He used the funds for personal expenses including his sons’ college tuitions.
The U.S. Justice Department has charged the founder of a cannabis payment processing startup with defrauding investors out of nearly $9 million.
United States Attorney David Metcalf said that David Dinenberg, 54, of Penn Wynne, Pennsylvania, is facing securities fraud and four counts of wire fraud.
Around 2013, Dinenberg established KindManage for the purpose of providing payment processing and related services to cannabis growers and distributors in states that had authorized, or were on the verge of authorizing, marijuana sales for medicinal and/or recreational purposes.
Authorities allege that, from about April 2014 to about April 2023, Dinenberg fraudulently induced dozens of people into buying shares of Kind and/or affiliated entities by making false representations about Kind’s revenues, valuations and business prospects. He’s also accused of misleading the investors into believing that their entire investments were being used for the benefit of Kind, when he embezzled more than a $500,000 from Kind and used it to pay for unauthorized personal expenditures, such as his sons’ college tuitions, rent on a luxurious California home and social club memberships.
In total, the information alleges, Dinenberg defrauded these investors out of more than $8.8 million.
According to the Philadelphia Inquirer, Dinenberg’s investors include singer John Legend; former tennis star Andy Roddick and his actress-model wife, Brooklyn Decker; and former Eagles running back Brian Westbrook.
Authorities also charged Dinenberg with using Kind to defraud the State of Rhode Island out of approximately $175,000 in fees paid by Rhode Island marijuana growers in 2020 and 2021. Instead of remitting most of the fees to the Rhode Island government, per the terms of his contract with the state, Dinenberg diverted the funds to his personal bank accounts and used them to pay for personal expenses.
Cannabis Entrepreneur David Dinenberg Named to Upstart 100 Inventors
Cannabis Entrepreneur David Dinenberg Named to Upstart 100 Inventors
January 13, 2016
Five for Friday: Medical marijuana entrepreneur David Dinenberg
https://www.phillyvoice.com/five-friday-medical-marijuana-entrepreneur-david-dinenberg/
He even managed to get into the New York Times