Regulation
SEC Charges Two Over $8.7 Million Fraud Targeting VeteransAdd Securities.io to your preferred sources on GoogleThe U.S. Securities and Exchange Commission announced charges on September 30, 2026, against Christopher Kenji Dinelli and Jacob David “Kobe” Frankel for allegedly orchestrating a fraud scheme that raised more than $8.7 million from 35 investors through their fund, Beyond Alpha Ventures LLC (BAV), and advisory firm, Beyond Equity LLC.
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York as case 26 Civ. 8564 and dated September 29, 2026, charges both defendants with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Frankel is additionally charged with violating Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8. The complaint, which demands a jury trial, seeks permanent injunctions, including bars on participating in any securities offering and on acting as or being associated with an investment adviser, broker or dealer, as well as disgorgement of ill-gotten gains with prejudgment interest and civil money penalties. The U.S. Attorney’s Office for the Southern District of New York has announced criminal charges against Dinelli and Frankel in a parallel action concerning the same conduct, according to the SEC.
According to the complaint, Dinelli, a former naval officer, solicited other Navy veterans and medical professionals affiliated with the U.S. Department of Veterans Affairs Clinic in Pensacola, Florida, where he was a patient and a member of his family was employed. Investors were told their money would be invested in the BAV fund, which was represented to have an options trading strategy, or in affiliated special purpose vehicles (SPVs) that purported to hold pre-IPO securities in two private companies, the SEC stated. “The bonds between service members are as strong, if not stronger, than in any other profession,” said Thomas P. Smith, Jr., Associate Director of the SEC’s New York Regional Office. “Through their alleged actions, the defendants took advantage of those relationships for greedy and self-serving purposes.”
Trading Fund Losses Behind the 153% Return Claim
A BAV marketing document titled “Trading Fund Overview 2024” that Frankel distributed to prospective investors claimed the fund had earned a 153% net return on investment over the prior four years and served more than 1,340 clients from over 17 countries, the complaint alleges. In fact, according to the complaint, the fund had fewer than 40 investors, nearly all of them in the United States, and by February 2025 it had lost 225% of net deposited funds. BAV’s website at times claimed a 144% year-to-date rate of return, more than $475 million raised from over 1,800 clients, and current investments in SpaceX (SPCX ) and xAI, all of which the complaint states were false.
The alleged performance figures contrasted with the fund’s trading record. Between June 2024 and July 2025, Frankel traded on margin in BAV’s four brokerage accounts, producing month-end losses in 13 of those 14 months, the complaint alleges. A single options trade in December 2024 lost $1.9 million and, after BAV failed to meet margin calls, became a debt that had grown to over $2 million by December 31, 2025. Total losses across the four accounts exceeded $2.8 million as of July 31, 2025; all four brokerage firms restricted BAV’s trading privileges, and BAV was completely unable to execute any trading strategy as of July 15, 2025.
To conceal the losses, the defendants provided investors with false account statements, the complaint alleges. In May 2025, Dinelli hand-delivered an altered April 2025 statement to a married couple who were Navy veterans, creating the appearance that their $750,000 investment had grown to $4.1 million. Frankel sent a California doctor a statement dated July 12, 2025, that falsely showed his $500,000 investment up 49.6% in a little over four months and valued at $747,980. A June 9, 2025 WhatsApp exchange quoted in the complaint shows Frankel and Dinelli discussing what the doctor had been told about his returns.
Pre-IPO SPV Raises and Alleged Misappropriation
Nearly $6 million of the $8.7 million raised came from promises of pre-IPO investments in SB Technology, Inc. (d/b/a SandboxAQ) and Payward, Inc. (d/b/a Kraken), including through two SPVs administered by a third party, the complaint alleges. Instead of routing funds to the SPV administrator, the defendants directed most of these investors to wire money to accounts the defendants controlled, commingling it with Trading Fund money, and less than half of the nearly $6 million was ultimately invested in pre-IPO securities. Some of the money was diverted to the fund’s brokerage accounts, where the vast majority was lost in failed options trades.
