CityVest borrowed $425,000 from advised funds without disclosing the conflicts

The October 2 order finds that between July 2019 and May 2025 the respondents borrowed $425,000 from funds they advised, directing some of that money to CityVest’s own operating expenses, including payroll, without telling investors or getting their consent.

The Commission brought the proceedings under Sections 203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940. The order finds the respondents willfully violated Section 206(2) of the Advisers Act.

the structure behind the loans

CityVest and Donenfeld built their business around “access funds” — vehicles that invested in third-party real estate funds and sold pro rata membership interests to individual investors. From December 2018 through December 2022, the firms raised approximately $47 million across roughly 15 such funds. CityVest, a Delaware corporation operating out of New York, held as much as $47 million in assets under management during the relevant period and has never been registered with the Commission.

CV Manager, a wholly owned CityVest subsidiary and also a Delaware corporation, managed each of the 15 access funds. It has never been registered with the Commission either. Donenfeld, 69, resides in New York, solely runs and part-owns CityVest, and acted as investment adviser to the access funds through both entities.

The fund documents provided to investors said nothing about the access funds lending money to CityVest. The order finds that the loans and their use to cover CityVest’s operating expenses created material conflicts of interest that were not fully and fairly disclosed to or consented to by the Three Access Funds and their investors.

what the order details

In July 2019, Donenfeld executed a promissory note for a $100,000 loan from Access Fund 1 to CityVest. On July 10 he transferred the proceeds into CityVest’s bank account, which carried a negative balance of $828.05 at the time.

The order notes that Donenfeld did not tell Investor A that money invested by Investor A was being used to repay the Access Fund 1 loan. CityVest then borrowed an additional $40,000 from Access Fund 2 between November 2019 and January 2020, repaying all outstanding Access Fund 2 loans without interest on March 17, 2020.

The order also describes a $75,000 payment from Investor B. Investor B made the check payable to CityVest rather than Access Fund 2 by mistake, and the funds went to CityVest’s operating expenses. Neither the use nor the transfer was disclosed to or approved by Investor B, and the fund documents did not authorize it.

The later borrowing involved Access Fund 3, which CityVest and Donenfeld closed December 31, 2020, after raising approximately $5.9 million. On October 11, 2024, CityVest took a $30,000 loan from that fund; Donenfeld executed the loan agreement on October 15, with terms allowing proceeds to be used “for any purpose.” A further $30,000 followed on May 7, 2025.

On the disclosed figures, that $425,000 total represents about 0.90% of CityVest’s maximum $47 million in assets under management ($425,000 ÷ $47,000,000 × 100).

consequences for investors

The order records that the loans and interest were fully repaid by July 2, 2025. It doesn’t resolve the core issue: investors in the three access funds were exposed to undisclosed loans that the SEC says were used partly for CityVest operating expenses. The available fact sheet provides no disgorgement amount and no prior comparable SEC action by CityVest for comparison.

The SEC’s order does not state that any investor lost principal permanently. It does state that Investor B’s $75,000 was used for CityVest operating expenses without disclosure or approval, and that the broader $425,000 borrowing program created undisclosed conflicts throughout the relevant period.

The order also says CityVest and CV Manager were never registered with the Commission, and the SEC applied the Advisers Act to their conduct regardless. Readers tracking the agency’s approach to private fund enforcement can consult the October 2 order directly for the full findings on how the Advisers Act was applied to an unregistered access-fund structure investing in third-party real estate.