SEC Charges Two Individuals in Alleged Fraud Scheme Targeting Veterans and Related Investors

The Alleged Scheme and Its Targets

The Securities and Exchange Commission announced charges against Christopher Kenji Dinelli, a former naval officer, and Jacob David “Kobe” Frankel for their roles in an alleged fraud that specifically targeted veterans and individuals who provide medical services to veterans. According to the complaint, the defendants operated through Beyond Alpha Ventures LLC, referred to as BAV, and an affiliated advisory firm, Beyond Equity LLC. The scheme reportedly raised more than $8.7 million from a total of 35 investors.

The complaint states that Dinelli and Frankel induced investments by claiming that funds would be placed in BAV, which was presented as employing an options trading strategy, or in special purpose vehicles that were said to hold pre-IPO securities in two private companies. These representations were allegedly used to appeal to investors who shared bonds formed through military service or support for veterans. The SEC has emphasized that such relationships were reportedly exploited for the defendants’ personal gain.

Misrepresentations About Performance and Operations

The SEC complaint details a series of alleged material misrepresentations made by the defendants concerning the past performance of the fund, the value of pre-IPO investments, the amount of assets under management, and the firm’s client base along with its current and past holdings. Despite the fund experiencing consistent losses, Dinelli and Frankel are accused of continuing to promote returns as high as 153 percent.

One document cited in the complaint, titled “Trading Fund Overview 2024,” reportedly claimed a “153% Net Return on Investment.” The SEC alleges that these portrayals of success were not supported by the actual results of the options trading activity. Such claims appear to have been central to attracting and retaining the 35 investors who collectively provided more than $8.7 million.

Alleged Diversion and Misappropriation of Funds

According to the complaint, investors in the pre-IPO securities were not informed that their money was being diverted to the fund’s brokerage accounts. Once transferred, the vast majority of these funds were allegedly lost through unsuccessful options trades. This redirection reportedly occurred without the knowledge or consent of the affected investors.

The SEC further alleges that Dinelli misappropriated more than $1 million of investor funds for his personal use, while Frankel is accused of misappropriating more than $340,000. These actions are presented as separate from the trading losses but part of the overall scheme that deprived investors of their capital. The complaint does not specify the exact disposition of all diverted amounts beyond the reported misappropriations.

Legal Charges and Parallel Proceedings

The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges both Dinelli and Frankel with violating the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Frankel faces additional charges under the Investment Advisers Act of 1940. The regulator is seeking permanent injunctions against the defendants, along with disgorgement of ill-gotten gains plus prejudgment interest and civil penalties.

A parallel criminal action based on the same alleged conduct has been announced by the U.S. Attorney’s Office for the Southern District of New York. The criminal charges against Dinelli and Frankel indicate that prosecutors are also pursuing the matter, although the precise nature of those charges is not detailed in the SEC’s release. The overlap between the civil and criminal cases underscores the seriousness with which authorities view the reported exploitation of veterans and other investors.

Regulatory Perspective and Investor Considerations

Thomas P. Smith, Jr., Associate Director of the SEC’s New York Regional Office, was quoted in the announcement underscoring the strength of bonds among service members. He stated that the defendants allegedly took advantage of those relationships for “greedy and self-serving purposes,” and that the agency intends to hold them accountable. This perspective frames the case as an abuse of trust within a specific community rather than a generic investment fraud.

The SEC has noted that investors considering pre-IPO offerings should be aware of the associated risks, referencing a separate Investor Alert on the topic. While the current case involves alleged misrepresentations rather than inherent risks of pre-IPO investments, the reminder highlights the need for due diligence. At this stage, the allegations remain unproven in court, and both defendants will have the opportunity to respond to the charges.

Source

U.S. Securities and Exchange Commission published this record on 2026-09-30. Pennington Financial accessed it on 2026-10-10.