Federal prosecutors have charged the founder of a marijuana industry payment-processing company with securities fraud and wire fraud, accusing him of defrauding dozens of investors out of more than $8.8 million and diverting fees owed to Rhode Island marijuana regulators.
The U.S. Attorney’s Office for the Eastern District of Pennsylvania announced Tuesday that David Dinenberg, 54, of Penn Wynne, Pennsylvania, was charged by information with one count of securities fraud and four counts of wire fraud.
Dinenberg established KindManage, LLC, also known as Kind, around 2013 to provide payment processing and related services to marijuana growers and distributors in states that had legalized or were preparing to legalize medical or recreational marijuana sales.
Federal prosecutors allege that from approximately April 2014 through April 2023, Dinenberg induced dozens of people to invest in Kind and affiliated companies by making false representations about the company’s revenue, valuation and business prospects.
Authorities also allege that Dinenberg misled investors into believing their money was being used entirely for the company while he diverted more than $500,000 for personal expenses. Prosecutors say those expenses included his sons’ college tuition, rent for a luxury California home and social club memberships.
In total, prosecutors allege that investors were defrauded out of more than $8.8 million.
The federal charges also detail a separate alleged scheme involving Rhode Island’s marijuana industry.
According to prosecutors, Kind collected fees from Rhode Island marijuana growers in 2020 and 2021 under a contract with the state. Dinenberg allegedly failed to remit most of that money to the state as required and instead diverted approximately $175,000 into his personal bank accounts for personal expenses.
If convicted, Dinenberg faces a maximum possible sentence of 20 years in prison for the securities fraud charge and 20 years for each wire fraud charge.
The case was investigated by the Federal Bureau of Investigation’s Philadelphia Newtown Square Resident Agency and is being prosecuted by Assistant United States Attorney Mark Dubnoff.
The charges are allegations, and Dinenberg is presumed innocent unless and until proven guilty.
