Manhattan District Attorney Alvin Bragg, Jr., today announced the indictment of DAVID KUSHNER, 59, for a $2 million, multi-state scheme to defraud private lenders and borrowers over the course of more than two years. KUSHNER is charged in a New York State Supreme Court indictment with Grand Larceny in the Second Degree and Scheme to Defraud in the First Degree.[1]

“As alleged, David Kushner lied to borrowers and lenders alike, concealing exorbitant fees, undisclosed risk, and outright theft of approximately $2 million,” said District Attorney Bragg. “New Yorkers expect honest business dealings, and our Financial Frauds Bureau is determined to protect both lenders and borrowers from fraudulent practices.”

According to court documents, between April 2019 and June 2021, KUSHNER purported to use his company, LaMancha Funding Corporation, to serve as a liaison between lenders and private borrowers, who were often professional athletes and sports agents. During this period, KUSHNER facilitated 12 loans totaling $4.78 million.

When marketing the loans to the lenders, KUSHNER claimed that he would identify credit-worthy borrowers by conducting extensive due diligence, including searching criminal histories, conducting credit checks, and confirming collateral. In contrast, KUSHNER did not perform due diligence, and knowingly marketed loans involving borrowers with substantial criminal histories or a history of bankruptcy. 

KUSHNER secretly charged the borrowers hefty fees, raising the effective interest rates on the loans to approximately 20%, and making the loans significantly riskier than he represented. While the defendant claimed that the risk of default was low, many of the borrowers ultimately defaulted.

Under the terms of the loan agreements, borrowers typically remitted payment to KUSHNER, so that he, in turn, could remit the payment to the lenders. Rather than doing so, he misappropriated approximately $2 million worth of interest and principal payments. The defendant spent the money on luxury vehicles, a summer house in the Hamptons, country club memberships, and more than $833,000 of payments to his personal American Express account. In addition, the defendant used more than $100,000 of the stolen proceeds to pay for legal fees related to an ongoing criminal case in the United States District Court for the District of New Jersey.

Assistant D.A. Catherine McCaw (Counsel to the Investigation Division), Assistant D.A. Kofi Sansculotte (Chief of the Financial Frauds Bureau) and Assistant D.A. Anthony Santucci are handling the prosecution of the case under the supervision of Executive Assistant D.A. Jodie Kane (Chief of the Investigation Division).

Senior Financial Investigator Lana Wong, Paralegal Jacob Sowers, Paralegal Varun Gaitonde, Investigative Analyst Max Stahl, Privilege Review Data Specialist Olivia Savell, Detective Investigator Josellina Nardulli, Investigator Kyle Bianco, and Assistant Chief of the Investigation Bureau Jonathan Reid provided valuable assistance with the case.

Forensic Accountant Investigator Francine Wexler, under the supervision of Irene Serrapica (Forensic Accountant and Financial Investigations Principal Deputy Bureau Chief) and Robert Demarest (Forensic Accountant and Financial Investigations Bureau Chief), also provided valuable assistance.

Special thanks to George Stepaniuk, Cynthia Matthews, Jessica Quinn and Russell Feldman, Division of Enforcement, New York Regional Office of the Securities and Exchange Commission (SEC).

Defendant Information

DAVID KUSHNER

Charges:

• Grand Larceny in the Second Degree, a class C felony, five counts
• Grand Larceny in the Third Degree, a class D felony, one count
• Scheme to Defraud in the First Degree, a class E felony, one count

 

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[1] The charges contained in the indictment are merely allegations, and the defendant is presumed innocent unless and until proven guilty. All factual recitations are derived from documents filed in court and statements made on the record in court.