$170 million fraud claims aimed at social media founder The Securities and Exchange Commission has levied a $170 million case against a social media company founder. The government watchdogs took the decision to investigate Abraham Shafi, the owner and...
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The Securities and Exchange Commission has levied a $170 million case against a social media company founder.
The government watchdogs took the decision to investigate Abraham Shafi, the owner and chief operating officer of Get Together Inc. The charges come at the individual for claims that he exaggerated the company's worth and for a litany of personal uses of company assets.
Get Together Inc CEO charged by SEC
Get Together Inc is also more commonly known in the public domain as the parent company of social media start-up IRL.
Shafi is being investigated by the SEC for inflating the company's stance as an organically grown social media entity. According to the SEC complaint, Shafti mislead investors that the base of it's social media following was generated from scratch.
The SEC found that this wasn't the case, and Shafti instead paid millions of dollars into aggressive advertising and incentives for people to download the app.
"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.
Shafti allegedly buried the advertising drive in the company books and through third party expenditure. He is also alleged to have charges hundreds of thousands of dollars to company credit cards for a lavish lifestyle.
His fiancée, Barbara Woortmann, is also complicit in the complaints that she used the company credit cards for "personal expenses, including for clothing, home furnishings, and travel."
The SEC filed the complaint in the U.S. District Court for the Northern District of California. The government entity charges Shafti 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."
His fiancée has been included in the charges as a relief defendant for their actions in spending company finances on themselves.
Image: Pixlr.
