WASHINGTON — Federal regulators and prosecutors have cracked down on an alleged investment fraud scheme that targeted military veterans and healthcare professionals, exploiting tight-knit professional bonds to siphon millions of dollars into failing trades and personal bank accounts.
The Securities and Exchange Commission announced civil charges on September 30, 2026, against Christopher Kenji Dinelli and Jacob David “Kobe” Frankel. According to the regulatory filings, the two men orchestrated a deceptive scheme that raised more than $8.7 million from 35 unsuspecting investors through their fund, Beyond Alpha Ventures LLC (BAV), and an advisory firm known as Beyond Equity LLC.
Simultaneously, the U.S. Attorney’s Office for the Southern District of New York announced parallel criminal charges against Dinelli and Frankel concerning the exact same fraudulent conduct, exposing the defendants to both severe civil penalties and criminal prosecution.
According to the SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, the operation relied heavily on manufactured prestige and targeted outreach. Dinelli, a former naval officer, allegedly leveraged his military background to gain the trust of fellow service members. He specifically focused his pitch on veterans, as well as individuals who provide medical services to veterans, convincing them to entrust their hard-earned savings to the defendants’ ventures.
Investigators detail that Dinelli and Frankel pitched two primary investment avenues to prospective clients. The first was the BAV fund, which was represented as utilizing a sophisticated options trading strategy. The second involved affiliated special purpose vehicles, or SPVs, which allegedly purported to hold valuable pre-IPO securities in two prominent private companies.
To entice investors to part with their money, the defendants allegedly engaged in a systematic campaign of material misrepresentations. Court documents state that they repeatedly lied about the past performance of both the fund and the pre-IPO investments, grossly inflated the total amount of assets they had under management, and fabricated details regarding BAV’s client base alongside its current and historical holdings.
The reality behind the trading accounts, however, starkly contrasted with the glowing reports provided to investors. Despite suffering consistent, substantial losses in the fund, Dinelli and Frankel allegedly continued to tout wildly successful financial returns. They claimed returns of up to 153% and boasted of managing a sprawling, highly successful client base.
As part of their marketing efforts, the defendants circulated a document titled “Trading Fund Overview 2024,” which brazenly claimed a “153% Net Return on Investment.” Investigators say these claims were entirely fictitious, designed to mask ongoing trading failures and lure in fresh capital from new victims.
The emotional and professional betrayal inherent in the scheme drew sharp condemnation from regulatory officials. Commenting on the nature of the outreach, Thomas P. Smith, Jr., Associate Director of the SEC’s New York Regional Office, emphasized the predatory tactics employed by the founders.
"The bonds between service members are as strong, if not stronger, than in any other profession," said Smith. "Through their alleged actions, the defendants took advantage of those relationships for greedy and self-serving purposes. We will hold them accountable for their actions."
Beyond the misleading performance figures and false promises of options trading success, the SEC complaint uncovers a deeper layer of financial betrayal regarding the pre-IPO investments. According to investigators, the defendants routinely diverted money provided by investors who believed they were purchasing pre-IPO securities directly into the fund’s brokerage accounts, completely without the investors’ knowledge or consent.
Once this capital reached the brokerage accounts, the vast majority of it was allegedly lost due to failed, high-risk options trades. Rather than safeguarding the assets or honoring the specific terms of the investment agreements, the defendants used the funds as a revolving door to prop up their failing trading strategies.
Furthermore, the complaint alleges that the scheme served as a vehicle for direct personal enrichment. Investigators claim that Dinelli misappropriated over $1 million of investor funds for his own personal use, while Frankel allegedly misappropriated more than $340,000.
The SEC’s formal legal action charges both Dinelli and Frankel with violating the core antifraud provisions of the federal securities laws, specifically the Securities Act of 1933 and the Securities Exchange Act of 1934. Additionally, Frankel faces individual charges for violating the Investment Advisers Act of 1940.
In its court filings, the regulatory agency is seeking permanent injunctions to bar the defendants from engaging in similar conduct in the future, alongside orders for disgorgement of ill-gotten gains with prejudgment interest and substantial civil monetary penalties.
The parallel criminal indictment unsealed by the U.S. Attorney’s Office for the Southern District of New York underscores the severity of the alleged wrongdoing, setting the stage for aggressive prosecution in federal court.
In the wake of these charges, federal regulators continue to urge caution among retail investors, particularly those considering high-risk or specialized market sectors. The SEC has highlighted educational resources available through official channels, noting that investors can learn more about the specific risks and regulatory red flags associated with investing in pre-IPO offerings by reviewing the Investor Alert published on Investor.gov.
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