SEC v. David Kushner; and La Mancha Funding Corp., No. 1:24-cv-08900, Southern District of New York (Nov. 21, 2024) — Complaint

ANTONIA M. APPS
REGIONAL DIRECTOR
Sheldon L. Pollock
George N. Stepaniuk
Russell J. Feldman
Cynthia A. Matthews
Jessica Quinn
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street
Suite 20-100
New York, NY 10004-2616
212-336-9144 (Feldman)
[email protected]

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

SECURITIES AND EXCHANGE
COMMISSION,

                                             Plaintiff,

                        -against-

DAVID KUSHNER and LA MANCHA
FUNDING CORP.,

                                             Defendants.

COMPLAINT

24 Civ. 8900

JURY TRIAL DEMANDED

Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against
Defendants David Kushner (“Kushner”) and La Mancha Funding Corp. (“La Mancha”)
(collectively, “Defendants”), alleges as follows:
SUMMARY
1. Between approximately September 2018 and April 2021 (the “Relevant Period”),
Kushner and La Mancha engaged in a fraudulent scheme through which they misappropriated at
least $2.14 million from investors.

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2. During the Relevant Period, La Mancha and its president and sole owner, Kushner,
offered and sold membership interests in at least 33 limited liability companies (“LLCs”). Kushner
and La Mancha, acting as investment advisers, formed these LLCs for investors to invest in business
loans that the LLCs would then make to various borrowers, including professional athletes and
sports agents (each a “Borrower” and collectively “the Borrowers”).
3. La Mancha, acting through Kushner, served as the managing member of each of the
LLCs. Defendants were responsible for managing the LLCs’ day-to-day business, including
identifying, vetting, and selecting Borrowers and servicing the business loans the LLCs made.
4. Kushner and La Mancha raised approximately $10.49 million by selling membership
interests in these LLCs to approximately 20 investors.
5. As detailed herein, Kushner and La Mancha defrauded the investors by making
material misrepresentations and omissions, misappropriating LLC and investor funds for their own
benefit, and breaching their fiduciary duties as investment advisers while offering and selling
membership interests in the LLCs to investors and managing the LLCs.
6. In the LLC operating agreements, Kushner and La Mancha represented that the
LLCs would use the investors’ funds to make the loans to the Borrowers. Kushner and La Mancha
also represented in the LLC operating agreements that the Borrowers’ interest and principal
payments—other than small percentages of the interest and principal that La Mancha would keep—
would be distributed to the investors when the Borrowers repaid the loans.
7. These representations were false.  In connection with many of the LLCs, Kushner
and La Mancha:
a. Misappropriated investor and LLC funds at the outset by taking undisclosed
“origination” and “broker” fees from the investor proceeds, which

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Defendants had represented in the LLC operating agreements would be used
by the LLCs to make the loans to the Borrowers; and
b. Misappropriated the principal that certain Borrowers repaid on the loans,
which Defendants had represented in the LLC operating agreements would
be distributed to the LLCs and the LLC investors.
8. In addition, Kushner and La Mancha made material misrepresentations or omitted to
disclose material facts to the investors about the due diligence Defendants had purportedly
conducted on the Borrowers’ criminal and credit histories.
9. Kushner and La Mancha also failed to disclose conflicts of interest Defendants had
with an individual who received purported “broker” fees from certain LLCs and who, along with an
entity he wholly owned, were Borrowers from other LLCs.
10. When some of the investors contacted Kushner after they had not received the
principal payments they expected in connection with their purchase of the LLCs’ membership
interests, Kushner lied to these investors. For example, Kushner told certain investors that the
Borrowers had not made principal payments on their loans when, in fact, the Borrowers had already
made principal payments to La Mancha. And Kushner sent at least one investor a fabricated account
statement that purported to corroborate Kushner’s lies about having extended the due date for the
principal payment on that loan.
11. Kushner diverted a significant portion of the funds that he and La Mancha
misappropriated from investors for his own personal use, including at least $300,000 in cashier’s
checks that Kushner made payable to himself or La Mancha, approximately $248,000 in payments
for his child’s tuition and his child’s apartment rental, approximately $172,000 to rent a home in the
Hamptons, at least $130,000 that Kushner used to pay personal credit card bills, approximately
$76,000 in payments for a Jeep and a Mercedes Benz, approximately $60,000 in country club dues, at

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least $55,000 that Kushner wired to a personal bank account, and approximately $25,000 in
payments to a diamond wholesaler.
VIOLATIONS
12. By virtue of the foregoing conduct and as alleged further herein, Kushner and La
Mancha have violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C.
§ 77q(a)], Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C.
§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Sections 206(1), (2) and (4) of the
Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. §§ 80b-6(1), (2), and (4)] and Rule
206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].
NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT
13. The Commission brings this action pursuant to the authority conferred upon it by
Securities Act Sections 20(b) and 20(d) [15 U.S.C. § 77t(b) and 77t(d)], Exchange Act Section 21(d)
[15 U.S.C. § 78u(d)], and Advisers Act Sections 209(d) and 209(e) [15 U.S.C. §§ 80b-9(d) and 80b-
9(e)].
14. The Commission seeks a final judgment: (a) permanently enjoining Defendants from
violating the federal securities laws and rules this Complaint alleges they have violated; (b) ordering
Defendants, jointly and severally, to disgorge all ill-gotten gains and unjust enrichment they received
as a result of the violations alleged herein and to pay prejudgment interest thereon on a joint-and-
several basis pursuant to Exchange Act Sections 21(d)(3), (d)(5), and (d)(7) [15 U.S.C. § 78u(d)(3),
78u(d)(5), and 78u(d)(7)]; (c) ordering Defendants to pay civil money penalties pursuant to Securities
Act Section 20(d) [15 U.S.C. § 77t(d)], Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)], and
Advisers Act Section 209(e) [15 U.S.C. § 80b-9(e)]; (d) permanently prohibiting Kushner from
serving as an officer or director of any company that has a class of securities registered under
Exchange Act Section 12 [15 U.S.C. § 78l] or that is required to file reports under Exchange Act

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Section 15(d) [15 U.S.C. § 78o(d)], pursuant to Securities Act Section 20(e) [15 U.S.C. § 77t(e)] and
Exchange Act Section 21(d)(2) [15 U.S.C. § 78u(d)(2)]; (e) permanently enjoining Kushner from
directly or indirectly, including, but not limited to, through any entity owned or controlled by
Kushner, participating in the issuance, purchase, offer, or sale of any security, with the exception of
purchasing or selling securities for his own personal account; and (f) ordering any other and further
relief the Court may deem just and proper.
JURISDICTION AND VENUE
15. This Court has jurisdiction over this action pursuant to Securities Act Section 22(a)
[15 U.S.C. § 77v(a)], Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15
U.S.C. § 80b-14].
16. Defendants, directly and indirectly, have made use of the means or instrumentalities
of, or the means or instruments of transportation or communication in, interstate commerce or of
the mails in connection with the transactions, acts, practices, and courses of business alleged herein.
17. Venue lies in this District under Securities Act Section 22(a) [15 U.S.C. § 77v(a)],
Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15 U.S.C. § 80b-14].
Defendants transacted business in the Southern District of  New York, and certain of  the acts,
practices, transactions, and courses of  business alleged in this Complaint occurred within this
District. For example, in order to solicit investment in the La Mancha LLCs’ membership interests
and to discuss the loans extended by the LLCs, Kushner communicated by phone and email and/or
met in person with at least one investor while that investor was located in this District in order to
solicit that investor. Kushner also met an individual described below as Borrower 1 in person in this
District to discuss providing loans to the Borrowers. In each of  the LLC operating agreements and
promissory notes, Kushner and La Mancha represented that La Mancha had an address in this
District—specifically, an office address belonging to the escrow agent. Similarly, in connection with

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this fraudulent scheme, Kushner and La Mancha directed the wiring of funds to the escrow agent’s
bank account at a bank located in this District.
DEFENDANTS
18. Kushner, age 59, resides in Boca Raton, Florida and, during much of the Relevant
Period, he lived in Cresskill, New Jersey. Since La Mancha’s inception, Kushner has been the
company’s president and sole shareholder. Kushner does not hold any securities licenses. In March
2021, a grand jury in the District of New Jersey indicted Kushner on three counts of tax evasion, in
violation of 26 U.S.C. § 7201, related to his failure to report income for tax purposes for the years
2014 through 2016, and those charges remain pending. On November 21, 2024, an indictment
returned by a grand jury in New York County was unsealed, which charged Kushner on five counts
of grand larceny in the second degree, in violation of N.Y. Penal Law § 155.40(1), one count of
grand larceny in the third degree, in violation of N.Y. Penal Law § 155.35(1), and one count of
scheme to defraud in the first degree, in violation of N.Y. Penal Law § 190.65(1)(b).
19. La Mancha is a New York corporation with its principal place of business in
Closter, New Jersey. Kushner owns and controls La Mancha.
FACTS
I. BACKGROUND
A. Kushner Created and Controlled La Mancha and the LLCs to Make Loans to
Borrowers and Attract Investors.
20. Kushner formed La Mancha in approximately September 2018.
21. La Mancha specialized in providing short term loans to the Borrowers, who were
professional athletes (including current and former National Football League players), sports agents,
and real estate investors. Those loans were typically collateralized by the Borrowers’ future earnings.
22. As La Mancha’s president and sole shareholder, Kushner has controlled all aspects
of La Mancha’s business and financial operations at all times.

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23. In approximately September 2018, Kushner opened a bank account for La Mancha
(the “Bank Account”).
24. Kushner was the sole person with signatory authority on the Bank Account.
25. Beginning in approximately November 2018, Kushner and La Mancha began
forming individual LLCs for the purpose of raising capital to provide loans to the Borrowers.
26. Kushner and La Mancha solicited investors to purchase LLC membership interests
in order to fund the loans the LLCs would provide to the Borrowers.
27. In total, Kushner and La Mancha formed at least 33 separate LLCs.
28. Each LLC had a unique name, following the naming convention of “La Mancha
Funding #__ LLC,” such as “La Mancha Funding #25 LLC.”
B.  Each LLC Was Governed By An Operating Agreement That Kushner Signed
On La Mancha’s Behalf.

29. With limited exceptions, each LLC was governed by a written operating agreement.
30. The parties to each operating agreement were the LLC itself, La Mancha, and the
LLC members—i.e., the investor(s) who purchased the LLC’s membership interests by making a
capital contribution to the LLC.
31. Some of the LLCs had multiple investor members, while others had a single investor
member.
32. Each LLC operating agreement designated La Mancha as the LLC’s managing
member and identified Kushner as La Mancha’s president.
33. Each LLC operating agreement gave La Mancha the authority to manage the LLC’s
business affairs, including advancing a loan to the Borrower(s) and servicing that loan.
34. As the managing member of each LLC, La Mancha (through Kushner) had the
authority to sign all documents on behalf of the LLCs and to legally bind the LLCs.
35. Each LLC operating agreement stated the number and proportional value of

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membership interests in the LLC, the total of which equaled the face amount of the loan the LLC
would provide to the Borrower(s).
36. For example, the operating agreement for La Mancha Funding #25 LLC stated that
the LLC had 733,000 membership interests and that the purpose of the LLC was to provide a
$733,000 loan to two Borrowers (a sports agent and a sports agency).
37. A schedule attached to each LLC operating agreement listed the names and
addresses of the LLC members, their initial capital contributions, the number of membership
interests owned by each member, and each member’s percentage ownership in the LLC.
38. For example, the schedule attached to the operating agreement for La Mancha
Funding #25 LLC stated that an investor (“Investor A”) contributed $733,000 to the LLC, held
732,926.7 membership interests, and owned 99.99% of the LLC. The schedule also stated that La
Mancha made no capital contribution, held 73.3 membership interests, and owned 0.01% of the
LLC.
39. With limited exceptions, each LLC operating agreement made clear that La Mancha
owned a small fraction of the LLC’s membership interests—0.01% of the total membership
interests—and the investors owned the remaining 99.99% of the membership interests in each LLC.
40. Each operating agreement set forth the rights of the LLC’s investor member(s) and
La Mancha’s obligations as to how to distribute the Borrower’s interest and principal payments to
the member(s), as described further below in Section III.A.
41. Kushner signed each operating agreement on La Mancha’s behalf as its president.
C. Each LLC Provided a Loan to a Borrower, Evidenced By a Promissory Note
and Secured By a Security Agreement That Kushner Signed On La Mancha’s
Behalf.

42. Each LLC provided a loan to one or more Borrowers.
43. Each loan was evidenced by a promissory note provided by the Borrower(s) to the

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LLC that loaned the money to the Borrower(s).
44. Each promissory note reflected the terms of the LLC’s loan to the Borrower(s).
45. Pursuant to the promissory notes, the loans the LLCs made to the Borrowers ranged
in amount from $17,700 to $1.5 million, carried an annual interest rate ranging from 10% to 13%,
and ranged in duration from six months to 24 months.
46. The promissory notes stated the terms on which the Borrowers agreed to repay the
money received via the loans from the LLCs.
47. With respect to interest payments, most of the promissory notes specified that the
Borrower(s) would prepay to the relevant LLC, on the date the promissory notes were executed, all
the interest due from that date through the maturity date of the promissory notes.
48. With respect to principal payments, the promissory notes typically specified that the
principal was due and payable by the Borrower(s) on the maturity date.
49. Each promissory note was secured by a security agreement and other supporting
documents.
50. Each security agreement stated that, as security for payment under the promissory
note, the Borrower(s) granted the LLC a security interest in certain collateral.
51. That collateral typically included income the Borrower(s) expected to receive from
professional sports contracts or other future earnings.
52. Each security agreement was executed by the Borrower(s) and the LLC.
53. Kushner, as La Mancha’s president, signed each security agreement on behalf of the
respective LLC.
D. Kushner and La Mancha Acted as Investment Advisers.
54. Kushner and La Mancha acted as investment advisers to the LLCs, and in the case of
the single-member LLCs, acted as investment advisers to the individual investor members.

