The Securities and Trade Fee is dropping the hammer on non-public fund advisers who allegedly mishandled tens of millions in investor property beneath the guise of granting them profitable pre-IPO shares in coveted startups similar to OpenAI, SpaceX, and others.
In accordance with two separate circumstances introduced on Wednesday, the SEC claims a number of fund advisers allegedly deceived mom-and-pop traders—together with Navy veterans—about the place the tens of millions they thought they invested truly went. One adviser raised cash for funds meant to carry OpenAI and SpaceX shares, whereas the opposite pair pitched traders on SandboxAQ and Kraken whereas falsely claiming to carry stakes in SpaceX and xAI. None of the particular firms or the executives who lead them are alleged to have engaged in wrongdoing.
The SEC has introduced a collection of fees associated to pre-IPO stakes, misappropriated investor funds, and hidden charges in latest months, following SpaceX’s blockbuster $1.8 trillion IPO in June. Different latest fees have alleged that a whole lot of traders have been lured in by claims non-public fund advisers might grant them entry to firms together with Anduril, Anthropic, Perplexity, and others as valuations have skyrocketed.
In an eye-popping case introduced on Wednesday the SEC sued Owen Meyer, 35, and his agency, Meyer International Administration in federal Court docket in Manhattan, alleging Meyer raised not less than $18.5 million from almost 100 traders whereas misappropriating not less than $1.27 million in consumer cash alongside the way in which. What’s extra, the SEC claims Meyer spent greater than $18,000 in fund capital for his “private leisure” at a strip membership one evening in April 2023 that spilled into the wee hours of the morning.
Meyer allegedly tried to pay a $4,400 invoice to the membership at 4:41 a.m. utilizing a debit card related to Meyer International Companions, but it surely was declined twice, the SEC claims. Simply minutes later, Meyer transferred $10,000 from a fund account containing solely investor cash to the Meyer International Companions account. He then allegedly paid the membership $4,400 at 4:44 a.m. after which one other $3,650 at 5:30 a.m. for receipts that listed drinks, “leisure room rental charges,” and included the title of Meyer’s cocktail server on the membership, the SEC claims.
That very same evening, Meyer allegedly transferred $10,000 instantly from the identical fund account, which held investor cash raised to purchase shares of on-line on line casino operator Playstar. He transferred the cash to the supervisor of the strip membership, the SEC alleges. Memo traces on the funds listed “film tickets and theatre efficiency,” and “opera.” The SEC claims the strip membership supervisor testified that “Meyer visited the membership alone, not with any enterprise associates or associates, and that Meyer’s funds to him personally might have been as a result of Meyer was having difficulties paying along with his personal bank card, or as gratuity to him as supervisor,” the grievance states.
When Meyer was requested by SEC workers in regards to the $10,000 switch from the fund account, Meyer invoked his Fifth Modification rights towards self-incrimination, the SEC mentioned. Meyer didn’t reply to a request for remark. The SEC characterised it as an undisclosed “interest-free mortgage” as a result of the Playstar traders finally received their a refund.
In a second case introduced on Wednesday, the SEC and federal prosecutors charged former naval officer Christopher Dinelli, 34, and Jacob Frankel, 32, with allegedly defrauding 35 traders of greater than $8.7 million via their agency, Past Alpha Ventures. Their advertising and marketing falsely listed SpaceX and xAI as holdings, the SEC claims, when the funds by no means held investments in these firms.
Authorities declare Dinelli and Frankel pitched traders on a buying and selling fund with “153%” web returns plus pre-IPO stakes in crypto trade Kraken, and AI software program agency SandboxAQ, chaired by former Google CEO Eric Schmidt. Not one of the corporations are alleged to have engaged in wrongdoing. The SEC claims the buying and selling fund misplaced cash in 13 of 14 months, and fewer than half the almost $6 million raised for pre-IPO offers went into them. A lot of the remainder went into choices buying and selling that was later misplaced, the grievance states. The 2 allegedly despatched pretend statements to traders, together with one which Dinelli allegedly “hand-delivered” to a Navy veteran couple saying their $750,000 funding had grown to $4.1 million.
