The statement showed a fortune. The separate account did not exist.

In May 2025, the SEC says, Dinelli hand-delivered an altered brokerage statement to a married couple who were Navy veterans. It appeared to show that their $750,000 trading-fund investment had become $4.1 million.

According to the complaint, the couple did not have the separate brokerage account depicted in the statement. Their money had been pooled with funds from other investors. At the end of April 2025, the SEC alleges, the trading operation’s cumulative losses stood at approximately 166% after additional investor money had been transferred into brokerage accounts.

Losses could exceed 100% because the fund traded on margin. In plain language, borrowed exposure allowed a failed trade to consume deposited money and create debt beyond it. The complaint says one options trade produced a $1.9 million loss in December 2024. With unpaid margin obligations and interest, the related debt had grown to more than $2 million by the end of 2025.

The altered statement was one alleged part of a larger pattern: spectacular returns in the pitch, repeated losses in the brokerage accounts and investor reports that concealed the gap.

The pitch ran in the opposite direction from the trading record

Beyond Alpha described its strategy as using technology, artificial intelligence and sophisticated options trades to generate lucrative returns. The SEC says the numbers presented to prospective investors had little relationship to the operation’s history.

From June 2024 through July 2025, Frankel allegedly traded on margin in four Beyond Alpha brokerage accounts. Thirteen of those 14 months ended with losses. By July 31, 2025, total trading losses exceeded $2.8 million, and every brokerage firm involved had restricted Beyond Alpha’s trading privileges. The operation was allegedly unable to execute any trading strategy at all as of July 15.

“Before we lose any more money trading, we should safeguard it . . . . That’s our fiduciary duty to our investors.”WhatsApp message attributed to Dinelli on June 23, 2025, as quoted in the SEC complaint

The message records concern about continued losses. It does not, by itself, establish every allegation concerning knowledge or responsibility. The SEC relies on a broader record that includes account ownership, messages, marketing materials, wire instructions and allegedly false investor statements.

Where pre-IPO money allegedly went

Special purpose vehicles, or SPVs, are entities created to hold a specific asset or investment. Investors were told that third-party-administered SPVs would facilitate purchases of private shares in SandboxAQ and Kraken. The SEC alleges that most investors were instead instructed to wire money into bank accounts controlled by Dinelli or Frankel.

SandboxAQ

Dinelli and Frankel allegedly raised more than $4.2 million from 26 investors for SandboxAQ between August 2024 and February 2026. The complaint says only $1 million was invested in an outside private fund that owned SandboxAQ shares. Those interests were acquired for Beyond Alpha, not for the promised SPV or in individual investors’ names.

The SEC says only two SandboxAQ investors initially sent money to the administrator, and their funds were later refunded. Most investors sent money to Beyond Alpha or Beyond Alpha Capital Management accounts. A total of $880,400 was returned to certain investors at their request, according to the filing.

Kraken

The complaint says $2.5 million was raised from 16 investors for Kraken between March 2025 and February 2026. Frankel allegedly used $1.2 million from those investors, plus at least $800,000 already held in a commingled Beyond Alpha account, to buy 80,000 Kraken shares for $2 million.

The shares were allegedly purchased in Beyond Alpha’s name, not for the Kraken SPV or the individual investors. The SEC says this created a risk that promised investor interests would have to be divided with other Beyond Alpha investors.

The fundraising traveled through networks of trust

Dinelli served in the Navy from 2014 to 2023. The SEC says he solicited fellow veterans and medical professionals connected to a Department of Veterans Affairs clinic in Pensacola, Florida, where he was a patient and a family member worked.

One former Navy colleague was allegedly told that the fund was approved by the SEC and that current clients were up 140%. Beyond Alpha was never registered with the SEC, according to the complaint, and its brokerage accounts had already suffered a cumulative net investment loss of 60% before that pitch.

A Navy veteran who treated Dinelli at the VA clinic invested $1.3 million in eight installments across the trading fund, SandboxAQ and Kraken. The SEC says Dinelli promised the investor pre-IPO shares, predicted a return of 36 times the SandboxAQ investment and claimed he would contribute $750,000 personally. The complaint alleges that Dinelli made no such personal investment.

A California doctor invested $1 million after receiving claims about regulatory compliance, online portfolio access and returns of 375% a year. Four months after the doctor’s $500,000 trading-fund investment, Frankel allegedly sent a statement valuing it at $747,980. The SEC says the relevant brokerage account had consistently lost money.

These examples illustrate the human stakes without establishing the investors’ final losses. The supplied complaint does not calculate how much each investor ultimately recovered or may still recover.

At least $1.3 million allegedly became personal money

The SEC accuses both men of taking investor funds for themselves. Its combined allegation is at least $1.3 million, although the complaint describes different transfers, withdrawals and fee calculations within that total.

Fee language varied among the documents described in the complaint, including a provision in some SPV agreements that contemplated holding back ten years of management fees. The SEC says that language conflicted with other materials signed by investors and Frankel. The court will have to assess the documents, the transactions and the legal significance of those differences.

The paper trail allegedly kept the illusion intact

The SEC describes investor statements, Schedule K-1 tax forms, marketing decks, subscription agreements and regulatory filings that allegedly portrayed investments differently from the way money was handled.

• June 2024Margin trading began in Beyond Alpha brokerage accounts.
• December 2024A single options trade allegedly produced a $1.9 million loss and a margin debt.
• February and March 2025Marketing materials circulated claims of a 153% return, more than 1,340 clients and hundreds of pre-IPO deals.
• June 23, 2025Dinelli sent the message about safeguarding money before more was lost.
• July 15, 2025The SEC says brokerage restrictions left Beyond Alpha completely unable to trade.
• December 16, 2025The SPV administrator told Frankel that multiple investors had never been admitted to the vehicles they expected to join.
• September 29, 2026The SEC filed its civil complaint against Dinelli and Frankel.

The SEC separately alleges that Frankel filed six Forms ADV for Beyond Alpha and Beyond Equity between May 2025 and June 2026 with false answers about felony charges, a felony conviction and regulatory discipline. The complaint states that Frankel had accepted a four-month FINRA suspension in December 2023 and was convicted of grand larceny and identity theft in March 2026.

What the SEC wants the court to do

The complaint accuses both men of violating federal antifraud provisions governing securities. It also brings investment-adviser fraud claims against Frankel. These are civil claims, and the SEC demanded a jury trial.

The agency asks the court to permanently bar Dinelli and Frankel from violating the cited laws, participating in securities offerings through controlled entities and working as or with investment advisers, brokers or dealers. The requested relief would still allow them to trade securities in their own personal accounts.

The SEC also seeks disgorgement of alleged ill-gotten gains, prejudgment interest and civil monetary penalties. The filing does not specify a final dollar amount for those remedies, and the supplied record contains no judgment granting them.

What remains unknown

The complaint describes more than a series of losing trades. If proven, its central allegation is that investor confidence was first obtained with false performance claims and then preserved with statements that hid how funds had been pooled, redirected or spent. The unresolved practical question is how much of the $8.7 million can still be traced and returned to the people who supplied it.