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The founder of the corporate behind the IRL social media app was charged with defrauding investors of $170 million within the firm’s 2021 funding spherical, the Department of Justice mentioned Wednesday.
A federal grand jury in Oakland federal court docket indicted Abraham Shafi, 38 of Hawaii, with wire fraud, securities fraud and obstruction in connection with the scheme, the DOJ mentioned.
Shafi was the CEO of Get Together, the guardian firm of IRL. The firm was valued at $1 billion after its 2021 Series C funding spherical. IRL, which shuttered in June 2023, was a platform for customers to arrange occasions and offline actions. It discovered some traction in 2018, rating amongst Apple’s prime social apps.
Shafi allegedly spent thousands and thousands on incentive promoting to spice up installs of the app main as much as the Series C whereas sustaining to investors that the corporate spent “very little” on getting new customers, the DOJ mentioned.
He then hid the expense by invoicing it to a different agency, the DOJ mentioned.
The indictment additionally alleges that the CEO and his fiancée used investor funds for “luxury hotel stays, luxury clothing, purchases from home furnishing retailers, thousands of dollars for art classes, and hundreds of thousands of dollars for SHAFI’s wedding, including payments for wedding guests’ airfare and luxury hotels.”
Shafi told CNBC in February 2018 that investors backed the corporate on its potential to compete with Facebook and Snapchat. Investors in IRL included Peter Thiel’s Founders Fund and the enterprise agency Floodgate.
Shafi’s co-founders at IRL included Scott Banister, the primary board member of PayPal and an early investor in Facebook, amongst others.
Only Shafi was named within the DOJ indictment. He faces a max of 20 years in jail on every depend, the DOJ mentioned.
Last 12 months, the Securities and Exchange Commission filed a civil lawsuit towards Shafi for a similar alleged scheme.
“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,” Monique Winkler, director of the SEC’s San Francisco Regional Office, mentioned in a launch on the time.
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