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55. Kushner and La Mancha advised the LLCs and the single-member-LLC investors—
Kushner’s and La Mancha’s investment advisory clients—concerning the investment of these
clients’ assets in the loans to Borrowers (evidenced by promissory notes), including choosing which
loans the LLCs made to which Borrowers on which terms.
56. In return, Kushner and La Mancha received monetary compensation as specified in
the LLC operating agreements.
57. La Mancha held itself out in each LLC operating agreement as the managing member
responsible for each LLC’s operations.
58. Kushner, as La Mancha’s sole owner and president, was responsible for La Mancha’s
management.
59. As investment advisers, Kushner and La Mancha owed fiduciary duties to their
clients—the LLCs and the single-member-LLC investors—including the duties to exercise the
utmost good faith with their clients, to provide their clients with full and fair disclosure of all
material facts, and to always act in their clients’ best interests.
II. DEFENDANTS SOLICITED INVESTORS FOR THE LLCS AND MADE
MATERIAL MISREPRESENTATIONS AND OMISSIONS ABOUT THE DUE
DILIGENCE THEY PURPORTEDLY CONDUCTED.

60. When soliciting investors to purchase membership interests in the LLCs, Kushner
and La Mancha represented that they would conduct appropriate due diligence on the Borrowers to
whom the LLCs would be making loans in order to ensure that the Borrowers were creditworthy
and could therefore repay the loans’ principal with interest.
61. Kushner and La Mancha made representations to the investors, both orally and by
email, that they conducted criminal background checks and credit checks on the Borrowers.
62. Kushner assured the investors that, based on the due diligence he and La Mancha
had purportedly conducted, the loans carried low credit risk.

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63. Specifically, Kushner and La Mancha made representations to investors that the
Borrowers had “no criminal history” and/or “good credit.”
64. In multiple instances, as described in more detail below, these representations were
false because Kushner and La Mancha either: (a) failed to conduct adequate due diligence to uncover
that several Borrowers had prior criminal history and/or poor credit; or (b) knew or recklessly
disregarded that several Borrowers had a prior criminal history and/or poor credit and omitted to
disclose that information to the investors.
65. Kushner and La Mancha claimed that several Borrowers had no prior criminal
history or omitted to disclose that those Borrowers had prior criminal history.
66. In reality, several Borrowers had prior criminal convictions.
67. For example, one Borrower (“Borrower 1”) obtained loans from several of the
LLCs: La Mancha Funding #16 LLC, La Mancha Funding #31 LLC, and La Mancha Funding #42
LLC.
68. In an initial conversation about La Mancha and its plan to offer short term loans to
Borrowers, Borrower 1 informed Kushner that he had a prior criminal conviction for conspiracy to
commit wire fraud.
69. Kushner and La Mancha nevertheless failed to disclose Borrower 1’s prior criminal
conviction to the investors who funded these three LLCs.
70. Similarly, another Borrower (“Borrower 2”) obtained a loan from La Mancha
Funding #37 LLC.
71. Kushner and La Mancha either failed to conduct adequate due diligence that would
have uncovered that Borrower 2 had a prior criminal conviction for carrying a pistol without a
permit or they knew or recklessly disregarded that information and failed to disclose it to the
investor in La Mancha Funding #37 LLC.

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72. On June 6, 2019, Kushner sent an email to the investor in the LLC and falsely
represented that Borrower 2 had “NO CRIMINAL HISTORY.”
73. Kushner and La Mancha also claimed that several other Borrowers had good credit
or omitted to disclose that these Borrowers did not have good credit.
74. In reality, several Borrowers did not have good credit, because they had prior unpaid
tax debts, had failed to repay other loans, or had previously filed for bankruptcy.
75. For example, one Borrower (“Borrower 3”) had unpaid assessed federal income
taxes that, as of July 2023, totaled over $4.6 million.
76. Another Borrower (“Borrower 4”) had failed to repay over $1.1 million in non-La
Mancha loans that Borrower 4 had received previously.
77. Yet another Borrower (“Borrower 5”) had filed for bankruptcy.
78. Kushner and La Mancha did not disclose any of these facts to the investors in the
relevant LLCs.
79. In fact, with respect to Borrower 5, Kushner received an email on November 18,
2018 indicating that Borrower 5 had previously filed for bankruptcy.
80. Kushner did not disclose that fact to the prospective investors in La Mancha
Funding #11 LLC—the LLC that ultimately provided a loan to Borrower 5.
81. Instead, on November 23, 2018, Kushner simply told the investors in an email, “[w]e
have done a UCC search and there are no liens or judgments” against Borrower 5, making no
mention of the fact that the Borrower had filed for bankruptcy.
82. Defendants’ failure to disclose material facts about certain of the Borrowers’ prior
criminal history and credit history resulted in investors’ funding LLCs that made loans to Borrowers
with a higher credit risk than Defendants had represented to investors.
83. Defendants’ material misrepresentations and omissions about the due diligence they

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purportedly conducted, and the resulting increase in the Borrowers’ credit risk, caused substantial
investor losses when several Borrowers defaulted on their La Mancha LLC loans, including in the
examples described in paragraphs 84-87 below.
84. Borrower 5, whose prior bankruptcy Kushner knowingly or recklessly failed to
disclose, defaulted in full on his loan.
85. Borrower 1, whose prior criminal conviction for conspiracy to commit wire fraud
Kushner knowingly or recklessly failed to disclose to investors, defaulted in full on at least one of his
loans and in total repaid to La Mancha only approximately $281,000 out of the $1.93 million he
received from three La Mancha LLCs.
86. Borrower 3, whose unpaid assessed federal taxes Kushner knowingly or recklessly
failed to disclose to investors, defaulted in full on at least two of his three loans.
87. Borrower 4, whose default on prior non-La Mancha loans Kushner knowingly or
recklessly failed to disclose to investors, also defaulted in full on at least two of his three loans.
III. DEFENDANTS MADE MATERIAL MISREPRESENTATIONS AND
OMISSIONS IN THE LLC OPERATING AGREEMENTS.

A.  Defendants Made Misrepresentations and Omissions in the Operating
Agreements About the Use of Investors’ Funds.
88. In the LLC operating agreements, Defendants represented the purpose for which the
LLCs were created and how the investors’ funds, in the form of capital contributions to the LLCs to
purchase LLC membership interests, were to be used: to invest in business loans, evidenced by
promissory notes, to one or more Borrowers.
89. For example, Section 1.2 of the operating agreement for La Mancha Funding #41
LLC represented:
The purposes for which the Company [the LLC] has been formed is to advance a
$1,200,000 business loan (the ‘Loan’) to [a named borrower] and [a named sports
agency] (collectively ‘the Borrower’) and as evidenced by all the documents
evidencing said Loan (the ‘Loan Documents’), and to engage in any other lawful

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act or activity related thereto for which limited liability companies may be
formed under the [Limited Liability Company Act of the State of New York, as
amended].
90. Each LLC operating agreement claimed that “[a]ny funds received by the [LLC] shall
be utilized by the [LLC] for the purposes of advancing the Loan or as otherwise set forth herein.”
91. With respect to interest payments that Borrowers made on the loans, each LLC
operating agreement claimed that La Mancha would receive and retain for itself 0.50% to 1.0% of
the loan amount (prorated over the term of the loan).
92. Each LLC operating agreement claimed that La Mancha was required to distribute
the balance of the Borrower’s interest payments (which typically ranged from 9.5% to 12.5% of the
loan amount, prorated over the term of the loan) to the LLC members in accordance with their
percentage ownership in the LLC.
93. For example, the LLC operating agreement for La Mancha Funding #24 LLC
claimed that La Mancha was entitled to receive 1.0% of the $105,000 loan amount (prorated over
the 12-month term of the loan), or $1,050, as its share of the interest. La Mancha was required to
distribute the remaining 12%, or $12,600, in interest to the investor in the LLC.
94. None of the LLC operating agreements disclosed that La Mancha or Kushner would
divert any fees—such as “origination” fees and “broker” fees—from the investors’ capital
contributions to the LLCs or from the loan proceeds.
1. Defendants Misappropriated Investor Funds Through Undisclosed
“Origination” and “Broker” Fees.

95. Kushner and La Mancha misappropriated LLC and investor funds—which were
supposed to fund the LLCs’ loans to the Borrowers—through undisclosed “origination” and
“broker” fees.
96. The process by which Kushner and La Mancha misappropriated investor funds
through these undisclosed fees followed a similar pattern.

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97. To purchase the LLC membership interests, investors wired the purchase price (i.e.,
their capital contribution to the LLC) to La Mancha’s escrow agent.
98. The total amount investors in any particular LLC wired to the escrow agent equaled
the total face amount of the loan or loans to the Borrower(s) in which the LLC was going to invest.
99. At Kushner’s direction, the escrow agent withdrew a specified amount for its legal
fee.
100. The escrow agent then typically wired an amount equal to the total interest owed by
the Borrower over the term of the loan (i.e., the prepaid interest) into the Bank Account.
101. La Mancha retained the 0.5% or 1% portion of the loan amount—the interest it was
entitled to receive under the terms of the LLC operating agreements—and Kushner and La Mancha
generally distributed the remaining prepaid interest to the investors.
102. Kushner, however, did not direct the escrow agent to disburse all of the remaining
investor funds to the Borrowers as loan proceeds.
103. Instead, for each LLC, Kushner typically directed the escrow agent to first transfer
approximately 3% to 4.5% of the face amount of the loans to La Mancha’s Bank Account as a
purported “origination” fee.
104. In at least one instance, on approximately June 18, 2019, Kushner directed the
escrow agent to transfer 4.5% of the loan amount ($2,835) to Kushner’s personal bank account,
rather than to La Mancha’s Bank Account, as a purported “origination” fee.
105. These purported “origination” fees were deducted from the Borrowers’ loan
proceeds without reducing the principal amount the Borrowers owed on the loans. Therefore, even
though the Borrowers never received these “origination” fee amounts, they were still required to pay
those amounts to the LLCs as loan “principal.”
106. Kushner and La Mancha did not disclose to the investors that the LLCs would pay

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these “origination” fees to La Mancha from the investor funds.
107. Nor did Kushner and La Mancha disclose that these fees would be deducted from
the Borrowers’ loan proceeds without reducing the principal amount the Borrowers owed on the
loans.
108. In total, Kushner and La Mancha diverted approximately $455,000 of investor funds
to La Mancha or Kushner in undisclosed “origination” fees.
109. In connection with nearly all of the LLCs, Kushner also directed the escrow agent to
transfer approximately 2% to 3.5% of the face amount of the loans—purported “broker” fees—to
an entity owned by Borrower 1.
110. These purported “broker” fees were also deducted from the Borrowers’ loan
proceeds without reducing the principal amount the Borrowers owed on the loans.
111. Like the “origination” fees above, Kushner and La Mancha did not disclose to the
investors that the LLCs would pay these “broker” fees from investors’ funds.
112. Nor did Kushner and La Mancha disclose that these fees would be deducted from
the Borrowers’ loan proceeds without reducing the principal amount the Borrowers owed on the
loans.
113. In total, Kushner and La Mancha diverted approximately $207,000 of investor funds
to an entity owned by Borrower 1 in undisclosed “broker” fees.
2. Defendants Misappropriated “Origination” and “Broker” Fees From
Some Investors As They Were Making Misrepresentations About the
Use of Investor Proceeds to Other Investors.
114. Even after Kushner and La Mancha took undisclosed “origination” fees for
themselves and diverted undisclosed “broker” fees in connection with some LLCs, Defendants
entered into other LLC operating agreements for other LLCs that similarly misrepresented how the
investors’ proceeds would be used. Defendants failed to disclose that these fees would be siphoned

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off from the capital contributions made by the investors and, ultimately, the loan proceeds received
by the Borrowers, as the examples below describe.
115. On January 18, 2019, Kushner (on behalf of La Mancha) and an investor (“Investor
B”) entered into an LLC operating agreement for La Mancha Funding #21 LLC in order to fund a
$74,000 loan to two Borrowers.
116. The operating agreement contained the misrepresentations and omissions about the
use of the LLC investor’s funds described above in paragraphs 88-90.
117. That same day, after Investor B made a capital contribution to the LLC, La Mancha
diverted $3,300 of that amount to the Bank Account for an “origination” fee and diverted $1,850 of
the capital contribution to an entity owned by Borrower 1 for a “broker” fee.
118. Defendants did not disclose those fees to Investor B.
119. A week later, on January 25, 2019, Kushner (on behalf of La Mancha) and Investor
A entered into an LLC operating agreement for La Mancha Funding #23 LLC in order to fund a
$70,000 loan to two Borrowers.
120. The operating agreement contained the misrepresentations and omissions about the
use of the LLC investor’s funds described above in paragraphs 88-90.
121. That same day, after Investor A made a capital contribution to the LLC, La Mancha
diverted $3,150 to the Bank Account as an “origination” fee and diverted $1,750 to an entity owned
by Borrower 1 as a “broker” fee.
122. Defendants did not disclose those fees to Investor A.
123. About a month later, on February 27, 2019, Kushner (on behalf of La Mancha) and
Investor A entered into an LLC operating agreement for La Mancha Funding #26 LLC in order to
fund a $290,000 loan to a Borrower.
124. The operating agreement contained the misrepresentations and omissions about the

18
use of the LLC investor’s funds described above in paragraphs 88-90.
125. That same day, after Investor A made a capital contribution to the LLC, La Mancha
diverted $7,250 to an entity owned by Borrower 1 as a “broker fee.”
126. The next day, La Mancha diverted $13,050 to the Bank Account as an “origination
fee.”
127. Defendants did not disclose those fees to Investor A.
128. About a week after that, on March 6, 2019, Kushner (on behalf of La Mancha) and
Investor B entered into an LLC operating agreement for La Mancha Funding #27 LLC in order to
fund an $80,000 loan to two Borrowers.
129. The operating agreement contained the misrepresentations and omissions about the
use of the LLC investor’s funds described above in paragraphs 88-90.
130. That same day, after Investor B made a capital contribution to the LLC, La Mancha
diverted $3,600 to the Bank Account as an “origination fee” and diverted $2,000 to an entity owned
by Borrower 1 as a “broker fee.”
131. Defendants did not disclose those fees to Investor B.
3. Defendants’ Misrepresentations and Omissions About the
“Origination” and “Broker” Fees Were Material.
132. Because Defendants took the undisclosed “origination” fees shortly after the
investors funded the LLCs, Defendants obtained these purported fees whether the Borrower
ultimately repaid the loan or defaulted.
133. Therefore, unbeknownst to the LLC investors, Defendants profited from the LLCs
regardless of whether the LLCs’ loans to the Borrowers were profitable—unlike the investors, who
profited from their LLC investments only if the loans were profitable.
134. In addition, also unbeknownst to the LLC investors, the “origination” and “broker”
fees reduced the amount of the loan proceeds the Borrowers received but did not reduce the

19
“principal” amounts the Borrowers ultimately owed on the loans. This meant the Borrowers owed
money, designated as “principal,” to the LLCs that the Borrowers had never received from the LLC.
135. These purported “fees” therefore effectively increased the annual interest rate on
each loan to a figure well above the annual interest rate disclosed in the LLC operating agreements,
promissory notes, or otherwise.
136. This effective increase in the loans’ annual interest rates in turn increased the credit
risk—the risk that the Borrowers would not repay the loans—beyond what Kushner and La Mancha
had disclosed to the investors, as the Borrowers would need to obtain additional funds to pay the
LLC the shortfall between the “principal” amount due and the actual amount the Borrowers had
received from the loans.
B. Defendants Failed to Disclose Conflicts of Interest.

