MANILA, Philippines – A former Snapchat employeee sued the company for allegedly citing false numbers to boost its valuation for its upcoming initial public offering (IPO). The ex-employee, Anthony Pompliano, filed the lawsuit on Wednesday, January 4, US time, at the L.A. County Superior Court. 

The Hollywood Reporter (THR), which first obtained the court filing, said that Pomplano cited “the avarice of the small executives at the helm” and his refusal to participate in the company’s culture of misrepresentation led to his being fired.

He claimed that Snapchat (officially known as Snap Inc now) was inflating its user numbers in pursuit of a big IPO, which experts predict could be in March. 

Yahoo! reported that Pompliano also claims that Snapchat’s chief security officer (CSO) Imran Khan regularly falsified numbers to its investors. Pompliano specified one investor who had allegedly been victimized: ecommerce giant Alibaba Group Holding Ltd which dangled and eventually made a $200-million investment in Snapchat. 

Snapchat has not been known as a company that’s transparent about their numbers. But several Bloomberg reports estimated in mid-2016 that the social network enjoys 10 billion video views a day and about 150 million users overall – a majority of which are coming from the 25-and-under crowd.

That type of audience has been known to be attractive to marketers. Snapchat’s significant hold on the sector, beyond the sheer numbers, immensely adds to their value. 

Last year, Facebook and its subsidiary Instagram have been attemping to copy several of Snapchat’s features to lure back some users. But it’s too early to tell whether the changes are powerful enough to pull away Snapchat users. 

False numbers as a lure

According to the complaint, Snapchat falsified its numbers not just to boost their IPO but also to pull away Pompliano from Facebook.

Before that, he was Facebook Pages’ growth team lead for over a year. In September 2016, Pomplano was hired by Snapchat in a similar role as a growth lead. He lasted just 3 weeks. 

In the complaint, Pompliano’s attorney, David Michaels, said that information pertaining to the company’s growth was falsely represented to the plaintiff to lure him away from the bigger social network.

When Pompliano allegedly learned of the misrepresentation, he warned executives to stop the practice or else he would blow the whistle on them.

He also claimed that the company attempted to squeeze out confidential information on Facebook’s business. These were the reasons that led to his being “unlawfully terminated”, as stated in the lawsuit. 

What is Snapchat’s answer to these accusations? A statement received by THR from communications vice president Mary Ritti brushed it all off: “We’ve reviewed the complaint. It has no merit. It is totally made up by a disgruntled former employee.” – Rappler.com