SEC Charges Two Individuals With Orchestrating Fraud Scheme That Targeted Veterans

The Securities and Exchange Commission has filed civil charges against former naval officer Christopher Kenji Dinelli and Jacob David “Kobe” Frankel for allegedly running a fraudulent investment scheme that raised more than $8.7 million from 35 investors through their entities Beyond Alpha Ventures LLC and Beyond Equity LLC. The defendants purported to invest the money in an options‑trading strategy and special‑purpose vehicles holding pre‑IPO securities, but the complaint says they repeatedly misrepresented the fund’s performance, assets under management and client base, touting fictitious returns of up to 153 percent while the fund actually suffered consistent losses. Dinelli is accused of diverting over $1 million and Frankel more than $340,000 for personal use, and both are charged with violating antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and, for Frankel, the Investment Advisers Act of 1940. The SEC seeks permanent injunctions, disgorgement with prejudgment interest and civil penalties, and a parallel criminal case has been opened by the U.S. Attorney’s Office for the Southern District of New York.

The scheme specifically targeted U.S. military veterans and professionals who provide medical services to veterans, exploiting the trust inherent in those relationships. Dinelli and Frankel allegedly used their veteran status and connections to persuade investors that the fund’s “strong bonds” would yield high returns, presenting fabricated documents such as a “Trading Fund Overview 2024” that claimed a 153 percent net return. By misrepresenting past performance and the existence of pre‑IPO holdings, they induced investors to commit capital that was then funneled into brokerage accounts where it was largely lost on failed options trades, while the defendants siphoned off substantial sums for themselves.

The SEC’s action underscores heightened regulatory scrutiny of pre‑IPO investment offerings, which carry inherent risks and have been a growing avenue for fraud. Investors are being warned to conduct thorough due diligence and to be wary of promises of extraordinary returns, especially when presented by individuals leveraging veteran status. The civil and criminal proceedings aim to hold the perpetrators accountable and to deter similar schemes that prey on the veteran community, while the SEC’s Investor Alert provides guidance on recognizing and avoiding such fraudulent investments.

⚡ Effects Interpreter