SEC Charges Advisory Firm La Mancha and its Owner David Kushner with Fraud
summary
David Kushner and La Mancha Funding Corp. were charged by the SEC for defrauding nearly two dozen investors of $2.1 million through misrepresented private securities offerings.
paragraph
David Kushner and his company, La Mancha Funding Corp., face charges for violating the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. The SEC alleges they defrauded investors of approximately $2.1 million by misrepresenting the use of $10.5 million in raised capital. The defendants are also accused of misappropriating $1.5 million in loan repayments to fund personal luxury expenses.
narrative
The SEC charged David Kushner and his company, La Mancha Funding Corp., with defrauding nearly two dozen investors of approximately $2.1 million through private securities offerings. While raising $10.5 million intended for loans to professional athletes, the defendants allegedly made material misrepresentations and took hundreds of thousands in undisclosed fees. Kushner further misappropriated nearly $1.5 million in loan repayments to fund personal luxuries, including a Mercedes Benz, a Hamptons rental, and country club dues. The SEC is seeking a permanent injunction, disgorgement, civil penalties, and an officer-and-director bar against Kushner. In addition to the SEC's civil complaint, the New York County District Attorney has filed parallel criminal charges. The case was filed in the U.S. District Court for the Southern District of New York.
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Statutes
15 U.S.C. § 77q(a)15 U.S.C. § 78j(b)15 U.S.C. § 80b-6
Parties
david kushner and his company la mancha funding corp.Securities and Exchange Commissionsheldon l. pollockthe sec’s complaintthe securities and exchange commission
Keywords
kushnersecmanchakushner manchainvestorsdavid kushnersecuritiesadvisory firmfirm manchamancha ownerowner davidkushner fraudsecurities exchangeundisclosed feesagainst kushner
Exhibits & Attached Documents (1)
Extracted insights
Dollar amounts 3
- $10.50M $10.5 million $10M–$100M
- $2.10M $2.1 million $1M–$10M
- $1.50M $1.5 million $1M–$10M
Entities 5
- company david kushner and his company la mancha funding corp.
- agency Securities and Exchange Commission
- person sheldon l. pollock
- agency the sec’s complaint
- agency the securities and exchange commission
Triples 13
- The Securities and Exchange Commission charged David Kushner and his company La Mancha Funding Corp.
- Kushner is La Mancha’s president and sole owner
- Kushner and La Mancha raised approximately $10.5 million from investors through a series of LLCs
- Kushner and La Mancha made material misrepresentations to the investors about what would be done with the investors’ funds
- Kushner and La Mancha secretly took hundreds of thousands of dollars in undisclosed fees for themselves out of the intended loan proceeds
- The complaint alleges that the defendants also misappropriated nearly $1.5 million of loan repayments
- Kushner used those and other misappropriated funds, including the undisclosed fees, to pay personal expenses
- Sheldon L. Pollock said 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
- The SEC’s complaint charges Kushner and La Mancha with violating the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940
- The SEC’s complaint seeks a permanent injunction, disgorgement plus prejudgment interest, and civil monetary penalties, as well as a conduct-based injunction and an officer-and-director bar against Kushner
- The investigation of this matter was conducted by Cynthia Matthews, James Flynn, Jessica Quinn and George N. Stepaniuk of the SEC’s New York Regional Office
- The litigation will be led by Russell Feldman, under the supervision of Preethi Krishnamurthy
- The SEC wishes to acknowledge the assistance of Office of the District Attorney for New York County, which today filed parallel criminal charges against Kushner
PDF (from attached: complaint)
Text layers
Extracted body text (2,651c)
The Securities and Exchange Commission today charged David Kushner, a resident of Boca Raton, Florida, and his company La Mancha Funding Corp. with defrauding nearly two dozen investors out of approximately $2.1 million in a series of private securities offerings. Kushner is La Mancha’s president and sole owner. As alleged in the SEC’s complaint, Kushner and La Mancha raised approximately $10.5 million from investors through a series of “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 what would be done with the investors’ funds, secretly taking hundreds of thousands of dollars in undisclosed “fees” for themselves out of the intended loan proceeds. The complaint alleges that the defendants also misappropriated nearly $1.5 million of loan repayments that, according to the terms of the LLC operating agreements, were supposed to go back to the investors. Kushner used those and other misappropriated funds, including the undisclosed fees, to pay personal expenses, such as payments for personal 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, filed in the U.S. District Court for the Southern District of New York, charges Kushner and La Mancha with violating the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. The complaint seeks a permanent injunction, disgorgement plus prejudgment interest, and civil monetary penalties, as well as a conduct-based injunction and an officer-and-director bar against Kushner. The investigation of this matter was conducted by Cynthia Matthews, James Flynn, Jessica Quinn and George N. Stepaniuk of the SEC’s New York Regional Office and was supervised by Mr. Pollock. The litigation will be led by Russell Feldman, under the supervision of Preethi Krishnamurthy. The SEC also wishes to acknowledge the assistance of Office of the District Attorney for New York County, which today filed parallel criminal charges against Kushner.
OCR text (2,651c · html-text · 99% conf)
The Securities and Exchange Commission today charged David Kushner, a resident of Boca Raton, Florida, and his company La Mancha Funding Corp. with defrauding nearly two dozen investors out of approximately $2.1 million in a series of private securities offerings. Kushner is La Mancha’s president and sole owner. As alleged in the SEC’s complaint, Kushner and La Mancha raised approximately $10.5 million from investors through a series of “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 what would be done with the investors’ funds, secretly taking hundreds of thousands of dollars in undisclosed “fees” for themselves out of the intended loan proceeds. The complaint alleges that the defendants also misappropriated nearly $1.5 million of loan repayments that, according to the terms of the LLC operating agreements, were supposed to go back to the investors. Kushner used those and other misappropriated funds, including the undisclosed fees, to pay personal expenses, such as payments for personal 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, filed in the U.S. District Court for the Southern District of New York, charges Kushner and La Mancha with violating the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Advisers Act of 1940. The complaint seeks a permanent injunction, disgorgement plus prejudgment interest, and civil monetary penalties, as well as a conduct-based injunction and an officer-and-director bar against Kushner. The investigation of this matter was conducted by Cynthia Matthews, James Flynn, Jessica Quinn and George N. Stepaniuk of the SEC’s New York Regional Office and was supervised by Mr. Pollock. The litigation will be led by Russell Feldman, under the supervision of Preethi Krishnamurthy. The SEC also wishes to acknowledge the assistance of Office of the District Attorney for New York County, which today filed parallel criminal charges against Kushner.