SEC Sues 5G Funding and Jacob Garfinkel Over Alleged $4.5 Million Fraud
SEC sues Jacob Garfinkel and two 5G Funding firms over an alleged $4.5 million fraud targeting at least 23 investors in Illinois, New York and New Jersey.
Summary
SEC Litigation Release No. 26651 says the agency filed Securities and Exchange Commission v. Jacob Garfinkel, 5G Funding LLC, and Five G Funding LLC, No. 26-cv-11825, in the Northern District of Illinois on September 28, 2026. The SEC alleges the Skokie, Illinois merchant cash advance companies and their CEO and owner raised approximately $4.5 million from at least 23 investors, almost exclusively in Orthodox Jewish communities in Illinois, New York, and New Jersey.
From November 2021 through at least January 2023, Garfinkel allegedly portrayed 5G Funding as highly profitable and promised investors a share of net profits from funded merchant cash advances. The SEC says some money entered an unprofitable business, while Garfinkel collected $1.1 million in undisclosed or mischaracterized origination fees and diverted approximately $1 million in repayments and other funds to personal spending and related parties. Defendants also allegedly overstated portfolio performance, claimed Garfinkel had an industry track record despite no prior experience, and used refinancing transactions to generate fees without a legitimate business purpose.
The complaint charges violations of Securities Act Section 17(a), Exchange Act Section 10(b), and Rule 10b-5. The SEC seeks permanent injunctions, disgorgement with prejudgment interest, civil penalties, and a conduct-based injunction barring Garfinkel from securities offerings. Peter Senechalle and Trevor Schumacher investigated under Amy Flaherty Hartman and Anne C. McKinley; BeLinda Mathie will litigate under Eric M. Phillips.
Positives
- The SEC seeks disgorgement with prejudgment interest, potentially recovering alleged proceeds if the court grants relief.
- A conduct-based injunction could prohibit Garfinkel from participating in future securities offerings.
- Permanent injunctions and civil penalties are requested against Garfinkel, 5G Funding LLC, and Five G Funding LLC.
Risks & concerns
- Approximately $4.5 million was allegedly raised from at least 23 investors through the merchant cash advance scheme.
- $1.1 million allegedly went to Garfinkel through origination fees after investors were misled about his compensation.
- Approximately $1 million in repayments and other funds was allegedly diverted to personal spending and related parties.
- 5G Funding’s merchant cash advance operation was allegedly unprofitable despite representations that the business was highly profitable.
- Defendants allegedly misstated portfolio performance, fabricated Garfinkel’s industry track record, and refinanced transactions solely to generate fees.
