WFCN –
An enormous $170 million fraud operation that misled investors over the company’s real growth has finally led to charges against the CEO from the SEC.
The SEC has announced that Abraham Shafi, the private social media business “IRL” (Get Together Inc.)’s founder and former CEO, has been charged with misleading investors.
Shafi, who lives in Pepeekeo, Hawaii, allegedly solicited almost $170 million from investors by falsely advertising IRL as a popular social media site that gained most of its 12 million users naturally. This, according to the SEC’s lawsuit.
Actually, the SEC claims that Shafi hidden the millions of dollars in marketing expenditures from investors, while IRL spent millions on ads that offered incentives to download the app.
Source – Franknez
In addition, the SEC claims that Shafi hid from investors the fact that he and his fiancee Barbara Woortmann spent hundreds of thousands of dollars on clothes, furniture, and vacation using IRL’s corporate credit cards.
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Shafi allegedly deceived the investors who gave IRL $170 million by making inaccurate promises about the business’s growth and hiding his large personal spending of company funds, according to the SEC.
Director of the SEC’s San Francisco Regional Office Monique C. Winkler stated, “As we alleged, Shafi fraudulently raised approximately $170 million by lying about IRL’s business practices,” referring to the company’s pre-IPO technology investments.
“Partners and investors in this field need to keep their wits about them.”
Shafi is being sued by the SEC in a federal securities law case that seeks an officer-and-director bar, disgorgement with prejudgment interest, civil monetary penalties, permanent injunctive relief, and charges that he violated the antifraud provisions of those laws. The lawsuit was filed in the U.S. District Court for the Northern District of California.
According to the newspaper, Woortmann is also named as a relief defendant in the complaint, which demands disgorgement with prejudgment interest for the personal costs she charged to an IRL credit card and which were reimbursed with investor money.