The SEC now charges a CEO for a whopping $170 million fraud scheme that tricked its investors about the company’s actual growth.
In its statement, the Securities and Exchange Commission (SEC) has charged Abraham Shafi, the founder and former CEO of the private social media startup “IRL” (Get Together Inc.), with defrauding investors.
According to the SEC’s complaint, Shafi, who resides in Pepeekeo, Hawaii, raised approximately $170 million from investors by misrepresenting IRL as a rapidly growing social media platform that organically attracted the majority of its claimed 12 million users.
In reality, the SEC alleges that IRL spent millions of dollars on advertisements that offered incentives to download the app, and Shafi concealed these marketing expenses from investors.
The SEC further alleges that Shafi failed to disclose to investors that he and his fiancée, Barbara Woortmann, used IRL’s business credit cards to pay for hundreds of thousands of dollars in personal expenses, including clothing, home furnishings, and travel.
By making false and misleading statements about the company’s growth and concealing the extensive personal use of company funds, the SEC claims that Shafi defrauded investors who provided the $170 million in funding to IRL.
“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, per the report.
Also Read: Short Seller Who Shorted GameStop Now Surrenders to Securities Fraud
Other SEC News Today
Trump now says he will fire SEC Chair Gary Gensler, after making an appearance at this year’s Bitcoin conference in Nashville, Tennessee.
In his address at the Bitcoin 2024 conference in Nashville, Tennessee, former President Donald Trump made a direct appeal to the cryptocurrency community.
He promised to take several actions if elected, which are aimed at addressing the concerns of the crypto industry.
Specifically, Trump stated that he would put an end to the “persecution” of the crypto sector, which he attributes to the current administration’s “crusade” against bitcoin.
He also pledged to remove the chair of the Securities and Exchange Commission (SEC), likely referring to the agency’s heightened scrutiny and enforcement actions against various crypto companies and activities.
“On day one, I will fire Gary Gensler,” Trump said to a massive roar from the roughly 5,000 people seated in the audience.
“I pledge to the bitcoin community, that the day I take the oath of office, Joe Biden and Kamala Harris’ anti-crypto crusade will be over,” said Trump.
Furthermore, Trump promised to “free” a convict who is viewed as a martyr within the cryptocurrency community.
This is likely a reference to the case of a prominent figure who has been convicted and imprisoned, but is seen by many in the crypto space as a victim of unjust persecution.
This appeal to the crypto community is part of his broader effort to rally support from this influential segment of the electorate ahead of the 2024 presidential election.
However, investors in the stock market communities have also scrutinized Gary Gensler for his inactivity in tackling stock market manipulation.
Particularly in his disengagement from the MMTLP scandal.
What are your thoughts on Trump’s promise to fire Gary Gensler?
Leave your thoughts below.
Also Read: South Korea Now Finds Banks Pursued Illegal Shorting Scheme
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