Between August 2024 and February 2026, the defendants raised over $4.2 million from 26 SandboxAQ investors, the complaint alleges. Only $1 million was invested in SandboxAQ, through an investment in a third-party private fund that owned SandboxAQ shares; only two investors sent money to the SPV administrator, and those funds were refunded as of February 2026. A total of $880,400 was returned to certain investors who requested it.
The complaint alleges that between March 2025 and February 2026, the defendants raised $2.5 million from 16 Kraken investors after misrepresenting that their funds would be invested in Kraken or through the SPV. Frankel arranged for BAV itself, rather than the SPV or the investors, to purchase 80,000 Kraken shares for $2 million from Kraken’s founder through a pre-IPO secondary trading platform, using at least $800,000 of commingled funds before any Kraken investor money arrived. On December 16, 2025, the SPV administrator’s Director of Deal Operations emailed Frankel that several investors “have not been admitted as members of the SPVs because, at your direction, they wired money directly to your fund.”
According to the complaint, a second marketing document, “Venture Fund Overview 2024,” listed SpaceX, xAI, Oxos and Streamex as current BAV investments and claimed $50 million in assets under management, $475 million in capital raised and more than 400 completed pre-IPO deals. Since its formation in June 2023, BAV had invested in only two pre-IPO deals, neither of which reached the IPO stage, and had raised less than $9 million, the complaint states.
The complaint further alleges that Dinelli misappropriated at least $1.08 million of the approximately $2.3 million that investors deposited at his direction into an account of Beyond Alpha Capital Management LLC (BACM) between October 2024 and April 2025, spending $250,000 on a personal documentary-film investment and transferring $800,000 to his personal accounts and accounts of other companies he controlled, including $300,000 sent overseas. Frankel withdrew approximately $730,000 of investor funds for his personal use, according to the complaint, against a maximum agreed 7% fee that would have equaled approximately $385,000. He transferred over $620,000 to personal bank and brokerage accounts, lost over $300,000 through personal trading, and paid at least $35,000 to his criminal defense attorney from a BAV account between April 2025 and March 2026.
Dinelli, 34, of Frederick, Maryland, served in the U.S. Navy from 2014 to 2023 and was BAV’s chairman until July 2025; he is owner, CEO and chairman of BACM, which, according to its registered agent, is owned by Dinelli and another Navy veteran who is also a BAV investor. The complaint also cites a September 8, 2024 social media message in which Dinelli told a prospective investor he had started his own hedge fund that was approved by the SEC; BAV was never approved by or registered with the Commission.
Frankel, 32, of Kinnelon, New Jersey, founded BAV, a Wyoming limited liability company formed in June 2023 that has never been registered with the SEC in any capacity. He was associated with several broker-dealers as a registered representative from approximately 2016 through 2023, holding Series 7 and 63 licenses, and in December 2023 agreed to a four-month FINRA suspension based on findings that included his failure to disclose his criminal history to his employer. Between approximately 2017 and 2020, Frankel was charged with four felony drug-related offenses, and on March 20, 2026, he was convicted following a jury trial in New York Supreme Criminal Court of grand larceny in the third degree and identity theft in the first degree. Between May 6, 2025, and June 16, 2026, he signed and filed six Forms ADV on behalf of BAV and Beyond Equity that falsely stated the advisers had no advisory affiliate who had been charged with or convicted of a felony, the complaint alleges.
Beyond Equity, a Delaware limited liability company formed in November 2024, has reported to the state of New York as an exempt reporting adviser since May 2025 and served BAV as its only advisory client; its June 2026 Form ADV reported BAV’s asset value as $1 million. A fourth entity, Beyond Alpha Capital Partners LLC, was formed in September 2024, with Frankel the sole member listed on its bank accounts.