137. While acting as investment advisers to the LLCs, Kushner and La Mancha failed to
disclose to the LLCs or their investors a conflict of interest with Borrower 1.
138. As discussed above, Borrower 1 received “broker” fees in connection with almost all
of the loans made by the LLCs.
139. During the Relevant Period, Borrower 1 had a La Mancha email address and used
that email address to solicit potential Borrowers of the loans provided by the other LLCs; used an
email signature line that stated “[Borrower 1], La[ ]Mancha Funding Corp”; and provided Kushner
with paperwork concerning other Borrowers’ collateral.
140. At the same time, Kushner and La Mancha offered and sold to investors interests in
LLCs that provided loans to Borrower 1 and an entity wholly owned by Borrower 1 (“Borrower 1’s
Company”).
141. Borrower 1 and Borrower 1’s Company together received at least three loans,
including one from each of three LLCs: La Mancha Funding #16 LLC, La Mancha Funding #31

20
LLC, and La Mancha Funding #42 LLC.
142. Together, these three loans totaled nearly $2 million.
143. When the investors purchased membership interests in La Mancha Funding #16
LLC, La Mancha Funding #31 LLC, and La Mancha Funding #42 LLC, and funded the loans
received by Borrower 1 and Borrower 1’s Company, Defendants failed to disclose to those investors
that Borrower 1 had received “broker” fees in connection with other La Mancha LLC loans and
appeared to be affiliated with La Mancha.
1

144. Borrower 1 and Borrower 1’s Company defaulted entirely on one of the loans and
owed over $1.5 million on the other two loans they received.
C.  Defendants Made Misrepresentations About and Misappropriated Borrowers’
Principal Repayments.

145. Each LLC operating agreement represented that, after the LLC’s expenses were paid
(including reimbursements to the managing member for out-of-pocket expenses incurred on the
LLC’s behalf), the LLC would distribute the Borrower’s interest and principal payments to the
LLC’s members in accordance with each member’s percentage ownership in the LLC.
146. Each LLC operating agreement further represented that the Borrower was required
to remit its principal payments to an escrow agent, which in turn was required to disburse those
payments to the LLC members in accordance with their percentage ownership in the LLC.
147. For example, the LLC operating agreement for La Mancha Funding #24 LLC
claimed that La Mancha was entitled to receive from the escrow agent 0.01% of the principal repaid
by the Borrower, and the investor was entitled to receive from the escrow agent 99.99% of principal
repaid by the Borrower.

1
 Borrower 1 did not receive “broker” fees in connection with the LLCs’ loans to Borrower-1’s
Company.

21
148. None of the LLC operating agreements disclosed that La Mancha or Kushner would
retain some or all of the principal repayments made by the Borrower rather than distributing those
funds to the LLC investors in accordance with their percentage ownership in the LLCs.
149. In a number of instances, however, including those examples cited in Section III.D
below, the Borrowers repaid some or all of the principal due on their loans and Defendants retained
those principal payments rather than distribute those funds to investors—as Defendants had
represented they would do in the LLC operating agreements.
150. Borrowers typically sent their principal payments to La Mancha’s Bank Account,
where Defendants commingled the principal payments with other Borrower repayments on different
loans, the undisclosed “origination” fees La Mancha misappropriated, and La Mancha’s own funds.
151. Defendants misappropriated at least $1.48 million of principal payments from LLC
investors in this manner.
152. Kushner used the misappropriated principal payments and other misappropriated
funds, including the “origination” fees described above, to pay personal expenses and for other
unauthorized purposes, including at least $300,000 in cashier’s checks that Kushner made payable to
himself or La Mancha, approximately $248,000 in payments for his child’s tuition and his child’s
apartment rental, approximately $172,000 to rent a home in the Hamptons, at least $130,000 that
Kushner used to pay personal credit card bills, approximately $76,000 in payments for a Jeep and a
Mercedes Benz, approximately $60,000 in country club dues, at least $55,000 that Kushner wired to
a personal bank account, and approximately $25,000 in payments to a diamond wholesaler.
D. Examples of Defendants’ Fraud
153. The following examples detail how Kushner and La Mancha defrauded the LLCs
and the LLC investors by misappropriating “origination” fees, “broker” fees, and Borrowers’
principal payments.

22
1. La Mancha Funding #24 LLC
154. On approximately February 4, 2019, an investor (“Investor C”) wired $105,000 to
the escrow account for La Mancha Funding #24 LLC to purchase membership interests in that
LLC.
155. Investor C’s purpose in doing so was to invest in and fund a loan by the LLC in that
principal amount, as reflected in the operating agreement for La Mancha Funding #24 LLC.
156. In exchange for his investment, Investor C received 99.99% of the membership
interests in La Mancha Funding #24 LLC, as reflected in the same operating agreement.
157. This LLC’s loan to its Borrower had a 12-month term and a 13% annual interest
rate.
158. The LLC operating agreement represented that La Mancha would receive 1.0% of
the loan amount (prorated over the term of the loan), or $1,050, as its share of the prepaid interest,
with the remaining 12% in interest to be distributed to Investor C.
159. In the LLC operating agreement, Defendants represented that, after payment of the
LLC’s expenses (for example, the escrow agent’s legal fee), the balance of the funds would be
disbursed to the Borrower.
160. At Kushner’s direction, after Investor C wired the funds to the escrow account, the
escrow agent deducted its legal fees.
161. The escrow agent then wired the total 13% interest amount owed by the Borrower
for the loan term, as prepaid interest, to La Mancha at the Bank Account.
162. La Mancha retained 1% for itself and distributed the remaining 12% to Investor C.
163. However, Kushner also instructed the escrow agent to transfer an additional 4.5% of
the loan amount ($4,725) to La Mancha as an “origination” fee and 2.5% of the loan amount
($2,625) to Borrower 1 as a “broker” fee before remitting the balance to the Borrower.

23
164. By deducting these undisclosed “fees” from the loan proceeds remitted to the
Borrower without reducing the principal amount due on the loan, Defendants secretly increased the
effective annual interest rate on the loan to approximately 20%—higher than the 13% annual
interest rate disclosed in the LLC’s operating agreement and promissory note.
165. This increased the risk that the Borrower would default on the loan.
166. The Borrower did repay the loan in full on October 7, 2019, but Defendants failed to
distribute to the LLC or Investor C any of the principal payments made by the borrower.
167. Kushner misappropriated all $105,000 of the Borrower’s principal payments for his
own use.
168. For example, on the same day the borrower repaid the principal, Kushner wired
$9,000 to himself from the La Mancha Bank Account.
169. On October 9 and October 15, 2019, Kushner made a $1,452 payment to Mercedes
Benz and a $3,600 payment to a country club, respectively, from that same account.
2. La Mancha Funding #32 LLC
170. On approximately April 11, 2019, an investor (“Investor D”) wired $85,000 to the
escrow account for La Mancha Funding #32 LLC in order to purchase membership interests in that
LLC.
171. Investor D’s purpose in doing so was to invest in and fund a loan by the LLC in that
principal amount, as reflected in the operating agreement for La Mancha Funding #32 LLC.
172. In exchange for his investment, Investor D received 99.99% of the membership
interests in La Mancha Funding #32 LLC, as reflected in the same operating agreement.
173. This LLC’s loan to its Borrower had an 8.5-month term and a 13% annual interest
rate.
174. The LLC operating agreement represented that La Mancha would receive 1.0% of

24
the loan amount (prorated over the term of the loan), or $605, as its share of the prepaid interest,
with the remaining 12% in interest to be distributed to Investor D.
175. In the LLC operating agreement, Defendants represented that, after payment of the
LLC’s expenses (for example, the escrow agent’s legal fee), the balance of the funds would be
disbursed to the Borrower.
176. At Kushner’s direction, after Investor D wired the funds to the escrow account, the
escrow agent deducted its legal fees.
177. The escrow agent then wired the total 13% interest amount owed by the Borrower
for the loan term, as prepaid interest, to La Mancha at the Bank Account.
178. La Mancha retained 1% for itself and distributed the remaining 12% to Investor D.
179. However, Kushner instructed the escrow agent to transfer an additional 4.5% of the
loan amount ($3,825) to La Mancha as an “origination” fee and 2.5% of the loan amount ($2,125) to
Borrower 1 as a “broker” fee before remitting the balance to the Borrower.
180. By deducting these undisclosed “fees” from the loan proceeds remitted to the
Borrower without reducing the principal amount due on the loan, Defendants secretly increased the
effective annual interest rate on the loan to approximately 16%—higher than the 13% annual
interest rate disclosed in the LLC’s operating agreement and promissory note.
181. This increased the risk that the Borrower would default on the loan.
182. The Borrower did repay the loan in full by November 22, 2019, but Defendants
failed to distribute to the LLC or the investor approximately $63,000 of the principal payments
made by the Borrower.
183. Kushner misappropriated approximately $63,000 of the Borrower’s principal
payments for his own use.
184. For example, on November 26, 2019, Kushner drafted a $2,000 check payable to

25
himself from the La Mancha Bank Account.
185. On November 29, 2019, from that same account, Kushner made a $18,720 credit
card payment on an American Express account under his wife’s name.
3. La Mancha Funding #37 LLC
186. On approximately June 6, 2019, Investor A wired $100,000 to the escrow account
for La Mancha Funding #37 LLC in order to purchase membership interests in that LLC.
187. Investor A’s purpose in doing so was to invest in and fund a loan by the LLC in that
principal amount, as reflected in the operating agreement for La Mancha Funding #37 LLC.
188. In exchange for his investment, Investor A received 99.99% of the membership
interests in La Mancha Funding #37 LLC, as reflected in the same operating agreement.
189. This LLC’s loan to its Borrower had a 7-month term and a 13% annual interest rate.
190. The LLC operating agreement represented that La Mancha would receive 0.50% of
the loan amount (prorated over the term of the loan), or $308, as its share of the prepaid interest,
with the remaining 12.5% in interest to be distributed to Investor A.
191. In the LLC operating agreement, Defendants represented that, after payment of the
LLC’s expenses (for example, the escrow agent’s legal fee), the balance of the funds would be
disbursed to the Borrower.
192. At Kushner’s direction, after Investor A wired the funds to the escrow account, the
escrow agent deducted its legal fees.
193. The escrow agent then wired the total 13% interest amount owed by the Borrower
for the loan term, as prepaid interest, to La Mancha at the Bank Account.
194. La Mancha retained 0.50% for itself and distributed the remaining 12.5% to Investor
A.
195. However, Kushner also instructed the escrow agent to transfer an additional 4.5% of

26
the loan amount ($4,500) to La Mancha as an “origination” fee and 2.5% of the loan amount
($2,500) to Borrower 1 as a “broker” fee before remitting the balance to the Borrower.
196. By deducting these undisclosed “fees” from the loan proceeds without reducing the
principal amount of the loan, Defendants secretly increased the effective annual interest rate on the
loan to 14.6%—higher than the 13% annual interest rate disclosed in the LLC’s operating agreement
and promissory note.
197. This increased the risk that the Borrower would default on the loan.
198. The Borrower did repay the loan in full by January 6, 2020, but Defendants failed to
distribute to the LLC or Investor A approximately $75,000 of the principal payments made by the
Borrower.
199. Kushner misappropriated approximately $75,000 of the Borrower’s principal
payments for his own use.
200. For example, on the same day the borrower repaid the principal, Kushner wired
$9,000 to himself from the La Mancha Bank Account.
201. The next day, Kushner made a $1,182 rent payment for an apartment (located near
where Kushner’s child attended college) from that same account.
202. On January 18, 2020, Kushner made a $1,452 payment to Mercedes Benz from that
same account.
4. La Mancha Funding #33 LLC
203. On approximately April 30, 2019 and May 1, 2019, multiple investors wired a total of
$900,000 to the escrow account for La Mancha Funding #33 LLC in order to purchase membership
interests in that LLC.
204. The investors’ purpose in doing so was to invest in and fund a loan by the LLC in
that principal amount, as reflected in the operating agreement for La Mancha Funding #33 LLC.

27
205. In exchange for their investments, the investors together received 99.99% of the
membership interests in La Mancha Funding #33 LLC, as reflected in the same operating
agreement.
206. This LLC’s loan to its Borrower had an 18-month term and a 10% annual interest
rate.
207. The LLC operating agreement represented that La Mancha would receive 0.50% of
the loan amount (prorated over the term of the loan), or $6,750, as its share of the prepaid interest,
with the remaining 9.50% in interest to be distributed to the investors in the LLC.
208. In the LLC operating agreement, Defendants represented that, after payment of the
LLC’s expenses (for example, the escrow agent’s legal fee and title recording fees), the balance of the
funds would be disbursed to the Borrower.
209. At Kushner’s direction, after the investors wired the funds to the escrow account,
the escrow agent deducted its legal fees and paid the title and recording fee for the underlying
mortgage note.
210. The escrow agent then wired the total 10% interest amount owed by the Borrower
for the loan term, as prepaid interest, to La Mancha at the Bank Account.
211. La Mancha retained 0.50% for itself and distributed the remaining 9.50% to the
investors.
212. However, Kushner also instructed the escrow agent to transfer an additional 3.0% of
the loan amount ($27,000) to La Mancha as an “origination” fee and another $6,250 to La Mancha
as a “lender per diem” before remitting the balance to the Borrower.
213. By deducting these undisclosed “fees” from the loan proceeds without reducing the
principal amount of the loan, Defendants secretly increased the effective annual interest rate on the
loan to approximately 16.19%—higher than the 10% annual interest rate disclosed in the LLC’s

28
operating agreement and mortgage note.
214. This increased the risk that the Borrower would default on the loan.
215. The loan was repaid in full on approximately January 19, 2021, but Defendants failed
to distribute to the LLC or to the investors approximately $728,000 of the principal payments made
by or on behalf of the Borrower.
216. Kushner misappropriated approximately $728,000 of these principal payments for
his own use.
217. After approximately $902,000 of principal was repaid on January 19, 2021, the
balance of the La Mancha Bank Account was approximately $907,000. About two months later, the
balance of the La Mancha Bank Account was approximately $6,000.
218. In that two-month period, Kushner appears to have spent the majority of the repaid
principal on personal expenses.
219. For example, Kushner issued a total of $300,000 of cashier’s checks made payable to
himself or La Mancha, wired a total of approximately $55,000 to himself, made credit card payments
totaling approximately $130,000 on an American Express account under his wife’s name and a
Capital One account under his name, spent approximately $45,000 to rent a home in the Hamptons,
made approximately $29,000 in payments to Jeep and Mercedes Benz, and made approximately
$26,000 in payments for a child’s tuition and a child’s apartment rental.
IV. DEFENDANTS LIED TO INVESTORS TO PERPETUATE AND CONCEAL
THEIR FRAUDULENT SCHEME.

