SEC Charges Boca Raton Advisor with $2.1 Million Fraud Scheme
From the desk of Jim Eccleston at ÍøÆسԹÏ
The U.S. Securities and Exchange Commission (SEC) has charged David Kushner, a Boca Raton, Florida resident, and his company, La Mancha Funding Corp., with defrauding nearly two dozen investors out of approximately $2.1 million. InvestmentNews reports that the alleged misconduct occurred from September 2018 to April 2021 through a series of private securities offerings. Kushner serves as La Mancha’s president and sole owner.
According to the SEC’s complaint, Kushner and La Mancha raised about $10.5 million from investors through at least 33 limited liability companies (LLCs). These funds were intended for short-term loans to sports agents and professional athletes, including NFL players. However, the SEC alleges that Kushner and La Mancha made false statements to investors about the intended use of their money. They also breached their fiduciary duties by secretly taking hundreds of thousands of dollars in undisclosed origination and broker fees from the loan proceeds.
InvestmentNews reports that some investors became suspicious when they did not receive the expected principal payments. When contacted, Kushner allegedly lied, claiming that borrowers had not paid back the loans, even though they had. To support his false claims, Kushner sent at least one investor a fabricated account statement, falsely suggesting that a loan's due date had been extended.
The SEC’s complaint also accuses Kushner and La Mancha of misappropriating nearly $1.5 million in loan repayments that should have been returned to investors, according to the LLC operating agreements. Kushner allegedly used the misappropriated funds, along with the undisclosed fees, for personal expenses. These included payments for credit card bills, a child's college tuition, country club dues, luxury vehicles, a Hamptons rental home, and cashier’s checks made payable to himself or La Mancha. Additionally, Kushner reportedly transferred funds to a personal bank account and paid a diamond wholesaler, according to InvestmentNews.
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Tags: eccleston, eccleston law, sec
