IRL founder Abraham Shafi charged with defrauding investors of $170 million

The man who once pitched IRL as the next big social app to rival Facebook and Snapchat is now facing the fight of his life in federal court. Abraham Shafi, the founder and former CEO of Get Together, the parent company behind IRL, has been indicted by the Department of Justice on charges of defrauding investors out of $170 million. If convicted, Shafi faces up to 20 years in prison on each count.

A federal grand jury in Oakland charged the 38-year-old with wire fraud, securities fraud, and obstruction. Prosecutors allege Shafi misled backers about IRL’s growth while secretly burning through millions on advertising campaigns and personal luxuries. At the height of the hype in 2021, the company was valued at $1 billion following its Series C round, with investors that included Peter Thiel’s Founders Fund and Floodgate.

DOJ: IRL Founder Abraham Shafi Defrauded Investors of $170M During $1B Startup Boom

According to the DOJ, Shafi told investors the company spent “very little” to acquire new users. Behind the scenes, prosecutors say he funneled millions into incentive advertising to pump up install numbers, later concealing the expense by invoicing another firm.

“A federal grand jury in the Northern District of California returned an indictment charging a Hawaii man with wire fraud, securities fraud, and obstruction in connection with a scheme to defraud investors of $170 million as the CEO and Founder of the social media company Get Together, a privately held social media startup known as “IRL,” the Department of Justice said in a news release.

The indictment goes further, accusing Shafi of treating investor money as a personal piggy bank. Court filings describe payments 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.”

“According to court documents, Abraham Shafi, 38, of Pepeekeo, Hawaii, allegedly committed fraud in connection with Get Together’s 2021 “Series C” funding round, which raised $170 million at a valuation of over $1 billion. In seeking investment, Shafi told potential investors that IRL was spending only $50,000 a month in paid advertising and that user signups “were not incentivized or paid.””

IRL itself had a short but eventful run. Launched in 2018 as a way to help people organize events and activities offline, it climbed Apple’s charts and briefly looked like a breakout success. By June 2023, the app had shut down, undone by internal turmoil and questions about inflated user numbers.

In a 2018 interview with CNBC, Shafi said investors were betting on IRL’s potential to take on Facebook and Snapchat. Meanwhile, Shafi’s co-founders once included high-profile names like Scott Banister, PayPal’s first board member and an early Facebook investor. But only Shafi is named in the DOJ indictment. If convicted, he faces up to 20 years in prison on each count.

“Shafi is charged with wire fraud, securities fraud, and obstruction. If convicted, he faces a maximum penalty of 20 years in prison on each count. A federal judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.”

The criminal case adds to the mounting legal trouble. Last year, the Securities and Exchange Commission (SEC) filed a civil lawsuit accusing him of orchestrating the same scheme. At the time, Monique Winkler, director of the SEC’s San Francisco office, said: “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.”

For a startup once valued in the unicorn club, the fall has been swift. What was pitched as Silicon Valley’s next social contender now ends as another cautionary tale of hype, capital, and betrayal.