220. In late 2019 through the spring of 2020, certain of the LLCs’ investors had not
received principal payments that had come due on some of the loans made by the LLCs.
221. As a result, these investors contacted Kushner to determine whether the Borrowers
had made the principal payments, and, if not, whether Kushner and La Mancha had taken steps to
enforce the LLCs’ rights under the applicable loan documents.

29
222. For example, under the loan documents for all of the LLCs, La Mancha could
enforce the LLCs’ rights by charging the Borrowers additional interest pursuant to loan extension
agreements or by taking legal action to collect on the loans in the event of default.
223. In response to investors’ inquiries, Kushner lied to the investors.
224. In some instances, Kushner told investors that the Borrowers had not made the
outstanding principal payments on their loans when, in fact, Defendants had already received those
payments.
225. For example, on approximately April 11, 2019, La Mancha Funding #32 LLC
extended an $85,000 loan to a borrower.
226. Pursuant to the operating agreement for La Mancha Funding #32 LLC, Investor D
owned 99.99% of its membership interests.
227. The principal amount was due to be paid by the Borrower in equal installments
pursuant to a schedule, beginning on September 20, 2019 and concluding on December 27, 2019.
228. In the LLC’s operating agreement, the Defendants represented that, once the escrow
agent had received those principal payments and the LLC’s expenses (including reimbursements to
La Mancha for out-of-pocket expenses incurred on the LLC’s behalf) had been paid, the escrow
agent was required to distribute the remainder of the principal payments to Investor D pursuant to
Investor D’s percentage ownership in the LLC.
229. When Investor D contacted Kushner in December 2019 about the principal
payments that were still outstanding from the Borrower, Kushner told Investor D that those
payments were forthcoming.
230. In reality, the Borrower had already repaid the loan principal in full by November 22,
2019, and, as detailed above, Defendants had kept approximately $63,000 of the principal payments
rather than distribute those funds to Investor D, as the Defendants had represented they would in

30
the operating agreement.
231. On April 21 and May 7, 2020, Kushner sent Investor D wires for $507.50 and
$532.50, respectively, with the former marked as an interest payment rather than a principal
payment, and falsely told Investor D by email that he had agreed with the Borrower to extend the
loan for 6 additional months at an interest rate of 15%.
232. On April 21, 2020, Kushner also sent Investor D a fabricated account statement
showing that the outstanding account balance on the loan exceeded $53,000.
233. In another example, Kushner lied to other investors—Investor A, Investor B, and a
third investor (“Investor E”)—when those investors inquired about outstanding loan payments.
234. Beginning in late 2019, Investor A, Investor B, and Investor E contacted Kushner
several times to request information about at least five outstanding loans made by LLCs in which
those investors had purchased membership interests.
235. Kushner responded to those investors in February 2020 and told them that he
expected La Mancha “to be paid in full” on three of those loans by the end of February 2020 (the
loans extended by La Mancha Funding #13 LLC, La Mancha Funding #15 LLC, and La Mancha
Funding #19 LLC) and on two of those loans by “mid March” 2020 (the loans extended by La
Mancha Funding #26 LLC and La Mancha Funding #37 LLC).
236. When Kushner made those representations, La Mancha had received no principal
payments on two of the first three loans referenced above.
237. What Kushner characterized as a single loan made by La Mancha Funding #15 LLC
was actually comprised of two separate loans—each to a different Borrower. As Kushner knew or
recklessly disregarded, one of those two Borrowers had already repaid his loan in full, but
Defendants kept the funds rather than distributing them to Investor A and instead used those funds
for unauthorized purposes.

31
238. With respect to the two other loans referenced above—those made by La Mancha
Funding #26 LLC and La Mancha Funding #37 LLC—when Kushner told Investor A, Investor B,
and Investor E that he expected those loans to be paid in full by “mid-March,” Kushner knew or
recklessly disregarded that the Borrowers on those loans had already repaid their respective loans in
full to La Mancha.
239. By the time the Borrowers fully repaid those loans by December 31, 2019 and
January 6, 2020, respectively, Kushner and La Mancha returned only approximately 25% of the
$390,000 principal payments those Borrowers had made.
240. The Defendants failed to return the remainder of those principal payments,
$292,500, to Investor A and used those funds for unauthorized purposes.
241. Among other things, on January 3 and January 6, 2020, Kushner made a $5,358.20
payment for his child’s tuition and a $1,182.95 payment for his child’s apartment rental, respectively,
from the La Mancha Bank Account.
242. On January 6, January 16, and January 22, 2020, Kushner wired $9,000, $1,000, and
$1,000, respectively, from the La Mancha Bank Account to Kushner’s personal bank account.
243. And on January 20, 2020, from the La Mancha Bank Account, Kushner made a
$20,000 credit card payment on an American Express account under his wife’s name.
244. Investors suffered significant losses from Defendants’ fraudulent scheme, and many
investors lost most of the money they invested except for their share of the prepaid interest
amounts.
245. By June 17, 2021, Kushner had drained all the funds out of the La Mancha Bank
Account (such that it had a negative balance), including all of the “origination” fees and principal
payments he and La Mancha had misappropriated, to pay for his own personal expenses and to
make other unauthorized payments.

32
246. The La Mancha Bank Account’s balance continued to be negative until the account
was closed with a zero balance on August 17, 2021.
FIRST CLAIM FOR RELIEF
Violations of Securities Act Section 17(a)
(Both Defendants)

247. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1-136 and 145-246.
248. Kushner and La Mancha, directly or indirectly, singly or in concert, in the offer or
sale of securities and by the use of the means or instruments of transportation or communication in
interstate commerce or the mails, (1) knowingly or recklessly have employed one or more devices,
schemes or artifices to defraud, (2) knowingly, recklessly, or negligently have obtained money or
property by means of one or more untrue statements of a material fact or omissions of a material
fact necessary in order to make the statements made, in light of the circumstances under which they
were made, not misleading, and/or (3) knowingly, recklessly, or negligently have engaged in one or
more transactions, practices, or courses of business which operated or would operate as a fraud or
deceit upon the purchaser.
249. By reason of the foregoing, Kushner and La Mancha, directly or indirectly, singly or
in concern, have violated and, unless enjoined, will again violate Securities Act Section 17(a) [15
U.S.C. § 77q(a)].
SECOND CLAIM FOR RELIEF
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder
(Both Defendants)

250. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1-136 and 145-246.
251. Kushner and La Mancha, directly or indirectly, singly or in concert, in connection
with the purchase or sale of securities and by the use of means or instrumentalities of interstate

33
commerce, or the mails, or the facilities of a national securities exchange, knowingly or recklessly
have (i) employed one or more devices, schemes, or artifices to defraud, (ii) made one or more
untrue statements of a material fact or omitted to state one or more material facts necessary in order
to make the statements made, in light of the circumstances under which they were made, not
misleading, and/or (iii) engaged in one or more acts, practices, or courses of business which
operated or would operate as a fraud or deceit upon other persons.
252. By reason of the foregoing, Kushner and La Mancha, directly or indirectly, singly or
in concert, have violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15
U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
THIRD CLAIM FOR RELIEF
Violations of Advisers Act Sections 206(1) and (2)
(Both Defendants)

253. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1-246.
254. At all relevant times, Kushner and La Mancha were investment advisers under
Advisers Act Section 202(11) [15 U.S.C. § 80b-2(11)].
255. Kushner and La Mancha, by use of  the mails or any means or instrumentality of
interstate commerce, directly or indirectly have: (1) knowingly or recklessly employed one or more
devices, schemes, or artifices to defraud any client or prospective client, and/or (2) knowingly,
recklessly, or negligently engaged in one or more transactions, practices, and courses of  business
which operated as a fraud or deceit upon clients or prospective clients.
256. By reason of  the foregoing, Kushner and La Mancha, directly or indirectly, singly or
in concert, have violated and, unless enjoined, will again violate Advisers Act Sections 206(1) and (2)
[15 U.S.C. §§ 80b-6(1) and 80b-6(2)].

34
FOURTH CLAIM FOR RELIEF
Violations of Advisers Act Section 206(4) and Rule 206(4)-8 Thereunder
(Both Defendants)

257. The Commission re-alleges and incorporates by reference here the allegations in
paragraphs 1-202 and 220-246.
258. At all relevant times, Kushner and La Mancha were investment advisers, under
Advisers Act Section 202(11) [15 U.S.C. § 80b-2(11)], to one or more pooled investment vehicles, as
defined in Rule 206(4)-8(b) [17 C.F.R. § 275.206(4)-8(b)].
259. Kushner and La Mancha knowingly, recklessly, or negligently (i) made one or more
untrue statements of a material fact or omitted to state one or more material facts necessary in order
to make the statements made, in light of the circumstances under which they were made, not
misleading, to investors or prospective investors in pooled investment vehicles, and/or (ii) engaged
in one or more acts, practices, or courses of  business that were fraudulent, deceptive, or
manipulative, with respect to investors or prospective investors in a pooled investment vehicle.
260. By reason of  the foregoing, Kushner and La Mancha, directly or indirectly, singly or
in concert, have violated and, unless enjoined, will again violate Advisers Act Section 206(4) [15
U.S.C. § 80b-6(4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].
PRAYER FOR RELIEF
 WHEREFORE, the Commission respectfully requests that the Court enter a Final
Judgment:
I.
Permanently enjoining Kushner and his agents, servants, employees and attorneys and all
persons in active concert or participation with any of them from violating, directly or indirectly,
Securities Act Section 17(a) [15 U.S.C. § 77q(a)], Exchange Act Section 10(b) [15 U.S.C. §§ 78j(b)]
and Rule 10b-5 thereunder [17 C.F.R. §§ 240.10b-5], and Advisers Act Sections 206(1), (2) and (4)

35
[15 U.S.C. §§ 80b-6(1), (2), and (4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8].
II.
Permanently enjoining La Mancha and its agents, servants, employees and attorneys and all
persons in active concert or participation with any of them from violating, directly or indirectly,
directly or indirectly, Securities Act Section 17(a) [15 U.S.C. § 77q(a)], Exchange Act Section 10(b)
[15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §§ 240.10b-5], and Advisers Act Sections
206(1), (2) and (4) [15 U.S.C. §§ 80b-6(1), (2), and (4)] and Rule 206(4)-8 thereunder [17 C.F.R. §
275.206(4)-8].
III.
Ordering Defendants, jointly and severally, to disgorge all ill-gotten gains and unjust
enrichment they received as a result of the violations alleged herein and to pay prejudgment interest
thereon on a joint-and-several basis pursuant to Exchange Act Sections 21(d)(3), (d)(5), and (d)(7)
[15 U.S.C. § 78u(d)(3), 78u(d)(5), and 78u(d)(7)]
IV.
Ordering Defendants to pay civil monetary penalties pursuant to Securities Act Section 20(d)
[15 U.S.C. § 77t(d)], Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)], and Advisers Act Section
209(e) [15 U.S.C. § 80b-9(e)];
V.
 Permanently prohibiting Kushner from serving as an officer or director of any company that
has a class of securities registered under Exchange Act Section 12 [15 U.S.C. § 78l] or that is
required to file reports under Exchange Act Section 15(d) [15 U.S.C. § 78o(d)], pursuant to
Securities Act Section 20(e) [15 U.S.C. § 77t(e)] and Exchange Act Section 21(d)(2) [15 U.S.C.
§ 78u(d)(2)];

36
VI.
 Permanently enjoining Kushner from directly or indirectly, including, but not limited to,
through any entity owned or controlled by Kushner, participating in the issuance, purchase, offer, or
sale of any security, with the exception of purchasing or selling securities for his own personal
account.
VII.
Granting any other and further relief this Court may deem just and proper.
JURY DEMAND
 The Commission demands a trial by jury.

Dated: New York, New York
November 21, 2024
/s/ Antonia M. Apps
ANTONIA M. APPS
REGIONAL DIRECTOR
Sheldon L. Pollock
George N. Stepaniuk
Russell J. Feldman
Cynthia A. Matthews
Jessica Quinn
Attorneys for Plaintiff
SECURITIES AND EXCHANGE COMMISSION
New York Regional Office
100 Pearl Street
Suite 20-100
New York, NY 10004-2616
212-336-9144 (Feldman)
[email protected]

ANTONIA M. APPS 
REGIONAL DIRECTOR 
Sheldon L. Pollock 
George N. Stepaniuk 
Russell J. Feldman 
Cynthia A. Matthews 
Jessica Quinn 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
100 Pearl Street  
Suite 20-100 
New York, NY 10004-2616 
212-336-9144 (Feldman) 
[email protected]  
 
UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

 
SECURITIES AND EXCHANGE 
COMMISSION, 
 
                                             Plaintiff, 
 
                        -against- 
 
DAVID KUSHNER and LA MANCHA 
FUNDING CORP.,    
  
                                             Defendants.  
 

 
 
COMPLAINT 

   
24 Civ. 8900 

 
   

JURY TRIAL DEMANDED 
  

           
          

 
Plaintiff Securities and Exchange Commission (“Commission”), for its Complaint against 

Defendants David Kushner (“Kushner”) and La Mancha Funding Corp. (“La Mancha”) 

(collectively, “Defendants”), alleges as follows: 

SUMMARY 

1. Between approximately September 2018 and April 2021 (the “Relevant Period”), 

Kushner and La Mancha engaged in a fraudulent scheme through which they misappropriated at 

least $2.14 million from investors.  

