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Opalesque Industry Update - The Securities and Exchange Commission charged Abraham Shafi, the founder and former CEO of Get Together Inc., a privately held social media startup known as "IRL," with defrauding investors by making false and misleading statements about the company's growth and concealing his and his fiancee's extensive use of company credit cards to pay for personal expenses.
According to the SEC's complaint, Shafi, who resides in Pepeekeo, Hawaii, raised about $170 million from investors by portraying IRL as a viral social media platform that organically attracted the vast majority of its purported 12 million users. In reality, IRL spent millions of dollars on advertisements that offered incentives to download the IRL app. Shafi hid those expenditures with offering documents that significantly understated the company's marketing expenses and by routing advertising platform payments through third parties. The SEC's complaint further alleges that Shafi failed to disclose to investors that he and his fiance, Barbara Woortmann, charged hundreds of thousands of dollars to IRL's business credit cards for personal expenses, including for clothing, home furnishings, and travel. "As we alleged, Shafi took advantage of investors' appetite for investments in the pre-IPO technology space and fraudulently raised approximately $170 million by lying about IRL's business practices," said Monique C. Winkler, Director of the SEC's San Francisco Regional Office. "Investors in this space should continue to be vigilant." 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 the federal securities laws and seeks permanent injunctive relief, civil money penalties, disgorgement with prejudgment interest, and an officer-and-director bar against Shafi. The complaint also names Woortmann as a relief defendant and seeks disgorgement with prejudgment interest for the personal expenses she charged to an IRL credit card that were ultimately paid with investor money. The SEC's investigation was conducted by Matthew G. Meyerhofer of the San Francisco Regional Office and Christopher B. Marshall. It was supervised by Christina N. Filipp and Jason H. Lee, both with the San Francisco Regional Office. The SEC's litigation will be led by Mr. Meyerhofer and Marc Katz. Article source - Opalesque is not responsible for the content of external internet sites |
Industry Updates
SEC charges founder of social media company "IRL" with $170m fraud
Thursday, August 01, 2024
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