The U.S. Securities and Exchange Commission has filed proposed partial judgments against David Kushner and La Mancha Funding Corp. in a securities fraud case involving nearly two dozen investors and approximately $2.14 million in allegedly misappropriated funds.
The SEC said Kushner, a Boca Raton resident and La Mancha’s president and sole owner, consented to the judgments, subject to court approval. The proposed judgments would permanently enjoin Kushner and La Mancha from future violations of federal securities laws, while Kushner would also face a conduct-based injunction and an officer-and-director bar.
Monetary relief has not yet been decided. The SEC said disgorgement, civil penalties and other financial remedies will be determined later by the U.S. District Court for the Southern District of New York.
Nearly $10.5 Million Raised Through Private Offerings
The SEC’s original complaint, filed on November 21, 2024, alleged that Kushner and La Mancha raised approximately $10.49 million from investors through membership interests in a series of limited liability companies.
The investment pitch was built around short-term loans to borrowers including sports agents and professional athletes. According to the SEC, investors were told their money would be used for those loans and that repayments would flow back to the LLCs and investors.
Instead, the SEC alleged that Kushner and La Mancha made material misrepresentations about how investor funds were being used, including by taking undisclosed “origination” and “broker” fees for themselves.
Key Figure
Amount / Detail
Investors
Nearly two dozen
Total raised
Approximately $10.49 million
Allegedly misappropriated
At least $2.14 million
Original SEC complaint
November 21, 2024
Proposed partial judgments
July 1, 2026
Criminal case
Kushner previously pleaded guilty
Investor Money Allegedly Paid For Personal Expenses
The most striking part of the SEC’s case is where the money allegedly went. The SEC said Kushner misappropriated investor funds, including loan principal that borrowers had repaid and that investors were told would be distributed back to the LLCs and investors.
According to the complaint, Kushner used misappropriated funds and undisclosed fees to pay for personal expenses including credit card bills, his child’s college tuition, country club dues, a Mercedes Benz and a rental home in the Hamptons.
Money Source
Alleged Use
Investor funds
Short-term loan investments
Borrower repayments
Allegedly diverted instead of returned to LLC investors
Undisclosed fees
Allegedly taken by Kushner and La Mancha
Misappropriated proceeds
Credit cards, tuition, country club dues, Mercedes and Hamptons rental
What The SEC Is Seeking
The proposed judgments would permanently bar Kushner and La Mancha from violating antifraud provisions of the Securities Act, the Exchange Act and the Investment Advisers Act.
The SEC also seeks an officer-and-director bar against Kushner, which would restrict him from serving as an officer or director of a public company. The proposed conduct-based injunction would also limit future activity tied to similar misconduct.
The monetary part of the case remains open. That means the court has not yet determined how much Kushner and La Mancha may have to pay in disgorgement, prejudgment interest or civil penalties.
Parallel Criminal Case
The SEC said Kushner previously pleaded guilty in a parallel criminal action brought by the Office of the District Attorney for New York County.
The criminal indictment charged Kushner with five counts of grand larceny in the second degree, one count of grand larceny in the third degree and one count of scheme to defraud in the first degree.
The guilty plea strengthens the regulatory case because the SEC’s civil action is now moving toward permanent injunctions and later monetary remedies while the criminal case has already produced an admission of guilt.
Why This Case Matters
The case is another example of the risks investors face in private securities offerings, especially when money is pooled through LLC structures and controlled by a single adviser or sponsor.
Private offerings often involve less public disclosure than listed securities, making investor due diligence harder. When an adviser controls both the investment vehicle and the flow of money, undisclosed fees and conflicts of interest can become central investor-protection issues.
The SEC’s case also shows why repayment flows matter. Even if the underlying loans are real, investors can still be harmed if borrower repayments are diverted before reaching the investment vehicles that were supposed to receive them.
Education: Why Undisclosed Fees Can Become Fraud
Investment advisers owe duties to their clients and investors. If an adviser takes fees that were not disclosed, or diverts investor money for personal use, the issue is not simply poor administration. It can become securities fraud because investors made decisions based on incomplete or false information.
In this case, the SEC alleged violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5, as well as provisions of the Investment Advisers Act. These are core antifraud rules used in cases involving misstatements, omissions, deceptive conduct and breaches of fiduciary duty.
Timeline
Date
Event
November 21, 2024
SEC filed complaint against Kushner and La Mancha
November 21, 2024
Parallel New York criminal indictment was disclosed
Before July 1, 2026
Kushner pleaded guilty in the criminal case
July 1, 2026
SEC filed proposed partial judgments
Next stage
Court to decide monetary relief after SEC motion
Outlook
The proposed judgments would resolve part of the SEC’s civil case if approved by the court, but the financial consequences are still pending. The next important step will be the SEC’s motion for monetary relief, which will determine whether Kushner and La Mancha must pay disgorgement, penalties or other amounts connected to the alleged fraud.
For investors, the case is a reminder that private credit and niche lending strategies can sound sophisticated, especially when tied to professional athletes or sports agents. The risk is that the structure can also make it harder to see whether money is being used as promised.