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 2 

2. During the Relevant Period, La Mancha and its president and sole owner, Kushner, 

offered and sold membership interests in at least 33 limited liability companies (“LLCs”). Kushner 

and La Mancha, acting as investment advisers, formed these LLCs for investors to invest in business 

loans that the LLCs would then make to various borrowers, including professional athletes and 

sports agents (each a “Borrower” and collectively “the Borrowers”). 

3. La Mancha, acting through Kushner, served as the managing member of each of the 

LLCs. Defendants were responsible for managing the LLCs’ day-to-day business, including 

identifying, vetting, and selecting Borrowers and servicing the business loans the LLCs made. 

4. Kushner and La Mancha raised approximately $10.49 million by selling membership 

interests in these LLCs to approximately 20 investors.  

5. As detailed herein, Kushner and La Mancha defrauded the investors by making 

material misrepresentations and omissions, misappropriating LLC and investor funds for their own 

benefit, and breaching their fiduciary duties as investment advisers while offering and selling 

membership interests in the LLCs to investors and managing the LLCs. 

6. In the LLC operating agreements, Kushner and La Mancha represented that the 

LLCs would use the investors’ funds to make the loans to the Borrowers. Kushner and La Mancha 

also represented in the LLC operating agreements that the Borrowers’ interest and principal 

payments—other than small percentages of the interest and principal that La Mancha would keep—

would be distributed to the investors when the Borrowers repaid the loans.  

7. These representations were false.  In connection with many of the LLCs, Kushner 

and La Mancha: 

a. Misappropriated investor and LLC funds at the outset by taking undisclosed 

“origination” and “broker” fees from the investor proceeds, which 

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Defendants had represented in the LLC operating agreements would be used 

by the LLCs to make the loans to the Borrowers; and 

b. Misappropriated the principal that certain Borrowers repaid on the loans, 

which Defendants had represented in the LLC operating agreements would 

be distributed to the LLCs and the LLC investors. 

8. In addition, Kushner and La Mancha made material misrepresentations or omitted to 

disclose material facts to the investors about the due diligence Defendants had purportedly 

conducted on the Borrowers’ criminal and credit histories. 

9. Kushner and La Mancha also failed to disclose conflicts of interest Defendants had 

with an individual who received purported “broker” fees from certain LLCs and who, along with an 

entity he wholly owned, were Borrowers from other LLCs. 

10. When some of the investors contacted Kushner after they had not received the 

principal payments they expected in connection with their purchase of the LLCs’ membership 

interests, Kushner lied to these investors. For example, Kushner told certain investors that the 

Borrowers had not made principal payments on their loans when, in fact, the Borrowers had already 

made principal payments to La Mancha. And Kushner sent at least one investor a fabricated account 

statement that purported to corroborate Kushner’s lies about having extended the due date for the 

principal payment on that loan. 

11. Kushner diverted a significant portion of the funds that he and La Mancha 

misappropriated from investors for his own personal use, including at least $300,000 in cashier’s 

checks that Kushner made payable to himself or La Mancha, approximately $248,000 in payments 

for his child’s tuition and his child’s apartment rental, approximately $172,000 to rent a home in the 

Hamptons, at least $130,000 that Kushner used to pay personal credit card bills, approximately 

$76,000 in payments for a Jeep and a Mercedes Benz, approximately $60,000 in country club dues, at 

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least $55,000 that Kushner wired to a personal bank account, and approximately $25,000 in 

payments to a diamond wholesaler. 

VIOLATIONS 

12. By virtue of the foregoing conduct and as alleged further herein, Kushner and La 

Mancha have violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. 

§ 77q(a)], Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. 

§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Sections 206(1), (2) and (4) of the 

Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. §§ 80b-6(1), (2), and (4)] and Rule 

206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8]. 

NATURE OF THE PROCEEDINGS AND RELIEF SOUGHT 

13. The Commission brings this action pursuant to the authority conferred upon it by 

Securities Act Sections 20(b) and 20(d) [15 U.S.C. § 77t(b) and 77t(d)], Exchange Act Section 21(d) 

[15 U.S.C. § 78u(d)], and Advisers Act Sections 209(d) and 209(e) [15 U.S.C. §§ 80b-9(d) and 80b-

9(e)].  

14. The Commission seeks a final judgment: (a) permanently enjoining Defendants from 

violating the federal securities laws and rules this Complaint alleges they have violated; (b) ordering 

Defendants, jointly and severally, to disgorge all ill-gotten gains and unjust enrichment they received 

as a result of the violations alleged herein and to pay prejudgment interest thereon on a joint-and-

several basis pursuant to Exchange Act Sections 21(d)(3), (d)(5), and (d)(7) [15 U.S.C. § 78u(d)(3), 

78u(d)(5), and 78u(d)(7)]; (c) ordering Defendants to pay civil money penalties pursuant to Securities 

Act Section 20(d) [15 U.S.C. § 77t(d)], Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)], and 

Advisers Act Section 209(e) [15 U.S.C. § 80b-9(e)]; (d) permanently prohibiting Kushner from 

serving as an officer or director of any company that has a class of securities registered under 

Exchange Act Section 12 [15 U.S.C. § 78l] or that is required to file reports under Exchange Act 

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Section 15(d) [15 U.S.C. § 78o(d)], pursuant to Securities Act Section 20(e) [15 U.S.C. § 77t(e)] and 

Exchange Act Section 21(d)(2) [15 U.S.C. § 78u(d)(2)]; (e) permanently enjoining Kushner from 

directly or indirectly, including, but not limited to, through any entity owned or controlled by 

Kushner, participating in the issuance, purchase, offer, or sale of any security, with the exception of 

purchasing or selling securities for his own personal account; and (f) ordering any other and further 

relief the Court may deem just and proper.  

JURISDICTION AND VENUE 

15. This Court has jurisdiction over this action pursuant to Securities Act Section 22(a) 

[15 U.S.C. § 77v(a)], Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15 

U.S.C. § 80b-14].  

16. Defendants, directly and indirectly, have made use of the means or instrumentalities 

of, or the means or instruments of transportation or communication in, interstate commerce or of 

the mails in connection with the transactions, acts, practices, and courses of business alleged herein. 

17. Venue lies in this District under Securities Act Section 22(a) [15 U.S.C. § 77v(a)], 

Exchange Act Section 27 [15 U.S.C. § 78aa], and Advisers Act Section 214 [15 U.S.C. § 80b-14]. 

Defendants transacted business in the Southern District of  New York, and certain of  the acts, 

practices, transactions, and courses of  business alleged in this Complaint occurred within this 

District. For example, in order to solicit investment in the La Mancha LLCs’ membership interests 

and to discuss the loans extended by the LLCs, Kushner communicated by phone and email and/or 

met in person with at least one investor while that investor was located in this District in order to 

solicit that investor. Kushner also met an individual described below as Borrower 1 in person in this 

District to discuss providing loans to the Borrowers. In each of  the LLC operating agreements and 

promissory notes, Kushner and La Mancha represented that La Mancha had an address in this 

District—specifically, an office address belonging to the escrow agent. Similarly, in connection with 

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this fraudulent scheme, Kushner and La Mancha directed the wiring of  funds to the escrow agent’s 

bank account at a bank located in this District.    

DEFENDANTS 

18. Kushner, age 59, resides in Boca Raton, Florida and, during much of the Relevant 

Period, he lived in Cresskill, New Jersey. Since La Mancha’s inception, Kushner has been the 

company’s president and sole shareholder. Kushner does not hold any securities licenses. In March 

2021, a grand jury in the District of New Jersey indicted Kushner on three counts of tax evasion, in 

violation of 26 U.S.C. § 7201, related to his failure to report income for tax purposes for the years 

2014 through 2016, and those charges remain pending. On November 21, 2024, an indictment 

returned by a grand jury in New York County was unsealed, which charged Kushner on five counts 

of grand larceny in the second degree, in violation of N.Y. Penal Law § 155.40(1), one count of 

grand larceny in the third degree, in violation of N.Y. Penal Law § 155.35(1), and one count of 

scheme to defraud in the first degree, in violation of N.Y. Penal Law § 190.65(1)(b). 

19. La Mancha is a New York corporation with its principal place of business in 

Closter, New Jersey. Kushner owns and controls La Mancha.  

FACTS 

I. BACKGROUND 

A. Kushner Created and Controlled La Mancha and the LLCs to Make Loans to 
Borrowers and Attract Investors.   

20. Kushner formed La Mancha in approximately September 2018. 

21. La Mancha specialized in providing short term loans to the Borrowers, who were 

professional athletes (including current and former National Football League players), sports agents, 

and real estate investors. Those loans were typically collateralized by the Borrowers’ future earnings.  

22. As La Mancha’s president and sole shareholder, Kushner has controlled all aspects 

of La Mancha’s business and financial operations at all times.  

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23. In approximately September 2018, Kushner opened a bank account for La Mancha 

(the “Bank Account”).  

24. Kushner was the sole person with signatory authority on the Bank Account.  

25. Beginning in approximately November 2018, Kushner and La Mancha began 

forming individual LLCs for the purpose of raising capital to provide loans to the Borrowers. 

26. Kushner and La Mancha solicited investors to purchase LLC membership interests 

in order to fund the loans the LLCs would provide to the Borrowers.  

27. In total, Kushner and La Mancha formed at least 33 separate LLCs.  

28. Each LLC had a unique name, following the naming convention of “La Mancha 

Funding #__ LLC,” such as “La Mancha Funding #25 LLC.”  

B.  Each LLC Was Governed By An Operating Agreement That Kushner Signed 
On La Mancha’s Behalf.  

 
29. With limited exceptions, each LLC was governed by a written operating agreement.  

30. The parties to each operating agreement were the LLC itself, La Mancha, and the 

LLC members—i.e., the investor(s) who purchased the LLC’s membership interests by making a 

capital contribution to the LLC.  

31. Some of the LLCs had multiple investor members, while others had a single investor 

member.  

32. Each LLC operating agreement designated La Mancha as the LLC’s managing 

member and identified Kushner as La Mancha’s president.  

33. Each LLC operating agreement gave La Mancha the authority to manage the LLC’s 

business affairs, including advancing a loan to the Borrower(s) and servicing that loan.  

34. As the managing member of each LLC, La Mancha (through Kushner) had the 

authority to sign all documents on behalf of the LLCs and to legally bind the LLCs. 

35. Each LLC operating agreement stated the number and proportional value of 

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membership interests in the LLC, the total of which equaled the face amount of the loan the LLC 

would provide to the Borrower(s).  

36. For example, the operating agreement for La Mancha Funding #25 LLC stated that 

the LLC had 733,000 membership interests and that the purpose of the LLC was to provide a 

$733,000 loan to two Borrowers (a sports agent and a sports agency).  

37. A schedule attached to each LLC operating agreement listed the names and 

addresses of the LLC members, their initial capital contributions, the number of membership 

interests owned by each member, and each member’s percentage ownership in the LLC. 

38. For example, the schedule attached to the operating agreement for La Mancha 

Funding #25 LLC stated that an investor (“Investor A”) contributed $733,000 to the LLC, held 

732,926.7 membership interests, and owned 99.99% of the LLC. The schedule also stated that La 

Mancha made no capital contribution, held 73.3 membership interests, and owned 0.01% of the 

LLC.  

39. With limited exceptions, each LLC operating agreement made clear that La Mancha 

owned a small fraction of the LLC’s membership interests—0.01% of the total membership 

interests—and the investors owned the remaining 99.99% of the membership interests in each LLC. 

40. Each operating agreement set forth the rights of the LLC’s investor member(s) and 

La Mancha’s obligations as to how to distribute the Borrower’s interest and principal payments to 

the member(s), as described further below in Section III.A.  

41. Kushner signed each operating agreement on La Mancha’s behalf as its president.   

C. Each LLC Provided a Loan to a Borrower, Evidenced By a Promissory Note 
and Secured By a Security Agreement That Kushner Signed On La Mancha’s 
Behalf. 

 
42. Each LLC provided a loan to one or more Borrowers.  

43. Each loan was evidenced by a promissory note provided by the Borrower(s) to the 

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LLC that loaned the money to the Borrower(s).  

44. Each promissory note reflected the terms of the LLC’s loan to the Borrower(s). 

45. Pursuant to the promissory notes, the loans the LLCs made to the Borrowers ranged 

in amount from $17,700 to $1.5 million, carried an annual interest rate ranging from 10% to 13%, 

and ranged in duration from six months to 24 months. 

46. The promissory notes stated the terms on which the Borrowers agreed to repay the 

money received via the loans from the LLCs.  

47. With respect to interest payments, most of the promissory notes specified that the 

Borrower(s) would prepay to the relevant LLC, on the date the promissory notes were executed, all 

the interest due from that date through the maturity date of the promissory notes.  

48. With respect to principal payments, the promissory notes typically specified that the 

principal was due and payable by the Borrower(s) on the maturity date.  

49. Each promissory note was secured by a security agreement and other supporting 

documents.  

50. Each security agreement stated that, as security for payment under the promissory 

note, the Borrower(s) granted the LLC a security interest in certain collateral. 

51. That collateral typically included income the Borrower(s) expected to receive from 

professional sports contracts or other future earnings.   

52. Each security agreement was executed by the Borrower(s) and the LLC.  

53. Kushner, as La Mancha’s president, signed each security agreement on behalf of the 

respective LLC. 

D. Kushner and La Mancha Acted as Investment Advisers.  

54. Kushner and La Mancha acted as investment advisers to the LLCs, and in the case of 

the single-member LLCs, acted as investment advisers to the individual investor members.   

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55. Kushner and La Mancha advised the LLCs and the single-member-LLC investors—

Kushner’s and La Mancha’s investment advisory clients—concerning the investment of these 

clients’ assets in the loans to Borrowers (evidenced by promissory notes), including choosing which 

loans the LLCs made to which Borrowers on which terms. 

56. In return, Kushner and La Mancha received monetary compensation as specified in 

the LLC operating agreements.  

57. La Mancha held itself out in each LLC operating agreement as the managing member 

responsible for each LLC’s operations.  

58. Kushner, as La Mancha’s sole owner and president, was responsible for La Mancha’s 

management.  

59. As investment advisers, Kushner and La Mancha owed fiduciary duties to their 

clients—the LLCs and the single-member-LLC investors—including the duties to exercise the 

utmost good faith with their clients, to provide their clients with full and fair disclosure of all 

material facts, and to always act in their clients’ best interests. 

II. DEFENDANTS SOLICITED INVESTORS FOR THE LLCS AND MADE 
MATERIAL MISREPRESENTATIONS AND OMISSIONS ABOUT THE DUE 
DILIGENCE THEY PURPORTEDLY CONDUCTED. 

