Two Men Charged In Scheme To Defraud Investors Seeking To Invest In Pre-Ipo Companies And Trading Fund

 

Jacob Frankel and Christopher Dinelli Allegedly Obtained Over $8.7 Million From Investors Who Sought to Invest in Pre-IPO Companies and Hedge-Fund Trading Through Beyond Alpha Ventures LLC

United States Attorney for the Southern District of New York, Jamie McDonald, and the Acting Inspector in Charge of the New York Office of the U.S. Postal Inspection Service (“USPIS”), Darnell Edwards, announced the unsealing of an Indictment charging JACOB FRANKEL and CHRISTOPHER DINELLI with securities fraud, wire fraud, and conspiracy to commit securities fraud and wire fraud, and charging FRANKEL with investment adviser fraud and making false reports to the Securities and Exchange Commission.  FRANKEL was presented before U.S. Magistrate Judge Valerie Figuerdo in Manhattan federal court, and DINELLI was presented in the District of Maryland.  The case has been assigned to U.S. District Judge Jesse M. Furman.

“Prosecuting white collar crime is a top priority of this Office, and we are increasingly focusing on the pre-IPO markets as those markets grow,” said U.S. Attorney Jamie McDonald.  “This alleged fraud left investors, including U.S. Navy veterans, with millions in losses after they were promised access to pre-IPO opportunities and sophisticated trading strategies that did not exist.  As alleged, Jacob Frankel and Christopher Dinelli sold investors a fiction—exclusive investments, extraordinary returns, and professional management—while losing and diverting millions of dollars behind the scenes.  When the truth threatened to catch up with them, they allegedly responded with more lies, including fabricated account statements designed to make devastating losses look like enormous gains.”

“Beyond Alpha Ventures billed itself as a company investing in AI, technology, and cryptocurrency startups; however, as alleged, the founders’ real business was diverting investors’ money for their own personal gain,” said USPIS Acting Inspector in Charge Darnell Edwards.  “The U.S. Postal Inspection Service relentlessly investigates investment fraud to protect investors and the integrity of the U.S. financial system.  If you suspect investment fraud, please report it at USPIS.GOV.”

As alleged in the Indictment unsealed today in Manhattan federal court:

From 2023 through February 2026, FRANKEL and DINELLI perpetrated a scheme in which they fraudulently obtained over $8.7 million from approximately 35 investors in connection with their fund, Beyond Alpha Ventures LLC (“BAV”).  As part of that scheme, FRANKEL and DINELLI repeatedly lied to investors who sought to invest in pre-IPO companies by falsely telling some investors that they were purchasing direct shares in a pre-IPO company and falsely telling other investors that a third-party administrator would create a special purpose vehicle for their investment, hold the investors’ funds, and oversee the investment.  The defendants further oversubscribed one of the offerings and used the additional funds to, among other things, fund BAV’s margin calls and unprofitable options trading.  The defendants further lied to investors by claiming that BAV had previously invested in numerous other major companies before they went public, that BAV currently held interests in several pre-IPO companies, and that FRANKEL and DINELLI were personally investing in the two pre-IPO companies for which they solicited investments. 

FRANKEL and DINELLI further misled investors who sought to invest in BAV’s hedge-fund-style trading fund by falsely telling investors that BAV used a proprietary algorithm for its trading, had a long track record of producing exceptional returns, provided full liquidity, and real-time, verifiable access to the investors’ portfolios.  In fact, BAV had no proprietary algorithms, limited trading history, and suffered catastrophic losses due to FRANKEL’s reckless margin options trading, which included losing approximately $1.9 million on a single trade.  To hide the losses, the defendants created fabricated account statements and screenshots that purported to show investors’ double and triple-digit returns. 

FRANKEL further lied repeatedly on his Form ADV filings by failing to disclose that he had previously been charged and convicted of felony offenses and had previously been disciplined by the Financial Industry Regulatory Authority, including for failing to notify his prior employer of his criminal history.  

FRANKEL, 32, of Kinnelon, New Jersey, is charged with one count of securities fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison; one count of conspiracy to commit securities fraud, one count of investment adviser fraud, and one count of making false reports to the SEC, each of which carries a maximum sentence of five years in prison.

DINELLI, 34, of Frederick, Maryland, is charged with one count of securities fraud and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison; and one count of conspiracy to commit securities fraud and wire fraud, which carries a maximum sentence of five years in prison.

The maximum sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge.

Mr. McDonald praised the outstanding work of the USPIS.  Mr. McDonald further thanked the U.S. Securities and Exchange Commission, which has filed a parallel civil action.  

This case is being handled by the Office’s Securities and Commodities Fraud Task Force.  

1.  As the introductory phrase signifies, the entirety of the text of the Indictment and the description of the Indictment set forth herein constitutes only allegations and every fact described should be treated as an allegation.