Former IRL chief executive Abraham Shafi is trying to blow up the federal criminal case against him before it ever reaches a jury box, telling a San Francisco judge that the prosecution itself is tainted.
Today, Shafi asked a federal judge in the Northern District of California to dismiss the indictment, arguing that internal decisions by government lawyers, followed by later moves into private practice, created conflicts of interest that should knock out the case. Shafi has pleaded not guilty and remains under indictment.
In a filing today, his lawyers said the prosecution is compromised by conflicts involving a former lawyer from the U.S. Attorney's Office who later joined Gibson Dunn, a firm involved on the civil side of IRL's collapse, according to Reuters. The motion asks the court to toss counts of wire fraud, securities fraud and obstruction tied to IRL's 2021 Series C fundraising round.
A federal grand jury returned the indictment on Aug. 27, 2025, charging Shafi with wire fraud, securities fraud and obstruction and alleging he defrauded investors of about $170 million in the 2021 Series C at a valuation the government says topped $1 billion, according to the U.S. Attorney's Office. Prosecutors say Shafi hid millions in so-called incentive advertising payments and deleted records after the Securities and Exchange Commission opened an inquiry.
What the defense says
The new filing zeroes in on a former prosecutor identified in court as Jina Choi, described in the motion as having served as chief of the corporate and securities fraud section before leaving the U.S. Attorney's Office to join Gibson Dunn, according to Reuters. Defense lawyer Adam Fee of Weil, Gotshal & Manges argued that the sequence of government exits and private firm representations created at least the appearance of an improper connection that, in their view, should end the case outright.
Prosecutors' posture
The government's papers and the indictment list Assistant U.S. Attorneys Sailaja Paidipaty and Evan Mateer and note that the Justice Department's Criminal Division Fraud Section is also on the case. Prosecutors emphasize that an indictment is only a set of allegations that must be proved at trial. The charging document's penalty sheet shows each count carries up to 20 years in prison, and the FBI is still investigating, according to the Justice Department. In other words, the stakes for Shafi could hardly be higher if the case moves forward.
Backstory on IRL
IRL was once touted as a San Francisco area unicorn after hauling in major cash in 2021, only to implode in 2023 when scrutiny from its board and the media found that a huge share of its user accounts were automated or fake. The Securities and Exchange Commission separately sued Shafi in 2024, alleging he misled investors about growth and concealed incentive advertising practices, according to the San Francisco Chronicle. The SEC complaint lays out the regulator's version of how the numbers investors loved allegedly did not match reality.
What happens next
The judge will now have to decide whether the alleged conflicts are serious enough to justify the nuclear option of dismissal or whether the case should simply proceed toward trial with the current team. If the motion is denied, the government has indicated it will press ahead. Expect more written arguments and a hearing date as both sides dig in on whether the history of who worked where, and when, is enough to derail one of the Bay Area's splashier fraud cases in recent memory.