 
60. When soliciting investors to purchase membership interests in the LLCs, Kushner 

and La Mancha represented that they would conduct appropriate due diligence on the Borrowers to 

whom the LLCs would be making loans in order to ensure that the Borrowers were creditworthy 

and could therefore repay the loans’ principal with interest.   

61. Kushner and La Mancha made representations to the investors, both orally and by 

email, that they conducted criminal background checks and credit checks on the Borrowers.  

62. Kushner assured the investors that, based on the due diligence he and La Mancha 

had purportedly conducted, the loans carried low credit risk.  

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63. Specifically, Kushner and La Mancha made representations to investors that the 

Borrowers had “no criminal history” and/or “good credit.”  

64. In multiple instances, as described in more detail below, these representations were 

false because Kushner and La Mancha either: (a) failed to conduct adequate due diligence to uncover 

that several Borrowers had prior criminal history and/or poor credit; or (b) knew or recklessly 

disregarded that several Borrowers had a prior criminal history and/or poor credit and omitted to 

disclose that information to the investors.  

65. Kushner and La Mancha claimed that several Borrowers had no prior criminal 

history or omitted to disclose that those Borrowers had prior criminal history.  

66. In reality, several Borrowers had prior criminal convictions.  

67. For example, one Borrower (“Borrower 1”) obtained loans from several of the 

LLCs: La Mancha Funding #16 LLC, La Mancha Funding #31 LLC, and La Mancha Funding #42 

LLC.  

68. In an initial conversation about La Mancha and its plan to offer short term loans to 

Borrowers, Borrower 1 informed Kushner that he had a prior criminal conviction for conspiracy to 

commit wire fraud. 

69. Kushner and La Mancha nevertheless failed to disclose Borrower 1’s prior criminal 

conviction to the investors who funded these three LLCs.  

70. Similarly, another Borrower (“Borrower 2”) obtained a loan from La Mancha 

Funding #37 LLC.  

71. Kushner and La Mancha either failed to conduct adequate due diligence that would 

have uncovered that Borrower 2 had a prior criminal conviction for carrying a pistol without a 

permit or they knew or recklessly disregarded that information and failed to disclose it to the 

investor in La Mancha Funding #37 LLC.  

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72. On June 6, 2019, Kushner sent an email to the investor in the LLC and falsely 

represented that Borrower 2 had “NO CRIMINAL HISTORY.”  

73. Kushner and La Mancha also claimed that several other Borrowers had good credit 

or omitted to disclose that these Borrowers did not have good credit.  

74. In reality, several Borrowers did not have good credit, because they had prior unpaid 

tax debts, had failed to repay other loans, or had previously filed for bankruptcy.  

75. For example, one Borrower (“Borrower 3”) had unpaid assessed federal income 

taxes that, as of July 2023, totaled over $4.6 million.  

76. Another Borrower (“Borrower 4”) had failed to repay over $1.1 million in non-La 

Mancha loans that Borrower 4 had received previously.  

77. Yet another Borrower (“Borrower 5”) had filed for bankruptcy.  

78. Kushner and La Mancha did not disclose any of these facts to the investors in the 

relevant LLCs.  

79. In fact, with respect to Borrower 5, Kushner received an email on November 18, 

2018 indicating that Borrower 5 had previously filed for bankruptcy.  

80. Kushner did not disclose that fact to the prospective investors in La Mancha 

Funding #11 LLC—the LLC that ultimately provided a loan to Borrower 5.  

81. Instead, on November 23, 2018, Kushner simply told the investors in an email, “[w]e 

have done a UCC search and there are no liens or judgments” against Borrower 5, making no 

mention of the fact that the Borrower had filed for bankruptcy. 

82. Defendants’ failure to disclose material facts about certain of the Borrowers’ prior 

criminal history and credit history resulted in investors’ funding LLCs that made loans to Borrowers 

with a higher credit risk than Defendants had represented to investors. 

83. Defendants’ material misrepresentations and omissions about the due diligence they 

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purportedly conducted, and the resulting increase in the Borrowers’ credit risk, caused substantial 

investor losses when several Borrowers defaulted on their La Mancha LLC loans, including in the 

examples described in paragraphs 84-87 below.   

84. Borrower 5, whose prior bankruptcy Kushner knowingly or recklessly failed to 

disclose, defaulted in full on his loan.  

85. Borrower 1, whose prior criminal conviction for conspiracy to commit wire fraud 

Kushner knowingly or recklessly failed to disclose to investors, defaulted in full on at least one of his 

loans and in total repaid to La Mancha only approximately $281,000 out of the $1.93 million he 

received from three La Mancha LLCs.  

86. Borrower 3, whose unpaid assessed federal taxes Kushner knowingly or recklessly 

failed to disclose to investors, defaulted in full on at least two of his three loans. 

87. Borrower 4, whose default on prior non-La Mancha loans Kushner knowingly or 

recklessly failed to disclose to investors, also defaulted in full on at least two of his three loans. 

III. DEFENDANTS MADE MATERIAL MISREPRESENTATIONS AND 
OMISSIONS IN THE LLC OPERATING AGREEMENTS.  

 
A.  Defendants Made Misrepresentations and Omissions in the Operating 

Agreements About the Use of Investors’ Funds.     

88. In the LLC operating agreements, Defendants represented the purpose for which the 

LLCs were created and how the investors’ funds, in the form of capital contributions to the LLCs to 

purchase LLC membership interests, were to be used: to invest in business loans, evidenced by 

promissory notes, to one or more Borrowers. 

89. For example, Section 1.2 of the operating agreement for La Mancha Funding #41 

LLC represented:  

The purposes for which the Company [the LLC] has been formed is to advance a 
$1,200,000 business loan (the ‘Loan’) to [a named borrower] and [a named sports 
agency] (collectively ‘the Borrower’) and as evidenced by all the documents 
evidencing said Loan (the ‘Loan Documents’), and to engage in any other lawful 

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 14 

act or activity related thereto for which limited liability companies may be 
formed under the [Limited Liability Company Act of the State of New York, as 
amended].  

90. Each LLC operating agreement claimed that “[a]ny funds received by the [LLC] shall 

be utilized by the [LLC] for the purposes of advancing the Loan or as otherwise set forth herein.” 

91. With respect to interest payments that Borrowers made on the loans, each LLC 

operating agreement claimed that La Mancha would receive and retain for itself 0.50% to 1.0% of 

the loan amount (prorated over the term of the loan). 

92. Each LLC operating agreement claimed that La Mancha was required to distribute 

the balance of the Borrower’s interest payments (which typically ranged from 9.5% to 12.5% of the 

loan amount, prorated over the term of the loan) to the LLC members in accordance with their 

percentage ownership in the LLC.  

93. For example, the LLC operating agreement for La Mancha Funding #24 LLC 

claimed that La Mancha was entitled to receive 1.0% of the $105,000 loan amount (prorated over 

the 12-month term of the loan), or $1,050, as its share of the interest. La Mancha was required to 

distribute the remaining 12%, or $12,600, in interest to the investor in the LLC. 

94. None of the LLC operating agreements disclosed that La Mancha or Kushner would 

divert any fees—such as “origination” fees and “broker” fees—from the investors’ capital 

contributions to the LLCs or from the loan proceeds.  

1. Defendants Misappropriated Investor Funds Through Undisclosed 
“Origination” and “Broker” Fees.   

  
95. Kushner and La Mancha misappropriated LLC and investor funds—which were 

supposed to fund the LLCs’ loans to the Borrowers—through undisclosed “origination” and 

“broker” fees. 

96. The process by which Kushner and La Mancha misappropriated investor funds 

through these undisclosed fees followed a similar pattern.  

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97. To purchase the LLC membership interests, investors wired the purchase price (i.e., 

their capital contribution to the LLC) to La Mancha’s escrow agent.  

98. The total amount investors in any particular LLC wired to the escrow agent equaled 

the total face amount of the loan or loans to the Borrower(s) in which the LLC was going to invest.  

99. At Kushner’s direction, the escrow agent withdrew a specified amount for its legal 

fee.  

100. The escrow agent then typically wired an amount equal to the total interest owed by 

the Borrower over the term of the loan (i.e., the prepaid interest) into the Bank Account. 

101. La Mancha retained the 0.5% or 1% portion of the loan amount—the interest it was 

entitled to receive under the terms of the LLC operating agreements—and Kushner and La Mancha 

generally distributed the remaining prepaid interest to the investors.   

102. Kushner, however, did not direct the escrow agent to disburse all of the remaining 

investor funds to the Borrowers as loan proceeds.  

103. Instead, for each LLC, Kushner typically directed the escrow agent to first transfer 

approximately 3% to 4.5% of the face amount of the loans to La Mancha’s Bank Account as a 

purported “origination” fee.  

104. In at least one instance, on approximately June 18, 2019, Kushner directed the 

escrow agent to transfer 4.5% of the loan amount ($2,835) to Kushner’s personal bank account, 

rather than to La Mancha’s Bank Account, as a purported “origination” fee. 

105. These purported “origination” fees were deducted from the Borrowers’ loan 

proceeds without reducing the principal amount the Borrowers owed on the loans. Therefore, even 

though the Borrowers never received these “origination” fee amounts, they were still required to pay 

those amounts to the LLCs as loan “principal.” 

106. Kushner and La Mancha did not disclose to the investors that the LLCs would pay 

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these “origination” fees to La Mancha from the investor funds.  

107. Nor did Kushner and La Mancha disclose that these fees would be deducted from 

the Borrowers’ loan proceeds without reducing the principal amount the Borrowers owed on the 

loans. 

108. In total, Kushner and La Mancha diverted approximately $455,000 of investor funds 

to La Mancha or Kushner in undisclosed “origination” fees. 

109. In connection with nearly all of the LLCs, Kushner also directed the escrow agent to 

transfer approximately 2% to 3.5% of the face amount of the loans—purported “broker” fees—to 

an entity owned by Borrower 1.  

110. These purported “broker” fees were also deducted from the Borrowers’ loan 

proceeds without reducing the principal amount the Borrowers owed on the loans. 

111. Like the “origination” fees above, Kushner and La Mancha did not disclose to the 

investors that the LLCs would pay these “broker” fees from investors’ funds.  

112. Nor did Kushner and La Mancha disclose that these fees would be deducted from 

the Borrowers’ loan proceeds without reducing the principal amount the Borrowers owed on the 

loans. 

113. In total, Kushner and La Mancha diverted approximately $207,000 of investor funds 

to an entity owned by Borrower 1 in undisclosed “broker” fees. 

2. Defendants Misappropriated “Origination” and “Broker” Fees From 
Some Investors As They Were Making Misrepresentations About the 
Use of Investor Proceeds to Other Investors.  

114. Even after Kushner and La Mancha took undisclosed “origination” fees for 

themselves and diverted undisclosed “broker” fees in connection with some LLCs, Defendants 

entered into other LLC operating agreements for other LLCs that similarly misrepresented how the 

investors’ proceeds would be used. Defendants failed to disclose that these fees would be siphoned 

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off from the capital contributions made by the investors and, ultimately, the loan proceeds received 

by the Borrowers, as the examples below describe. 

115. On January 18, 2019, Kushner (on behalf of La Mancha) and an investor (“Investor 

B”) entered into an LLC operating agreement for La Mancha Funding #21 LLC in order to fund a 

$74,000 loan to two Borrowers.  

116. The operating agreement contained the misrepresentations and omissions about the 

use of the LLC investor’s funds described above in paragraphs 88-90.   

117. That same day, after Investor B made a capital contribution to the LLC, La Mancha 

diverted $3,300 of that amount to the Bank Account for an “origination” fee and diverted $1,850 of 

the capital contribution to an entity owned by Borrower 1 for a “broker” fee.  

118. Defendants did not disclose those fees to Investor B.  

119. A week later, on January 25, 2019, Kushner (on behalf of La Mancha) and Investor 

A entered into an LLC operating agreement for La Mancha Funding #23 LLC in order to fund a 

$70,000 loan to two Borrowers.  

120. The operating agreement contained the misrepresentations and omissions about the 

use of the LLC investor’s funds described above in paragraphs 88-90.   

121. That same day, after Investor A made a capital contribution to the LLC, La Mancha 

diverted $3,150 to the Bank Account as an “origination” fee and diverted $1,750 to an entity owned 

by Borrower 1 as a “broker” fee.  

122. Defendants did not disclose those fees to Investor A. 

123. About a month later, on February 27, 2019, Kushner (on behalf of La Mancha) and 

Investor A entered into an LLC operating agreement for La Mancha Funding #26 LLC in order to 

fund a $290,000 loan to a Borrower.  

124. The operating agreement contained the misrepresentations and omissions about the 

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use of the LLC investor’s funds described above in paragraphs 88-90.   

125. That same day, after Investor A made a capital contribution to the LLC, La Mancha 

diverted $7,250 to an entity owned by Borrower 1 as a “broker fee.”  

126. The next day, La Mancha diverted $13,050 to the Bank Account as an “origination 

fee.”  

127. Defendants did not disclose those fees to Investor A.  

128. About a week after that, on March 6, 2019, Kushner (on behalf of La Mancha) and 

Investor B entered into an LLC operating agreement for La Mancha Funding #27 LLC in order to 

fund an $80,000 loan to two Borrowers.  

129. The operating agreement contained the misrepresentations and omissions about the 

use of the LLC investor’s funds described above in paragraphs 88-90.   

130. That same day, after Investor B made a capital contribution to the LLC, La Mancha 

diverted $3,600 to the Bank Account as an “origination fee” and diverted $2,000 to an entity owned 

by Borrower 1 as a “broker fee.”  

131. Defendants did not disclose those fees to Investor B. 

3. Defendants’ Misrepresentations and Omissions About the 
“Origination” and “Broker” Fees Were Material.                        

132. Because Defendants took the undisclosed “origination” fees shortly after the 

investors funded the LLCs, Defendants obtained these purported fees whether the Borrower 

ultimately repaid the loan or defaulted.  

133. Therefore, unbeknownst to the LLC investors, Defendants profited from the LLCs 

regardless of whether the LLCs’ loans to the Borrowers were profitable—unlike the investors, who 

profited from their LLC investments only if the loans were profitable.  

134. In addition, also unbeknownst to the LLC investors, the “origination” and “broker” 

fees reduced the amount of the loan proceeds the Borrowers received but did not reduce the 

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“principal” amounts the Borrowers ultimately owed on the loans. This meant the Borrowers owed 

money, designated as “principal,” to the LLCs that the Borrowers had never received from the LLC.  

