The U.S. Securities and Exchange Commission filed proposed partial judgments against David Kushner and La Mancha Funding Corp. on July 1, 2026, in a securities fraud case involving nearly two dozen investors and approximately $2.14 million in allegedly misappropriated funds. Kushner, a Boca Raton resident and La Mancha's president and sole owner, consented to the judgments subject to court approval, according to the SEC. The case stems from allegations that Kushner and La Mancha raised approximately $10.49 million from investors through membership interests in limited liability companies while making material misrepresentations about fund use, including taking undisclosed fees and diverting investor money for personal expenses such as a Mercedes Benz and a Hamptons rental. The SEC's original complaint was filed on November 21, 2024, and Kushner previously pleaded guilty in a parallel criminal action brought by the Office of the District Attorney for New York County. The proposed judgments would permanently enjoin Kushner and La Mancha from future securities law violations, with monetary relief including disgorgement and civil penalties to be determined later by the U.S. District Court for the Southern District of New York.
SEC Alleges $2.14 Million Misappropriation From Investor Funds
The SEC's original complaint 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. 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.
SEC Seeks Permanent Injunctions And Pending Monetary Relief
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. The court has not yet determined how much Kushner and La Mancha may have to pay in disgorgement, prejudgment interest or civil penalties. 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.
Kushner Pleaded Guilty In 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.
Case Highlights Risks In Private Securities Offerings
The case is an 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.
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 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.
FAQ
What did the SEC file against David Kushner on July 1, 2026?
The SEC 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. Kushner consented to the judgments subject to court approval.
How did Kushner allegedly use investor money?
According to the SEC 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.
What penalties does the SEC seek against Kushner?
The proposed judgments would permanently enjoin Kushner and La Mancha from future securities law violations and impose an officer-and-director bar on Kushner. Monetary relief including disgorgement and civil penalties has not yet been decided and will be determined later by the U.S. District Court for the Southern District of New York.
