The U.S. Securities and Exchange Commission this week revealed details of two cases involving alleged phantom pre-IPO shares of SpaceX, OpenAI, and other sought-after startups. According to the regulator, scores of mom-and-pop investors, including some Navy veterans, were among the victims of fund advisers who claimed to be investing in pre-IPO shares of the startups but, the SEC alleges, never actually bought or owned shares of any of the companies.

The cases arrive at a moment when demand for pre-IPO shares is greater than ever. With AI companies now moving toward record-setting IPOs at valuations in the trillions of dollars, the opportunity for deceit in the market for private shares has grown alongside it — a dynamic Fortune has documented in its previous reporting on the swindles and mischief retail investors can face in the secondaries market. Unlike public stocks, shares in private companies trade through negotiated deals and pooled funds rather than on an exchange, with no public price quotes or regular company disclosures to check against — which can leave buyers leaning heavily on the documents and assurances an adviser provides.

In the first case, the SEC alleges the funds were used for everything from money-losing options trades to shopping sprees at Bloomingdale's and on Amazon, as Fortune's Amanda Gerut reports. In one particularly seedy episode, accused fund adviser Owen Meyer allegedly spent $18,000 of fund capital on “personal entertainment” at a strip club. The SEC claims Meyer 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.

“Just minutes, 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.”

In the second case, the SEC charged two men with defrauding 35 investors of more than $8.7 million through their firm, Beyond Alpha Ventures. According to the complaint, the two partners pitched investors on a trading fund with 153% net returns plus pre-IPO stakes in crypto exchange Kraken and AI software firm SandboxAQ. The SEC claims the trading fund lost money in 13 of 14 months, and less than half of the nearly $6 million raised for pre-IPO deals went into them; much of the rest went into options trading that was later lost — a record at odds with the performance the partners had advertised. The two also allegedly sent fake statements to investors, including one “hand-delivered” to a Navy veteran couple saying their $750,000 investment had grown to $4.1 million.

One of the partners, reached by Fortune, called the allegations “completely false.” The other partner, as well as Meyer, did not respond to requests for comment. Both cases arrived as civil enforcement complaints — at this stage, allegations that the defendants can contest in court or resolve through a settlement.

Beyond their particulars, the cases are a reminder that even as attention focuses on the novel risks of AI technology, the world remains full of old-fashioned dangers.

The full story, including further details of the SEC's allegations, was reported by Amanda Gerut for Fortune. This article originally appeared on Fortune.com.