135. These purported “fees” therefore effectively increased the annual interest rate on 

each loan to a figure well above the annual interest rate disclosed in the LLC operating agreements, 

promissory notes, or otherwise.  

136. This effective increase in the loans’ annual interest rates in turn increased the credit 

risk—the risk that the Borrowers would not repay the loans—beyond what Kushner and La Mancha 

had disclosed to the investors, as the Borrowers would need to obtain additional funds to pay the 

LLC the shortfall between the “principal” amount due and the actual amount the Borrowers had 

received from the loans.   

B. Defendants Failed to Disclose Conflicts of Interest. 
 
137. While acting as investment advisers to the LLCs, Kushner and La Mancha failed to 

disclose to the LLCs or their investors a conflict of interest with Borrower 1.  

138. As discussed above, Borrower 1 received “broker” fees in connection with almost all 

of the loans made by the LLCs. 

139. During the Relevant Period, Borrower 1 had a La Mancha email address and used 

that email address to solicit potential Borrowers of the loans provided by the other LLCs; used an 

email signature line that stated “[Borrower 1], La[ ]Mancha Funding Corp”; and provided Kushner 

with paperwork concerning other Borrowers’ collateral.  

140. At the same time, Kushner and La Mancha offered and sold to investors interests in 

LLCs that provided loans to Borrower 1 and an entity wholly owned by Borrower 1 (“Borrower 1’s 

Company”). 

141. Borrower 1 and Borrower 1’s Company together received at least three loans, 

including one from each of three LLCs: La Mancha Funding #16 LLC, La Mancha Funding #31 

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LLC, and La Mancha Funding #42 LLC.  

142. Together, these three loans totaled nearly $2 million.  

143. When the investors purchased membership interests in La Mancha Funding #16 

LLC, La Mancha Funding #31 LLC, and La Mancha Funding #42 LLC, and funded the loans 

received by Borrower 1 and Borrower 1’s Company, Defendants failed to disclose to those investors 

that Borrower 1 had received “broker” fees in connection with other La Mancha LLC loans and 

appeared to be affiliated with La Mancha.1  

144. Borrower 1 and Borrower 1’s Company defaulted entirely on one of the loans and 

owed over $1.5 million on the other two loans they received. 

C.  Defendants Made Misrepresentations About and Misappropriated Borrowers’ 
Principal Repayments.  

 
145. Each LLC operating agreement represented that, after the LLC’s expenses were paid 

(including reimbursements to the managing member for out-of-pocket expenses incurred on the 

LLC’s behalf), the LLC would distribute the Borrower’s interest and principal payments to the 

LLC’s members in accordance with each member’s percentage ownership in the LLC. 

146. Each LLC operating agreement further represented that the Borrower was required 

to remit its principal payments to an escrow agent, which in turn was required to disburse those 

payments to the LLC members in accordance with their percentage ownership in the LLC. 

147. For example, the LLC operating agreement for La Mancha Funding #24 LLC 

claimed that La Mancha was entitled to receive from the escrow agent 0.01% of the principal repaid 

by the Borrower, and the investor was entitled to receive from the escrow agent 99.99% of principal 

repaid by the Borrower.  

 
1 Borrower 1 did not receive “broker” fees in connection with the LLCs’ loans to Borrower-1’s 
Company. 

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148. None of the LLC operating agreements disclosed that La Mancha or Kushner would 

retain some or all of the principal repayments made by the Borrower rather than distributing those 

funds to the LLC investors in accordance with their percentage ownership in the LLCs. 

149. In a number of instances, however, including those examples cited in Section III.D 

below, the Borrowers repaid some or all of the principal due on their loans and Defendants retained 

those principal payments rather than distribute those funds to investors—as Defendants had 

represented they would do in the LLC operating agreements.  

150. Borrowers typically sent their principal payments to La Mancha’s Bank Account, 

where Defendants commingled the principal payments with other Borrower repayments on different 

loans, the undisclosed “origination” fees La Mancha misappropriated, and La Mancha’s own funds.  

151. Defendants misappropriated at least $1.48 million of principal payments from LLC 

investors in this manner.  

152. Kushner used the misappropriated principal payments and other misappropriated 

funds, including the “origination” fees described above, to pay personal expenses and for other 

unauthorized purposes, including at least $300,000 in cashier’s checks that Kushner made payable to 

himself or La Mancha, approximately $248,000 in payments for his child’s tuition and his child’s 

apartment rental, approximately $172,000 to rent a home in the Hamptons, at least $130,000 that 

Kushner used to pay personal credit card bills, approximately $76,000 in payments for a Jeep and a 

Mercedes Benz, approximately $60,000 in country club dues, at least $55,000 that Kushner wired to 

a personal bank account, and approximately $25,000 in payments to a diamond wholesaler. 

D. Examples of Defendants’ Fraud 

153. The following examples detail how Kushner and La Mancha defrauded the LLCs 

and the LLC investors by misappropriating “origination” fees, “broker” fees, and Borrowers’ 

principal payments. 

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1. La Mancha Funding #24 LLC 

154. On approximately February 4, 2019, an investor (“Investor C”) wired $105,000 to 

the escrow account for La Mancha Funding #24 LLC to purchase membership interests in that 

LLC.  

155. Investor C’s purpose in doing so was to invest in and fund a loan by the LLC in that 

principal amount, as reflected in the operating agreement for La Mancha Funding #24 LLC. 

156. In exchange for his investment, Investor C received 99.99% of the membership 

interests in La Mancha Funding #24 LLC, as reflected in the same operating agreement.   

157. This LLC’s loan to its Borrower had a 12-month term and a 13% annual interest 

rate.  

158. The LLC operating agreement represented that La Mancha would receive 1.0% of 

the loan amount (prorated over the term of the loan), or $1,050, as its share of the prepaid interest, 

with the remaining 12% in interest to be distributed to Investor C.  

159. In the LLC operating agreement, Defendants represented that, after payment of the 

LLC’s expenses (for example, the escrow agent’s legal fee), the balance of the funds would be 

disbursed to the Borrower.  

160. At Kushner’s direction, after Investor C wired the funds to the escrow account, the 

escrow agent deducted its legal fees.  

161. The escrow agent then wired the total 13% interest amount owed by the Borrower 

for the loan term, as prepaid interest, to La Mancha at the Bank Account.  

162. La Mancha retained 1% for itself and distributed the remaining 12% to Investor C.  

163. However, Kushner also instructed the escrow agent to transfer an additional 4.5% of 

the loan amount ($4,725) to La Mancha as an “origination” fee and 2.5% of the loan amount 

($2,625) to Borrower 1 as a “broker” fee before remitting the balance to the Borrower.  

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164. By deducting these undisclosed “fees” from the loan proceeds remitted to the 

Borrower without reducing the principal amount due on the loan, Defendants secretly increased the 

effective annual interest rate on the loan to approximately 20%—higher than the 13% annual 

interest rate disclosed in the LLC’s operating agreement and promissory note.  

165. This increased the risk that the Borrower would default on the loan. 

166. The Borrower did repay the loan in full on October 7, 2019, but Defendants failed to 

distribute to the LLC or Investor C any of the principal payments made by the borrower.  

167. Kushner misappropriated all $105,000 of the Borrower’s principal payments for his 

own use.  

168. For example, on the same day the borrower repaid the principal, Kushner wired 

$9,000 to himself from the La Mancha Bank Account.  

169. On October 9 and October 15, 2019, Kushner made a $1,452 payment to Mercedes 

Benz and a $3,600 payment to a country club, respectively, from that same account. 

2. La Mancha Funding #32 LLC 

170. On approximately April 11, 2019, an investor (“Investor D”) wired $85,000 to the 

escrow account for La Mancha Funding #32 LLC in order to purchase membership interests in that 

LLC.  

171. Investor D’s purpose in doing so was to invest in and fund a loan by the LLC in that 

principal amount, as reflected in the operating agreement for La Mancha Funding #32 LLC.  

172. In exchange for his investment, Investor D received 99.99% of the membership 

interests in La Mancha Funding #32 LLC, as reflected in the same operating agreement.  

173. This LLC’s loan to its Borrower had an 8.5-month term and a 13% annual interest 

rate.  

174. The LLC operating agreement represented that La Mancha would receive 1.0% of 

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the loan amount (prorated over the term of the loan), or $605, as its share of the prepaid interest, 

with the remaining 12% in interest to be distributed to Investor D.  

175. In the LLC operating agreement, Defendants represented that, after payment of the 

LLC’s expenses (for example, the escrow agent’s legal fee), the balance of the funds would be 

disbursed to the Borrower. 

176. At Kushner’s direction, after Investor D wired the funds to the escrow account, the 

escrow agent deducted its legal fees.  

177. The escrow agent then wired the total 13% interest amount owed by the Borrower 

for the loan term, as prepaid interest, to La Mancha at the Bank Account.  

178. La Mancha retained 1% for itself and distributed the remaining 12% to Investor D.  

179. However, Kushner instructed the escrow agent to transfer an additional 4.5% of the 

loan amount ($3,825) to La Mancha as an “origination” fee and 2.5% of the loan amount ($2,125) to 

Borrower 1 as a “broker” fee before remitting the balance to the Borrower.  

180. By deducting these undisclosed “fees” from the loan proceeds remitted to the 

Borrower without reducing the principal amount due on the loan, Defendants secretly increased the 

effective annual interest rate on the loan to approximately 16%—higher than the 13% annual 

interest rate disclosed in the LLC’s operating agreement and promissory note.  

181. This increased the risk that the Borrower would default on the loan. 

182. The Borrower did repay the loan in full by November 22, 2019, but Defendants 

failed to distribute to the LLC or the investor approximately $63,000 of the principal payments 

made by the Borrower.  

183. Kushner misappropriated approximately $63,000 of the Borrower’s principal 

payments for his own use.  

184. For example, on November 26, 2019, Kushner drafted a $2,000 check payable to 

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himself from the La Mancha Bank Account.  

185. On November 29, 2019, from that same account, Kushner made a $18,720 credit 

card payment on an American Express account under his wife’s name. 

3. La Mancha Funding #37 LLC 

186. On approximately June 6, 2019, Investor A wired $100,000 to the escrow account 

for La Mancha Funding #37 LLC in order to purchase membership interests in that LLC.  

187. Investor A’s purpose in doing so was to invest in and fund a loan by the LLC in that 

principal amount, as reflected in the operating agreement for La Mancha Funding #37 LLC.  

188. In exchange for his investment, Investor A received 99.99% of the membership 

interests in La Mancha Funding #37 LLC, as reflected in the same operating agreement. 

189. This LLC’s loan to its Borrower had a 7-month term and a 13% annual interest rate.  

190. The LLC operating agreement represented that La Mancha would receive 0.50% of 

the loan amount (prorated over the term of the loan), or $308, as its share of the prepaid interest, 

with the remaining 12.5% in interest to be distributed to Investor A.  

191. In the LLC operating agreement, Defendants represented that, after payment of the 

LLC’s expenses (for example, the escrow agent’s legal fee), the balance of the funds would be 

disbursed to the Borrower.  

192. At Kushner’s direction, after Investor A wired the funds to the escrow account, the 

escrow agent deducted its legal fees.  

193. The escrow agent then wired the total 13% interest amount owed by the Borrower 

for the loan term, as prepaid interest, to La Mancha at the Bank Account.  

194. La Mancha retained 0.50% for itself and distributed the remaining 12.5% to Investor 

A.  

195. However, Kushner also instructed the escrow agent to transfer an additional 4.5% of 

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the loan amount ($4,500) to La Mancha as an “origination” fee and 2.5% of the loan amount 

($2,500) to Borrower 1 as a “broker” fee before remitting the balance to the Borrower. 

196. By deducting these undisclosed “fees” from the loan proceeds without reducing the 

principal amount of the loan, Defendants secretly increased the effective annual interest rate on the 

loan to 14.6%—higher than the 13% annual interest rate disclosed in the LLC’s operating agreement 

and promissory note.  

197. This increased the risk that the Borrower would default on the loan. 

198. The Borrower did repay the loan in full by January 6, 2020, but Defendants failed to 

distribute to the LLC or Investor A approximately $75,000 of the principal payments made by the 

Borrower.  

199. Kushner misappropriated approximately $75,000 of the Borrower’s principal 

payments for his own use.  

200. For example, on the same day the borrower repaid the principal, Kushner wired 

$9,000 to himself from the La Mancha Bank Account.  

201. The next day, Kushner made a $1,182 rent payment for an apartment (located near 

where Kushner’s child attended college) from that same account.  

202. On January 18, 2020, Kushner made a $1,452 payment to Mercedes Benz from that 

same account. 

4. La Mancha Funding #33 LLC 

203. On approximately April 30, 2019 and May 1, 2019, multiple investors wired a total of 

$900,000 to the escrow account for La Mancha Funding #33 LLC in order to purchase membership 

interests in that LLC.  

204. The investors’ purpose in doing so was to invest in and fund a loan by the LLC in 

that principal amount, as reflected in the operating agreement for La Mancha Funding #33 LLC.  

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205. In exchange for their investments, the investors together received 99.99% of the 

membership interests in La Mancha Funding #33 LLC, as reflected in the same operating 

agreement.  

206. This LLC’s loan to its Borrower had an 18-month term and a 10% annual interest 

rate.  

207. The LLC operating agreement represented that La Mancha would receive 0.50% of 

the loan amount (prorated over the term of the loan), or $6,750, as its share of the prepaid interest, 

with the remaining 9.50% in interest to be distributed to the investors in the LLC.  

208. In the LLC operating agreement, Defendants represented that, after payment of the 

LLC’s expenses (for example, the escrow agent’s legal fee and title recording fees), the balance of the 

funds would be disbursed to the Borrower. 

209. At Kushner’s direction, after the investors wired the funds to the escrow account, 

the escrow agent deducted its legal fees and paid the title and recording fee for the underlying 

mortgage note.  

210. The escrow agent then wired the total 10% interest amount owed by the Borrower 

for the loan term, as prepaid interest, to La Mancha at the Bank Account.  

211. La Mancha retained 0.50% for itself and distributed the remaining 9.50% to the 

investors.  

212. However, Kushner also instructed the escrow agent to transfer an additional 3.0% of 

the loan amount ($27,000) to La Mancha as an “origination” fee and another $6,250 to La Mancha 

as a “lender per diem” before remitting the balance to the Borrower. 

