6 minBusiness
SEC Accuses Private Fund Advisers of Spending Investor Cash on Strip Clubs and Shopping
The Securities and Exchange Commission filed two cases Wednesday alleging that private fund advisers raised millions from small investors by promising pre-IPO shares in OpenAI, SpaceX and other hot startups, then diverted the money to personal spending, options trading and fake account statements.
The Securities and Exchange Commission filed two civil cases Wednesday accusing private fund advisers of deceiving small investors who believed they were buying pre-IPO shares in OpenAI, SpaceX and other closely watched startups, then using the money for personal expenses, losing options trades and fabricated account statements.
In the first case, filed in federal court in Manhattan, the SEC sued Owen Meyer, 35, and his firm Meyer Global Management, alleging he raised at least $18.5 million from nearly 100 investors and misappropriated at least $1.27 million. The complaint claims Meyer set up 16 funds, each intended to buy stakes in a single pre-IPO company, most often SpaceX, the Elon Musk-led rocket maker, and OpenAI, the Sam Altman-led artificial intelligence company that remains private.
According to the SEC, Meyer told investors he had access to shares he did not actually hold. The agency says he set up a fund to invest in OpenAI but never obtained any OpenAI shares. The complaint also alleges he spent more than $18,000 in fund capital on personal entertainment at a strip club in April 2023, a night that stretched into the early morning hours.
The SEC claims Meyer tried to pay a $4,400 club bill at 4:41 a.m. with a debit card tied to Meyer Global Partners, but the card was declined twice. Minutes later, he transferred $10,000 from a fund account holding only investor money into the firm account, then paid the club $4,400 at 4:44 a.m. and another $3,650 at 5:30 a.m., according to the complaint. Receipts listed drinks, entertainment room rental fees and the name of Meyer's cocktail server, the SEC said.
That same night, the agency alleges, Meyer transferred another $10,000 from the same fund account, which held money raised to buy shares of online casino operator Playstar, directly to the strip club manager. Payment memo lines described the transfers as movie tickets, theatre performances and opera, the SEC said. The complaint states the club manager testified that Meyer visited alone and that the personal payments may have been gratuities or a workaround for card trouble. When SEC staff asked Meyer about the $10,000 transfer, he invoked his Fifth Amendment right against self-incrimination, according to the agency. Meyer did not respond to a request for comment.
The SEC characterized the Playstar transfer as an undisclosed interest-free loan because investors eventually got their money back. None of the companies whose shares were marketed — OpenAI, SpaceX, Playstar or others — is alleged to have engaged in wrongdoing.
In a second case announced the same day, the SEC and federal prosecutors charged former naval officer Christopher Dinelli, 34, and Jacob Frankel, 32, with defrauding 35 investors of more than $8.7 million through their firm, Beyond Alpha Ventures. Regulators allege their marketing falsely listed SpaceX and xAI as holdings when the funds never held investments in those companies.
Authorities claim the two pitched a trading fund promising 153 percent net returns plus pre-IPO stakes in crypto exchange Kraken and AI software firm SandboxAQ, chaired by former Google CEO Eric Schmidt. The SEC says the trading fund lost money in 13 of 14 months and that less than half of the nearly $6 million raised for pre-IPO deals went into them. Much of the rest went into options trading that was later lost, according to the complaint.
The agency alleges the pair sent fake statements to investors, including one that Dinelli hand-delivered to a Navy veteran couple claiming their $750,000 investment had grown to $4.1 million. The SEC says Dinelli misappropriated more than $1 million, including a $250,000 investment in a documentary film, while Frankel misappropriated more than $340,000, partly for trades in accounts he controlled and to pay his criminal defense lawyer.
In a telephone interview, Frankel denied the allegations, calling them completely false and saying the truth will come out in court. He said he terminated Dinelli two years ago and blamed him for the claims. The SEC complaint says Dinelli was Beyond Alpha Ventures' chairman until July 2025. Dinelli did not respond to a request for comment. Frankel was convicted in March 2026 of grand larceny and identity theft, and the SEC claims he hid that conviction from regulators in required disclosures.
The cases add to a series of SEC charges in recent months involving pre-IPO stakes, misappropriated investor funds and hidden fees. The agency has alleged that hundreds of investors were lured by claims that advisers could grant access to companies including Anduril, Anthropic and Perplexity as private valuations have soared. The enforcement wave follows SpaceX's blockbuster $1.8 trillion IPO in June, which intensified retail demand for shares of still-private firms.
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