PHILADELPHIA, PA — A Montgomery County man faces federal securities and wire fraud charges after prosecutors accused him of defrauding dozens of investors in a cannabis-related company out of more than $8.8 million and diverting company money to personal expenses.
David Dinenberg, 54, of Penn Wynne, was charged Tuesday by information with securities fraud and four counts of wire fraud, according to the U.S. Attorney’s Office for the Eastern District of Pennsylvania. The charges involve alleged schemes targeting investors and the state of Rhode Island.
Federal prosecutors said Dinenberg established KindManage LLC, also known as Kind, around 2013 to provide payment processing and related services to cannabis growers and distributors in states that had authorized or were preparing to authorize marijuana sales.
From approximately April 2014 through April 2023, Dinenberg allegedly induced dozens of people to purchase shares in Kind or affiliated entities by making false representations about the company’s revenue, valuation and business prospects, according to the charging document.
Prosecutors also allege Dinenberg misled investors into believing their entire investments would benefit the company while he diverted more than $500,000 from Kind for unauthorized personal expenses. The information alleges those expenses included his sons’ college tuition, rent on a luxury California home and social club memberships.
Federal prosecutors allege the investors lost more than $8.8 million.
The information also accuses Dinenberg of using Kind to defraud Rhode Island of approximately $175,000 in fees paid by marijuana growers in 2020 and 2021. Under the company’s contract with the state, most of the money was supposed to be remitted to the Rhode Island government, prosecutors said.
Instead, Dinenberg allegedly diverted the money into his personal bank accounts and used it for personal expenses.
If convicted, Dinenberg faces a maximum possible sentence of 20 years in prison on the securities fraud charge and 20 years on each wire fraud charge.
The FBI Philadelphia’s Newtown Square Resident Agency investigated the case. Assistant U.S. Attorney Mark Dubnoff is prosecuting it.
All suspects, arrestees, and defendants are presumed innocent until proven guilty in a court of law.
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