213. By deducting these undisclosed “fees” from the loan proceeds without reducing the 

principal amount of the loan, Defendants secretly increased the effective annual interest rate on the 

loan to approximately 16.19%—higher than the 10% annual interest rate disclosed in the LLC’s 

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operating agreement and mortgage note. 

214. This increased the risk that the Borrower would default on the loan. 

215. The loan was repaid in full on approximately January 19, 2021, but Defendants failed 

to distribute to the LLC or to the investors approximately $728,000 of the principal payments made 

by or on behalf of the Borrower.  

216. Kushner misappropriated approximately $728,000 of these principal payments for 

his own use. 

217. After approximately $902,000 of principal was repaid on January 19, 2021, the 

balance of the La Mancha Bank Account was approximately $907,000. About two months later, the 

balance of the La Mancha Bank Account was approximately $6,000.  

218. In that two-month period, Kushner appears to have spent the majority of the repaid 

principal on personal expenses.  

219. For example, Kushner issued a total of $300,000 of cashier’s checks made payable to 

himself or La Mancha, wired a total of approximately $55,000 to himself, made credit card payments 

totaling approximately $130,000 on an American Express account under his wife’s name and a 

Capital One account under his name, spent approximately $45,000 to rent a home in the Hamptons, 

made approximately $29,000 in payments to Jeep and Mercedes Benz, and made approximately 

$26,000 in payments for a child’s tuition and a child’s apartment rental.     

IV. DEFENDANTS LIED TO INVESTORS TO PERPETUATE AND CONCEAL 
THEIR FRAUDULENT SCHEME.  

 
220. In late 2019 through the spring of 2020, certain of the LLCs’ investors had not 

received principal payments that had come due on some of the loans made by the LLCs.  

221. As a result, these investors contacted Kushner to determine whether the Borrowers 

had made the principal payments, and, if not, whether Kushner and La Mancha had taken steps to 

enforce the LLCs’ rights under the applicable loan documents.  

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222. For example, under the loan documents for all of the LLCs, La Mancha could 

enforce the LLCs’ rights by charging the Borrowers additional interest pursuant to loan extension 

agreements or by taking legal action to collect on the loans in the event of default. 

223. In response to investors’ inquiries, Kushner lied to the investors.  

224. In some instances, Kushner told investors that the Borrowers had not made the 

outstanding principal payments on their loans when, in fact, Defendants had already received those 

payments.  

225. For example, on approximately April 11, 2019, La Mancha Funding #32 LLC 

extended an $85,000 loan to a borrower.   

226. Pursuant to the operating agreement for La Mancha Funding #32 LLC, Investor D 

owned 99.99% of its membership interests.   

227. The principal amount was due to be paid by the Borrower in equal installments 

pursuant to a schedule, beginning on September 20, 2019 and concluding on December 27, 2019.  

228. In the LLC’s operating agreement, the Defendants represented that, once the escrow 

agent had received those principal payments and the LLC’s expenses (including reimbursements to 

La Mancha for out-of-pocket expenses incurred on the LLC’s behalf) had been paid, the escrow 

agent was required to distribute the remainder of the principal payments to Investor D pursuant to 

Investor D’s percentage ownership in the LLC.  

229. When Investor D contacted Kushner in December 2019 about the principal 

payments that were still outstanding from the Borrower, Kushner told Investor D that those 

payments were forthcoming.  

230. In reality, the Borrower had already repaid the loan principal in full by November 22, 

2019, and, as detailed above, Defendants had kept approximately $63,000 of the principal payments 

rather than distribute those funds to Investor D, as the Defendants had represented they would in 

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the operating agreement.  

231. On April 21 and May 7, 2020, Kushner sent Investor D wires for $507.50 and 

$532.50, respectively, with the former marked as an interest payment rather than a principal 

payment, and falsely told Investor D by email that he had agreed with the Borrower to extend the 

loan for 6 additional months at an interest rate of 15%.  

232. On April 21, 2020, Kushner also sent Investor D a fabricated account statement 

showing that the outstanding account balance on the loan exceeded $53,000. 

233. In another example, Kushner lied to other investors—Investor A, Investor B, and a 

third investor (“Investor E”)—when those investors inquired about outstanding loan payments. 

234. Beginning in late 2019, Investor A, Investor B, and Investor E contacted Kushner 

several times to request information about at least five outstanding loans made by LLCs in which 

those investors had purchased membership interests.  

235. Kushner responded to those investors in February 2020 and told them that he 

expected La Mancha “to be paid in full” on three of those loans by the end of February 2020 (the 

loans extended by La Mancha Funding #13 LLC, La Mancha Funding #15 LLC, and La Mancha 

Funding #19 LLC) and on two of those loans by “mid March” 2020 (the loans extended by La 

Mancha Funding #26 LLC and La Mancha Funding #37 LLC).      

236. When Kushner made those representations, La Mancha had received no principal 

payments on two of the first three loans referenced above.  

237. What Kushner characterized as a single loan made by La Mancha Funding #15 LLC 

was actually comprised of two separate loans—each to a different Borrower. As Kushner knew or 

recklessly disregarded, one of those two Borrowers had already repaid his loan in full, but 

Defendants kept the funds rather than distributing them to Investor A and instead used those funds 

for unauthorized purposes. 

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238. With respect to the two other loans referenced above—those made by La Mancha 

Funding #26 LLC and La Mancha Funding #37 LLC—when Kushner told Investor A, Investor B, 

and Investor E that he expected those loans to be paid in full by “mid-March,” Kushner knew or 

recklessly disregarded that the Borrowers on those loans had already repaid their respective loans in 

full to La Mancha.  

239. By the time the Borrowers fully repaid those loans by December 31, 2019 and 

January 6, 2020, respectively, Kushner and La Mancha returned only approximately 25% of the 

$390,000 principal payments those Borrowers had made.  

240. The Defendants failed to return the remainder of those principal payments, 

$292,500, to Investor A and used those funds for unauthorized purposes. 

241. Among other things, on January 3 and January 6, 2020, Kushner made a $5,358.20 

payment for his child’s tuition and a $1,182.95 payment for his child’s apartment rental, respectively,   

from the La Mancha Bank Account.  

242. On January 6, January 16, and January 22, 2020, Kushner wired $9,000, $1,000, and 

$1,000, respectively, from the La Mancha Bank Account to Kushner’s personal bank account.  

243. And on January 20, 2020, from the La Mancha Bank Account, Kushner made a 

$20,000 credit card payment on an American Express account under his wife’s name. 

244. Investors suffered significant losses from Defendants’ fraudulent scheme, and many 

investors lost most of the money they invested except for their share of the prepaid interest 

amounts.  

245. By June 17, 2021, Kushner had drained all the funds out of the La Mancha Bank 

Account (such that it had a negative balance), including all of the “origination” fees and principal 

payments he and La Mancha had misappropriated, to pay for his own personal expenses and to 

make other unauthorized payments.  

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246. The La Mancha Bank Account’s balance continued to be negative until the account 

was closed with a zero balance on August 17, 2021. 

FIRST CLAIM FOR RELIEF 
Violations of Securities Act Section 17(a)  

(Both Defendants) 
 

247. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1-136 and 145-246. 

248. Kushner and La Mancha, directly or indirectly, singly or in concert, in the offer or 

sale of securities and by the use of the means or instruments of transportation or communication in 

interstate commerce or the mails, (1) knowingly or recklessly have employed one or more devices, 

schemes or artifices to defraud, (2) knowingly, recklessly, or negligently have obtained money or 

property by means of one or more untrue statements of a material fact or omissions of a material 

fact necessary in order to make the statements made, in light of the circumstances under which they 

were made, not misleading, and/or (3) knowingly, recklessly, or negligently have engaged in one or 

more transactions, practices, or courses of business which operated or would operate as a fraud or 

deceit upon the purchaser. 

249. By reason of the foregoing, Kushner and La Mancha, directly or indirectly, singly or 

in concern, have violated and, unless enjoined, will again violate Securities Act Section 17(a) [15 

U.S.C. § 77q(a)]. 

SECOND CLAIM FOR RELIEF 
Violations of Exchange Act Section 10(b) and Rule 10b-5 Thereunder 

(Both Defendants) 
 

250. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1-136 and 145-246. 

251. Kushner and La Mancha, directly or indirectly, singly or in concert, in connection 

with the purchase or sale of securities and by the use of means or instrumentalities of interstate 

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commerce, or the mails, or the facilities of a national securities exchange, knowingly or recklessly 

have (i) employed one or more devices, schemes, or artifices to defraud, (ii) made one or more 

untrue statements of a material fact or omitted to state one or more material facts necessary in order 

to make the statements made, in light of the circumstances under which they were made, not 

misleading, and/or (iii) engaged in one or more acts, practices, or courses of business which 

operated or would operate as a fraud or deceit upon other persons. 

252. By reason of the foregoing, Kushner and La Mancha, directly or indirectly, singly or 

in concert, have violated and, unless enjoined, will again violate Exchange Act Section 10(b) [15 

U.S.C. § 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

THIRD CLAIM FOR RELIEF 
Violations of Advisers Act Sections 206(1) and (2)  

(Both Defendants) 
 

253. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1-246.  

254. At all relevant times, Kushner and La Mancha were investment advisers under 

Advisers Act Section 202(11) [15 U.S.C. § 80b-2(11)]. 

255. Kushner and La Mancha, by use of  the mails or any means or instrumentality of  

interstate commerce, directly or indirectly have: (1) knowingly or recklessly employed one or more 

devices, schemes, or artifices to defraud any client or prospective client, and/or (2) knowingly, 

recklessly, or negligently engaged in one or more transactions, practices, and courses of  business 

which operated as a fraud or deceit upon clients or prospective clients. 

256. By reason of  the foregoing, Kushner and La Mancha, directly or indirectly, singly or 

in concert, have violated and, unless enjoined, will again violate Advisers Act Sections 206(1) and (2) 

[15 U.S.C. §§ 80b-6(1) and 80b-6(2)]. 

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FOURTH CLAIM FOR RELIEF 
Violations of Advisers Act Section 206(4) and Rule 206(4)-8 Thereunder 

(Both Defendants) 
 

257. The Commission re-alleges and incorporates by reference here the allegations in 

paragraphs 1-202 and 220-246.  

258. At all relevant times, Kushner and La Mancha were investment advisers, under 

Advisers Act Section 202(11) [15 U.S.C. § 80b-2(11)], to one or more pooled investment vehicles, as 

defined in Rule 206(4)-8(b) [17 C.F.R. § 275.206(4)-8(b)].  

259. Kushner and La Mancha knowingly, recklessly, or negligently (i) made one or more 

untrue statements of a material fact or omitted to state one or more material facts necessary in order 

to make the statements made, in light of the circumstances under which they were made, not 

misleading, to investors or prospective investors in pooled investment vehicles, and/or (ii) engaged 

in one or more acts, practices, or courses of  business that were fraudulent, deceptive, or 

manipulative, with respect to investors or prospective investors in a pooled investment vehicle.   

260. By reason of  the foregoing, Kushner and La Mancha, directly or indirectly, singly or 

in concert, have violated and, unless enjoined, will again violate Advisers Act Section 206(4) [15 

U.S.C. § 80b-6(4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8]. 

PRAYER FOR RELIEF 

 WHEREFORE, the Commission respectfully requests that the Court enter a Final 

Judgment: 

I. 

Permanently enjoining Kushner and his agents, servants, employees and attorneys and all 

persons in active concert or participation with any of them from violating, directly or indirectly, 

Securities Act Section 17(a) [15 U.S.C. § 77q(a)], Exchange Act Section 10(b) [15 U.S.C. §§ 78j(b)] 

and Rule 10b-5 thereunder [17 C.F.R. §§ 240.10b-5], and Advisers Act Sections 206(1), (2) and (4) 

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[15 U.S.C. §§ 80b-6(1), (2), and (4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 275.206(4)-8]. 

II. 

Permanently enjoining La Mancha and its agents, servants, employees and attorneys and all 

persons in active concert or participation with any of them from violating, directly or indirectly, 

directly or indirectly, Securities Act Section 17(a) [15 U.S.C. § 77q(a)], Exchange Act Section 10(b) 

[15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. §§ 240.10b-5], and Advisers Act Sections 

206(1), (2) and (4) [15 U.S.C. §§ 80b-6(1), (2), and (4)] and Rule 206(4)-8 thereunder [17 C.F.R. § 

275.206(4)-8]. 

III. 

Ordering Defendants, jointly and severally, to disgorge all ill-gotten gains and unjust 

enrichment they received as a result of the violations alleged herein and to pay prejudgment interest 

thereon on a joint-and-several basis pursuant to Exchange Act Sections 21(d)(3), (d)(5), and (d)(7) 

[15 U.S.C. § 78u(d)(3), 78u(d)(5), and 78u(d)(7)] 

IV. 

Ordering Defendants to pay civil monetary penalties pursuant to Securities Act Section 20(d) 

[15 U.S.C. § 77t(d)], Exchange Act Section 21(d)(3) [15 U.S.C. § 78u(d)(3)], and Advisers Act Section 

209(e) [15 U.S.C. § 80b-9(e)]; 

V. 

 Permanently prohibiting Kushner from serving as an officer or director of any company that 

has a class of securities registered under Exchange Act Section 12 [15 U.S.C. § 78l] or that is 

required to file reports under Exchange Act Section 15(d) [15 U.S.C. § 78o(d)], pursuant to 

Securities Act Section 20(e) [15 U.S.C. § 77t(e)] and Exchange Act Section 21(d)(2) [15 U.S.C. 

§ 78u(d)(2)]; 

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VI. 

 Permanently enjoining Kushner from directly or indirectly, including, but not limited to, 

through any entity owned or controlled by Kushner, participating in the issuance, purchase, offer, or 

sale of any security, with the exception of purchasing or selling securities for his own personal 

account. 

VII. 

Granting any other and further relief this Court may deem just and proper.  

JURY DEMAND 

 The Commission demands a trial by jury.  

 
 
Dated: New York, New York 

November 21, 2024 

/s/ Antonia M. Apps       

ANTONIA M. APPS  
REGIONAL DIRECTOR  
Sheldon L. Pollock 
George N. Stepaniuk 
Russell J. Feldman 
Cynthia A. Matthews 
Jessica Quinn 
Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
New York Regional Office 
100 Pearl Street  
Suite 20-100 
New York, NY 10004-2616 
212-336-9144 (Feldman) 
[email protected]  
  

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mailto:[email protected]