The U.S. Securities and Exchange Commission (SEC) has charged Abraham Shafi, the founder and former CEO of the social media startup Get Together Inc. also known as ‘IRL’. He has been charged with defrauding investors by providing wrong information about the company’s growth and using of company funds discreetly. Shafi raised $170 million from investors by showcasing IRL as a fast-growing social media platform.
Allegations of Fraud
According to the SEC’s complaint, Shafi provided misleading information that an organic user base of 12 million existed on the social media platform. The truth is the company spent millions on advertisements offering incentives to download the app. Shafi concealed these marketing expenses through understated offering documents and routed payments through third parties.
Additionally, Shafi has also been accused of hiding that he and his fiancée used IRL‘s business credit cards to cover personal expenses such as clothing, home furnishings, and travel worth hundreds of thousands of dollars.
Regulatory Response
The SEC’s complaint, filed in the U.S. District Court for the Northern District of California, charges Shafi with violating the antifraud provisions of federal securities laws. The SEC seeks permanent injunctive relief, civil money penalties, disgorgement with prejudgment interest, and a bar against Shafi serving as an officer or director of IRL. Woortmann is named as a relief defendant, is also charged with disgorgement of personal expenses that she charged to the IRL credit card that were paid using investor funds.
