SEC alleges $8.7 million investment fraud targeting veterans
The regulator says two men misrepresented fund performance and holdings, and that more than $1.34 million was misappropriated.
The US Securities and Exchange Commission has charged Christopher Kenji Dinelli and Jacob David “Kobe” Frankel over an alleged investment fraud that raised more than $8.7 million from 35 investors through Beyond Alpha Ventures and advisory firm Beyond Equity.
The SEC complaint says Dinelli, a former naval officer, targeted veterans and people providing medical services to veterans. Investors were told their money would support an options strategy or affiliated vehicles holding pre-IPO securities in two private companies.
According to the complaint, the defendants misrepresented investment performance, assets under management, their client base and fund holdings. The SEC alleges they continued to promote returns of up to 153% despite losses in the fund.
The complaint also alleges that money given for pre-IPO securities was redirected to brokerage accounts, where most was lost through options trades. It says Dinelli misappropriated more than $1 million and Frankel more than $340,000.
The SEC is seeking permanent injunctions, disgorgement with interest and civil penalties. The US Attorney’s Office for the Southern District of New York has announced parallel criminal charges concerning the same conduct. The civil allegations have not been established in court.
