SEC charges ex-venture capital pro with siphoning $10.6M for strip clubs

The SEC has charged a former venture capital professional with siphoning $10.6 million in investor funds for strip clubs, luxury cars, and personal debts. 

The regulator filed the action against Sumit Rai, Kim de Mora, and three affiliated companies—SVN Med LLC, NVS Med Inc., and Onco Filtration, Inc.—in the U.S. District Court for the District of Massachusetts on January 15. The SEC is also seeking to recover funds from Cancer Check Labs LLC, named as a relief defendant. 

Rai raised approximately $26.7 million from about 180 investors through private securities offerings between November 2019 and September 2023, according to the SEC. The funds were intended to develop a medical device capable of filtering circulating tumor cells from a patient's bloodstream—technology marketed to investors as a form of "cancer dialysis." 

Instead, the SEC alleges Rai funneled at least $10.6 million into personal expenditures. 

The alleged scheme began in July 2020 when Rai obtained a personal line of credit using an SVN Med brokerage account—substantially funded by investor money—as collateral, according to the regulator. The SEC alleges Rai falsely told the bank he owned 100 percent of SVN Med when his actual stake was 30.5 percent. 

The alleged spending included about $2.3 million in credit card bills covering $1.6 million at restaurants, $350,000 on clothing and jewelry, and $70,000 on alcohol. Rai also allegedly withdrew $5.1 million in cash, dropped $850,000 on luxury vehicles for a Manhattan "elite social club" that never opened, and spent $85,000 in two days at Texas strip clubs. 

When the bank called the loan in April 2023, Rai used investor funds to pay off the $10.6 million balance without telling investors, the SEC alleges. 

The regulator also accuses Rai of doctoring documents during investor due diligence. One institutional investor that put $315,000 into SVN Med in December 2020 received a brokerage statement with critical information deleted—specifically, details revealing the account was pledged as collateral for Rai's personal loan. 

A second institutional investor that committed $3 million received compliance certificates falsely representing millions as "unrestricted cash" when more than 92 percent was actually restricted, according to the SEC. 

De Mora, who served as SVN Med's CEO from June 2019 to March 2022, faces charges for allegedly aiding the fraud. The SEC claims he signed loan authorization documents despite knowing, or being reckless in not knowing, that Rai's ownership claims were false, and later approved using investor funds to repay the loan without questioning how Rai spent the money. De Mora also allegedly took $150,000 in undocumented loans from the companies that remain unpaid. 

The case took another turn in September 2023 when Rai persuaded investors to swap their convertible notes for non-convertible promissory notes with a current face value of at least $210 million. Payments were due to begin December 31, 2024, but Rai unilaterally extended the deadline. No payments have been made through at least August 2025, according to the filing. 

Meanwhile, Rai formed Cancer Check Labs in September 2023 and structured it as the exclusive seller of Onco's products—with no obligation to pay Onco until the new company turns cash-flow positive, the SEC alleges. Cancer Check purports to have received at least $915,000 in revenue selling Onco's technology but has not remitted a dollar to Onco, the regulator claims. 

The SEC is seeking permanent injunctions, disgorgement with prejudgment interest, civil penalties, and officer-and-director bars against Rai and de Mora. The regulator also wants Rai barred from future securities offerings. 

The allegations have not been proven, and no final determination has been made. The SEC has requested a jury trial.