The SEC has charged David Kushner and La Mancha Funding Corp. with raising approximately $10.49 million from investors through membership interests in limited liability companies that purportedly made short-term loans to sports agents and professional athletes. According to the SEC complaint filed in federal court, Kushner and La Mancha misappropriated at least $2.14 million through undisclosed origination and broker fees while diverting investor principal for unauthorized purposes. The scheme affected nearly two dozen investors and prompted SEC Litigation Release LR-26579 on July 1, 2026.
What happened
Between 2020 and 2025, Kushner and La Mancha Funding Corp. solicited retail investors to purchase membership interests in LLCs structured around sports-agent lending. The offering materials represented that investor capital would fund short-term loans to agents and athletes seeking bridge financing. In reality, the SEC alleges that a significant portion of investor funds was siphoned through layered fee structures that were never disclosed in the private placement memoranda.
Kushner controlled the entity and directed the flow of capital. The complaint describes a pattern where origination fees ranging from three to seven percent were charged on every transaction. These fees were neither explained to investors nor reflected in the net returns they received. Additional broker fees were imposed without corresponding services, further eroding the capital pool.
The SEC filed its civil enforcement action on July 1, 2026. Both Kushner and La Mancha consented to proposed partial judgments subject to court approval. The settlement includes permanent injunctions and an officer-and-director bar against Kushner, with monetary relief to be determined at a later stage.
Key facts
| Item | Detail |
|---|---|
| SEC Litigation Release | LR-26579 |
| Defendants | David Kushner; La Mancha Funding Corp. |
| Scheme period | 2020 – 2025 |
| Total capital raised | Approximately $10.49 million |
| Misappropriated amount | At least $2.14 million |
| Investors affected | Nearly two dozen retail investors |
| Fee types | Undisclosed origination and broker fees |
| Relief sought | Permanent injunctions, officer-and-director bar |
How investors were harmed
The victims in this case were retail investors who believed their capital was backing secured short-term loans to professional athletes and their representatives. The sports-agent lending niche carries an intuitive appeal for investors familiar with athlete contracts and endorsement deals. Kushner exploited that familiarity by framing the LLC memberships as low-risk, high-yield instruments tied to verifiable cash flows.
In practice, the fee extraction left the underlying loan pool undercapitalized. When borrower repayments arrived, they were insufficient to cover both the promised returns and the layered fees Kushner had already withdrawn. The result was a gradual erosion of principal that investors only discovered when distribution checks stopped or redemption requests were denied.
The SEC notes that some investors were retirees who allocated portions of their savings to the offering based on representations about capital preservation. For these investors, the $2.14 million in misappropriated funds represents not just a financial loss but a breach of trust in a relationship that was presented as a straightforward lending arrangement.
Red flags that should have been caught
Several warning signs were present in the offering structure. First, the origination fees were charged on both the inflow and outflow of capital, a double-dipping arrangement that is uncommon in legitimate private lending. Second, the private placement documents lacked audited financial statements or third-party verification of the underlying loan portfolio. Third, the promised returns were consistently above market rates for comparable short-term credit instruments, suggesting either extraordinary risk or artificial subsidization.
Experienced investors in private placements typically demand a detailed schedule of fees, a verification mechanism for loan collateral, and a clear waterfall describing how distributions are calculated. None of these safeguards were present in the La Mancha offering materials according to the SEC complaint.
What affected investors can do now
Investors who participated in the La Mancha Funding LLC memberships should preserve all subscription documents, distribution statements, and correspondence with Kushner or entity representatives. These materials form the evidentiary foundation for any recovery claim. The SEC enforcement action may result in a disgorgement fund, but administrative recoveries often return only a fraction of losses and can take years to distribute.
Private arbitration through FINRA may be available for investors who purchased interests through a broker-dealer. For direct purchases, civil litigation in federal court remains an option, particularly given the SEC has already established the factual basis for fraud. The officer-and-director bar against Kushner limits his future activity but does not automatically trigger restitution.
Haselkorn & Thibaut fights for investor recovery
Haselkorn & Thibaut is a securities law firm founded by former Wall Street defense attorneys who shifted their practice to represent investors. The firm has recovered over $520 million for clients in securities matters and maintains a 98 percent success rate in resolved nontraded REIT cases. Attorneys are AV Preeminent rated through Martindale-Hubbell, designated as Super Lawyers, and hold a 5.0-star client review average. The firm operates on a contingency basis — no recovery, no fee.
Contact Haselkorn & Thibaut today
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This article is for informational purposes only and does not constitute legal advice. Investors should consult a qualified securities attorney to discuss the specific facts of their situation.
