How Affinity Fraud Uses Trusted Relationships
Affinity fraud is a common fraud scheme that preys on strong relationships established through religious, ethnic, military, work and other associations. Scammers use these trusted relationships to lure investors, relying on the credibility they have built by association to make defrauding the investors easier. The U.S. Securities and Exchange Commission (SEC) on September 30 announced that they have charged two individuals with an affinity fraud scheme that defrauded $8.7 million from 35 investors, most of whom were military veterans or those who provide medical services to veterans.1
Who Is Behind the Alleged Investment Scheme?
The individuals named in the SEC complaint are Christopher Kenji Dinelli, age 34, from Frederick, Maryland, and Jacob David “Kobe” Frankel, age 32, of Kinnelon, New Jersey. Dinelli is owner and CEO of a New York, New York-based company, Beyond Alpha Ventures (BAV), LLC, and its former Chairman. He served in the U.S. Navy from 2014 to 2023. Frankel is the founder, owner and CEO of BAV. He was associated with several broker-dealers as a registered representative from 2016 through 2023 and held Series 7 and 63 securities licenses.2 The BAV website touts that the company was recognized as the 2025 ‘Hedge Fund to Watch of the Year’.3
False Investment Returns and Misleading Pre-IPO Claims
In the complaint the SEC alleges that “Dinelli, a former naval officer, targeted veterans as well as individuals who provide medical services to veterans, telling them and other investors that their money would be invested in the BAV fund that was represented to have an options trading strategy and/or affiliated special purpose vehicles that purported to hold pre-IPO securities in two private companies.”4 The complaint further alleges that the defendants misrepresented the past performance of the fund and pre-IPO investments, the amount of assets under management as well as BAV’s client base and current and past holdings.
The SEC complaint revealed that investors in BAV’s Trading Fund were promised what is generally thought of as a red flag, or reason for caution in investing — returns of up to 153% over the past four years. The defendants also told investors that the Fund served over 1,340 clients from over 17 countries. In reality, the Fund had fewer than 40 investors, mostly from the U.S., and in 13 months of trading from 2024 to 2025 the Fund lost value. The Fund actually had net investment losses of over 200% as of December 2025.5
How Investor Funds Were Allegedly Misused
Pre-IPO securities investor funds were used to fund brokerage accounts that lost money due to failed options trades according to the complaint. Investor funds were also diverted for personal use by Dinelli and Frankel with Dinelli reportedly fraudulently diverting $1 million of investor funds for such things as a personal investment in a documentary film and Frankel diverting $340,000 to fund personal trading and criminal attorney fees.
The SEC complaint seeks permanent injunctions, disgorgement with prejudgment interest and civil penalties against both defendants. The U.S. Attorney’s Office for the Southern District of New York is also pursuing criminal charges against the two defendants.
Investment Fraud Concerns? Speak with a Michigan Securities Attorney
If you’ve suffered financial losses and suspect that an investment adviser, broker, or financial professional misrepresented an opportunity or misused your funds, understanding your legal options is an important first step.
At The Law Offices of Peter C. Rageas, P.C. in Royal Oak, Michigan, we represent investors in securities fraud, broker misconduct, investment misrepresentation, and securities litigation matters. Our firm helps clients examine the circumstances behind their losses and determine whether legal action may be appropriate.
Contact our office today for a free consultation to discuss your investor rights and options.
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1, 4 SEC Charges Two Individuals with Orchestrating Fraud Scheme That Targeted Veterans, 9/30/2026
Link: https://www.sec.gov/newsroom/press-releases/2026-97-sec-charges-two-individuals-orchestrating-fraud-scheme-targeted-veterans
2, 5 SEC Complaint Case 1:26-cv-08564, 9/29/2026
Link: https://www.sec.gov/files/litigation/complaints/2026/comp-pr2026-97.pdf
3 BAV Website
Link: https://www.beyondalphaventures.com/