By Federal Fraud Charges Filed
David Dinenberg, a Lower Merion businessman and founder of the marijuana payment-processing company Kind Financial, was charged by federal prosecutors Tuesday with five counts of fraud. The charges were filed in Philadelphia federal court.
Prosecutors say Dinenberg raised $9 million from more than 50 Main Line, pro sports, and Hollywood investors. The U.S. Attorney also called on Dinenberg to forfeit the $9 million prosecutors contend he had raised from investors by fraud.
According to the charges, Dinenberg “fraudulently induced dozens of people into buying shares of Kind” by supplying false sales and business information. Prosecutors say he misled investors into believing their entire investments were being used for the company, not “diverted” for his personal use.
Dinenberg did not return calls seeking comment. Investors had spoken to federal investigators before the charges were filed.
Investor Lindy Snider and others who had tried to keep the company going after Dinenberg left in 2023 said Wednesday that they had no advance notice of the criminal charges.
Alleged Misuse of Funds
Prosecutors allege Dinenberg “embezzled” more than $750,000 to pay for “unauthorized personal expenditures.” Those included family members’ school tuition, a luxury California rental home, and country club memberships.
Dinenberg is also accused of stealing $175,000 from Rhode Island, which had hired Kind to collect cannabis fees from growers. Prosecutors say he was supposed to forward that money to the state, less a small transaction payment, but began keeping the fees and reported money that should have gone to the state as company revenue.
Prosecutors also say Dinenberg stopped paying his lawyers and stopped paying Kind employees while keeping the tax and Social Security deductions he had withheld for them.
He issued glossy investor documents projecting sales of under $500,000 in 2016 would zoom to over $10 million in 2017 and $40 million in 2018. Prosecutors allege there was “no factual basis” for the unaudited financial reports, their “false” revenue data, and baseless projections.
Confronted by an employee, Dinenberg admitted he’d stolen money but claimed the total was $80,000, according to prosecutors.
Company Background and Investors
Dinenberg started Kind in 2012 to process cannabis transactions that were legal in some states but prohibited under federal law. The legal complexity discouraged national banks from working with cannabis businesses but created what Dinenberg persuaded investors was an opportunity.
He worked his networks of friends and business contacts to raise money from singer John Legend; former tennis star Andy Roddick and his actress-model wife, Brooklyn Decker; former Sixers manager Billy King; former Eagles star Brian Westbrook; investor Lindy Snider, whose family once owned the Flyers; and dozens more, according to investor lists.
In 2015, Kind acquired cannabis-farm payments software from Colorado-based Agrisoft Development Group. That relationship helped Kind land a software development partnership with Microsoft that won national media coverage, and Kind then won the Rhode Island contract.
