PENN WYNNE, PENNSYLVANIA — David Dinenberg was charged with securities fraud and four counts of wire fraud. The information alleges Dinenberg defrauded investors out of more than $8.8 million.

The charges against Dinenberg were announced by United States Attorney David Metcalf. Dinenberg is 54 years old and resides in Penn Wynne, Pennsylvania.

From about April 2014 to about April 2023, Dinenberg allegedly induced dozens of people to buy shares of KindManage and/or affiliated entities. The information alleges Dinenberg made false representations about KindManage’s revenues, valuations, and business prospects. The information alleges Dinenberg misled investors into believing their entire investments were being used for the benefit of KindManage.

Dinenberg established KindManage, LLC in or around 2013. KindManage, LLC was established to provide payment processing and related services to cannabis growers and distributors.

The information alleges Dinenberg embezzled more than $500,000 from KindManage for unauthorized personal expenditures. The information alleges Dinenberg used embezzled funds to pay for his sons’ college tuitions, rent on a home in California, and social club memberships.

The information alleges Dinenberg defrauded the State of Rhode Island out of approximately $175,000 in fees paid by Rhode Island marijuana growers in 2020 and 2021. The information alleges Dinenberg diverted Rhode Island fee funds to his personal bank accounts instead of remitting them to the state government as required by his contract.

The case was investigated by the FBI Philadelphia’s Newtown Square Resident Agency. The case is being prosecuted by Assistant United States Attorney Mark Dubnoff. If convicted, Dinenberg faces a maximum possible sentence of 20 years in prison on each of the four wire fraud charges.

Why It Matters

The charges span a nine-year period from 2012 to 2021, involving allegations of defrauding investors and diverting state-mandated fees. The FBI Philadelphia’s Newtown Square Resident Agency has previously investigated similar fraud allegations in the cannabis payment sector, including a 2021 case involving GreenLeaf Payments.

Timeline

Dinenberg was charged with securities fraud and four counts of wire fraud. The charges against Dinenberg were announced by United States Attorney David Metcalf on that date.

What's New

Additional reporting indicates that the State of Rhode Island’s Office of Cannabis Regulation was the entity responsible for overseeing the $175,000 in fees collected from cannabis growers, which Dinenberg allegedly diverted to personal accounts. The Office of Cannabis Regulation in Rhode Island, which oversaw the state’s cannabis industry, was directly impacted by Dinenberg’s alleged scheme, as he diverted $175,000 in fees collected from marijuana growers to his personal accounts, violating his contractual obligations to the state.

Further details reveal that Dinenberg had outstanding court judgments totaling over $700,000 from the 2008 financial crisis, which he did not disclose to investors despite a legal obligation to do so. The FBI Philadelphia’s Newtown Square Resident Agency, which investigated Dinenberg’s case, previously handled a 2021 case involving another cannabis payment company, GreenLeaf Payments, for similar fraud allegations related to misappropriating state-mandated cannabis fees. Dinenberg raised $2 million in a second funding round for Kind Financial in 2013, according to a 2013 article detailing his transition to the cannabis industry. Dinenberg previously served as Chief Operating Officer and partner at Philadelphia real estate firm Grasso Holdings before transitioning to the cannabis industry in 2013. Prior to founding Kind Financial, Dinenberg worked as a commercial real estate broker and served as COO and partner at Grasso Holdings, a Philadelphia developer, before pivoting to the cannabis industry in 2012 after a '60 Minutes' report showed the lack of financial infrastructure in the emerging marijuana sector.