The Securities and Exchange Commission on Sept. 30 charged two men with running a fraud that targeted veterans, alleging that Christopher Kenji Dinelli, a former naval officer, and Jacob David “Kobe” Frankel raised $8.7 million from 35 investors. The money came from veterans and the providers who treat them, according to the agency.
These are charges, not findings. Neither man has been found liable or convicted of anything, and both are presumed to have done nothing wrong unless and until a court decides otherwise.
What the SEC says Dinelli and Frankel promised
According to the SEC’s release 2026-97, the defendants told investors their money would go into a fund run through Beyond Alpha Ventures LLC, using an options trading strategy and affiliated special purpose vehicles that purported to hold pre-IPO securities in two private companies. Pre-IPO shares are stock in a company that has not yet listed publicly, a category that is hard for ordinary investors to verify and that fraudsters often use as bait.
The agency describes Dinelli as a former naval officer and says the pitch was aimed at veterans and the medical service providers who work with them. In all, 35 investors put in $8.7 million. The release also names Beyond Equity LLC, an advisory firm, among the entities involved, and cites a document called the “Trading Fund Overview 2024,” which the SEC says advertised returns of up to 153%.
Where the SEC says the money went
The SEC alleges that the pre-IPO promise was not how the money was used. Instead, investor funds were routed into the fund’s brokerage accounts, where the agency says the vast majority was lost on failed options trades.
Separately from those trading losses, the SEC alleges that both defendants took investor money for themselves. It says Dinelli misappropriated more than $1 million and Frankel misappropriated more than $340,000. Those figures are allegations in the complaint, and the defendants will have the opportunity to answer them in court.
The legal case and what comes next
The SEC filed its complaint in the U.S. District Court for the Southern District of New York. It charges both men with violating the antifraud provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. Frankel is also charged under the Investment Advisers Act of 1940. The agency seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and civil penalties.
Disgorgement, one of the remedies the SEC seeks, is a court-ordered repayment of profits a defendant is found to have gained from a violation, and prejudgment interest is added to it. Civil penalties are fines on top of that. All of these remedies are requests in the complaint. A judge would decide whether any apply only after the claims are litigated or resolved, and the release reports no ruling on any of them as of its publication.
The U.S. Attorney’s Office for the Southern District of New York has filed parallel criminal charges. A civil complaint and a criminal case move on separate tracks, and a charge in either one is an accusation that the government must prove.
Thomas P. Smith Jr., Associate Director of the SEC’s New York Regional Office, framed the case around the trust that the scheme allegedly exploited. “The bonds between service members are as strong, if not stronger, than in any other profession,” Smith said in the agency’s announcement.
Why the veteran angle matters for savers
The release describes what is known as affinity fraud, in which a pitch travels through a community whose members trust one another, here the military and the health providers who serve it. A shared background lowers a prospective investor’s guard, and that is the lever the SEC says was pulled. The money at stake in this case was investment capital that investors expected to grow, and the agency says most of it was lost to trading.
The case also followed a pattern the SEC highlighted a day earlier. Its release 2026-95 described fraud schemes totaling at least $15 million that used WhatsApp and other platforms, a reminder that the pitches reach people through many channels.
The SEC’s release does not say how the defendants found or contacted the 35 investors, and nothing in it ties this case to any data broker. The agency’s press release index confirms the Sept. 30 date for the action.
Where a pre-IPO pitch aimed at veterans can find its audience
The SEC’s release does not say how the defendants reached investors. In general, though, phone numbers, email addresses, military affiliations and professional lists can end up in the databases of data brokers and people-search sites, which is one way a targeted pitch can find a particular group. Incogni asks those brokers and people-search sites to remove a subscriber’s personal information, sends the removal requests on the subscriber’s behalf and keeps re-sending them, and shows the status of each request in the account. Less personal data on broker lists can mean fewer scam calls, texts and emails.
See how Incogni sends removal requests to data brokers on a subscriber’s behalf → We may earn a commission if you buy through this link.
This article was produced with AI assistance and checked against the primary sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
