Investors thought they were buying pre-IPO OpenAI and SpaceX shares. Their cash went to strip clubs, Bloomingdale’s, and shopping on Amazon, SEC alleges

The Securities and Exchange Commission is dropping the hammer on private fund advisers who allegedly mishandled millions in investor assets under the guise of granting them lucrative pre-IPO shares in coveted startups such as OpenAI, SpaceX, and others.

According to two separate cases announced on Wednesday, the SEC claims multiple fund advisers allegedly deceived mom-and-pop investors—including Navy veterans—about where the millions they thought they invested actually went. One adviser raised money for funds meant to hold OpenAI and SpaceX shares, while the other pair pitched investors on SandboxAQ and Kraken while falsely claiming to hold stakes in SpaceX and xAI. None of the actual companies or the executives who lead them are alleged to have engaged in wrongdoing.

The SEC has brought a series of charges related to pre-IPO stakes, misappropriated investor funds, and hidden fees in recent months, following SpaceX's blockbuster $1.8 trillion IPO in June. Other recent charges have alleged that hundreds of investors were lured in by claims private fund advisers could grant them access to companies including Anduril, Anthropic, Perplexity, and others as valuations have skyrocketed.

In an eye-popping case announced on Wednesday the SEC sued Owen Meyer, 35, and his firm, Meyer Global Management in federal Court in Manhattan, alleging Meyer raised at least $18.5 million from nearly 100 investors while misappropriating at least $1.27 million in client money along the way. What's more, the SEC claims Meyer spent more than $18,000 in fund capital for his "personal entertainment" at a strip club one night in April 2023 that spilled into the wee hours of the morning.

Meyer allegedly tried to pay a $4,400 bill to the club at 4:41 a.m. using a debit card associated with Meyer Global Partners, but it was declined twice, the SEC claims. Just minutes later, Meyer transferred $10,000 from a fund account containing only investor money to the Meyer Global Partners account. He then allegedly paid the club $4,400 at 4:44 a.m. and then another $3,650 at 5:30 a.m. for receipts that listed drinks, "entertainment room rental fees," and included the name of Meyer's cocktail server at the club, the SEC claims.

That same night, Meyer allegedly transferred $10,000 directly from the same fund account, which held investor money raised to buy shares of online casino operator Playstar. He transferred the money to the manager of the strip club, the SEC alleges. Memo lines on the payments listed "movie tickets and theatre performance," and "opera." The SEC claims the strip club manager testified that "Meyer visited the club alone, not with any business associates or friends, and that Meyer's payments to him personally may have been because Meyer was having difficulties paying with his own credit card, or as gratuity to him as manager," the complaint states.