgment interest, and civil monetary penalties. Additionally, it seeks a conduct-based injunction and an officer-and-director bar against Kushner.