The SEC says Dinelli allegedly misappropriated greater than $1 million, together with a $250,000 funding in a documentary movie, and Frankel allegedly misappropriated greater than $340,000, partly for trades in accounts he managed and to pay his prison protection lawyer.
In a phone interview, Frankel denied the SEC’s allegations, calling them “utterly false,” and mentioned the “reality will come out in court docket.” Frankel mentioned he terminated Dinelli “two years in the past,” and blamed him for the allegations. The SEC’s grievance says Dinelli was Past Alpha Ventures’ chairman till July 2025.
Dinelli didn’t reply to a request for remark. Frankel was convicted in March 2026 of grand larceny and identification theft. The SEC claims Frankel hid that conviction from regulators in his required disclosures.
The Mechanics
In each circumstances, regulators allege the fund advisers marketed themselves as gaining access to stakes in excessive profile non-public firms. All are alleged to have despatched traders pretend account statements and communications claiming their investments have been both protected and sound or rising quickly.
In Meyer’s case, the SEC claims he arrange 16 funds, every to purchase stakes in a single pre-IPO firm, most frequently Elon Musk-led SpaceX, along with Sam Altman-led OpenAI, which stays non-public.
In accordance with the SEC, Meyer arrange a fund to put money into OpenAI, however by no means received any OpenAI shares. Meyer testified {that a} deal to accumulate OpenAI property fell via in March 2024, but six traders wired almost $1.1 million in April and weren’t advised for about six months that there was no funding. The SEC claims Meyer paid himself about $168,000 in charges anyway, greater than triple what traders agreed to, and a few of it went to landscaping at his dwelling in Setauket, New York. Solely about $15,600 stays within the fund, the SEC acknowledged.
As for his SpaceX funds, Meyer advised traders in 2021 that a big buy in SpaceX property had closed despite the fact that the third-party fund that held the shares wouldn’t approve the switch, the grievance states. Meyer wound up allegedly misappropriating about $570,000, together with $100,000 for a private funding in an exotic-car firm and $220,000 despatched to his private checking account.
In 2025, when three different SpaceX funds have been liquidated, Meyer allegedly moved about $636,000 meant for traders into his private account. He allegedly spent hundreds on procuring at Bloomingdale’s and Amazon, and allegedly despatched $86,000 to his father, the grievance states. One other fund forfeited its complete SpaceX stake after Meyer allegedly did not pay a capital name for $46,000, or reply a lawsuit, the grievance states. About $13.1 million was paid again to traders after the liquidation, the SEC famous.
The day of the June 12 SpaceX IPO, Meyer emailed his traders in his SpaceX funds, together with the one which had misplaced its stake.
“This can be a dream that many people have adopted for years, and at the moment we now have the chance to take part in what I imagine might be probably the most vital firms of our technology,” Meyer wrote, in response to the grievance Meyer closed the word by telling them to “keep tuned” for updates on their distributions. The fund held no SpaceX shares to distribute, the SEC says. The SEC is looking for to bar Meyer from the trade, plus disgorgement and penalties.
Within the second case, the SEC claims Navy vet Dinelli allegedly recruited fellow veterans and medical workers at a Veterans Affairs clinic in Pensacola, Fla., the place he was a affected person, the grievance states. In the meantime, Frankel allegedly misplaced $2.8 million in margin buying and selling within the fund’s brokerage account, together with $1.9 million on a single choices commerce, the grievance states.
Prosecutors charged Dinelli and Frankel with securities fraud, wire fraud, and conspiracy. Frankel additionally faces funding adviser fraud and false-statement counts over SEC filings that allegedly hid his conviction and a Finra suspension.
