David Kushner and his company La Mancha Funding Corp. raised approximately $10.49 million from investors through membership interests in limited liability companies that purported to make short-term loans to sports agents and professional athletes. The Securities and Exchange Commission alleges Kushner misappropriated at least $2.14 million in undisclosed origination and broker fees, diverting investor principal to personal expenses including credit-card bills, college tuition, country-club dues, a Mercedes-Benz lease, and a Hamptons rental.
What happened
The SEC filed proposed partial judgments in July 2026 through Litigation Release LR-26579, stemming from an underlying complaint filed in November 2024. Kushner, based in Boca Raton, Florida, marketed investment opportunities in LLCs that would fund loans to sports industry clients. Investors contributed membership interests expecting repayment with interest.
Instead of deploying capital as represented, Kushner allegedly extracted millions in hidden fees. The SEC claims he used investor funds for personal enrichment rather than the stated lending strategy. The $10.49 million raised from multiple investors now sits at the center of a federal fraud case.
Key facts about the case
| Detail | Amount / Status |
|---|---|
| Total capital raised | $10.49 million |
| Alleged misappropriation | At least $2.14 million |
| Defendants | David Kushner, La Mancha Funding Corp. |
| SEC litigation release | LR-26579 (July 2026) |
| Location | Boca Raton, Florida |
How investor funds were diverted
The SEC complaint outlines a pattern of self-dealing. Kushner allegedly charged undisclosed origination and broker fees that stripped capital from the LLCs before any loans were made. The remaining principal allegedly went to personal expenses rather than the promised sports lending program.
This type of arrangement is a textbook example of investment fund misappropriation. The offering materials presented a legitimate business purpose, but the capital never reached the intended borrowers in the sports industry. Instead, it funded luxury lifestyle spending.
Red flags investors should recognize
Private placement offerings in niche industries like sports lending can appear exclusive and sophisticated. That exclusivity often masks a lack of transparency. Investors in the Kushner LLCs reportedly did not receive clear fee disclosures or regular account statements showing how their capital was deployed.
A second warning sign was the concentration of control. Kushner served as the sole manager and decision-maker for the LLCs, with no independent oversight or third-party administrator verifying fund flows. The absence of an independent auditor is a common feature in misappropriation schemes.
What affected investors can do now
Investors who contributed to the Kushner LLCs and suffered losses may have legal options under federal securities law. The SEC’s proposed judgments aim to secure permanent injunctions and disgorgement, but individual recovery often requires separate civil action or arbitration.
Time matters in recovery cases. The earlier investors act, the stronger their position. A qualified securities attorney can review subscription documents, fee structures, and account history to assess claims for misrepresentation and breach of fiduciary duty.
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
Time matters in recovery cases. The earlier you act, the stronger your position. The firm offers a free case evaluation to assess your losses, review your account history, and explain your options under arbitration or settlement.
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