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Former Silicon Valley CEO Charged with $170M Fraud Scheme
A federal grand jury in California has indicted Abraham Shafi, 38, of Pepeekeo, Hawaii, on charges of wire fraud, securities fraud, and obstruction in connection with a scheme to defraud investors of $170 million.
According to court documents, Shafi, the CEO and Founder of Get Together, a privately held social media startup known as ‘IRL’, allegedly committed fraud in connection with the company’s 2021 ‘Series C’ funding round, which raised $170 million at a valuation of over $1 billion.
In seeking investment, Shafi told potential investors that IRL was spending only $50,000 a month in paid advertising and that user signups ‘were not incentivized or paid.’ However, Shafi had spent millions of dollars on paid advertising, including incentive advertising, a form of advertising in which users are provided a reward in a third-party app if they download IRL.
Shafi concealed IRL’s spending on incentive ads by having them invoiced to a third-party firm, ensuring that the nature and amount of the expense did not appear on IRL’s ledger. He continued to conceal the amount that IRL was spending in incentive ads after the Series C closed, instructing an IRL employee to create false invoices that listed the ad spending as being related to infrastructure, or ‘infra costs,’ and falsely telling his investors that the money spent on incentive ads had instead been used for other forms of advertising.
When the SEC opened an investigation into IRL, Shafi restored his cell phone to a previously saved backup, resulting in the deletion of records, and instructed other IRL employees to lie about his involvement in the scheme.
Shafi is charged with wire fraud, securities fraud, and obstruction. If convicted, he faces a maximum penalty of 20 years in prison on each count. A federal judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The FBI is investigating the case. Acting Assistant Chief Attorney Laura Connelly of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Sailaja Paidipaty and Evan Mateer for the Northern District of California are prosecuting the case.
An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Key Facts
- State: California
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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