Abraham Shafi, the former CEO of the social media company Get Together, also known as "IRL", is now facing charges of wire fraud, securities fraud, and obstruction of justice. This indictment follows a federal investigation into a scheme that, according to prosecutors, was designed to mislead investors during a crucial funding round. The U.S. Attorney's Office for the Northern District of California announced that Shafi allegedly defrauded investors of $170 million, a staggering sum that has put this case in the spotlight.
The intricacies of the case reveal a complex web of deceit. Shafi, 38, of Pepeekeo, Hawaii, is accused of lying about the company's advertising expenses and user acquisition strategies during the Series C funding round in 2021. He claimed that IRL was spending a mere $50,000 a month on paid advertising, reassuring potential investors that, "[u]nlike other apps that spend aggressively to acquire new users, we spend very little," according to the statement released by the U.S Attorney's office. However, court documents reveal that Shafi had channeled millions into incentive advertising, an expenditure he went to great lengths to hide.
Shafi misled investors after the Series C investment, which boosted IRL's valuation to over $1 billion. He instructed employees to falsify invoices, repackaging ad spending as infrastructure costs. This misinformation campaign persisted even amidst an SEC investigation, during which Shafi allegedly deleted records from his cell phone and directed others at IRL to fabricate their testimonies.
The potential punishment matches the gravity of the allegations. Shafi faces up to 20 years in prison for each charge if convicted. The announcement by Acting Assistant Attorney General Matthew R. Galeotti and FBI Special Agent in Charge Sanjay Virmani is a sharp reminder that Silicon Valley is not immune to the same financial scrutiny faced by other sectors. The case is under active investigation by the FBI, with Assistant U.S. Attorneys Sailaja Paidipaty and Evan Mateer for the Northern District of California leading the prosecution alongside Acting Assistant Chief Attorney Laura Connelly of the Criminal Division’s Fraud Section.
