Ex-Snapchat Employee Sues, Alleges App Owners Misled Investors About Growth

Snap Inc. is being sued by a former employee who claims the company, parent to social media app, Snapchat, inflated growth metrics ahead of its March 2017 initial public offering. According to his complaint, which was initially filed in January in Los Angeles County Superior Court, Anthony Pompliano alleges that he was lured from Facebook in 2015 to Snapchat to focus on user growth and engagement and was fired after he refused to go along with inflated figures to make the company look better. 

The company made headlines last year when reports emerged that is was working on an IPO that could value the company at $25 billion or more. Snap Inc., which operates the app that lets users send videos and messages that disappear in seconds, is looking to sell shares as early as late March.

Pompliano says he was recruited from Facebook based on the false metrics, and when he urged Snapchat to correct them, he was fired after only three weeks on the job, according to the complaint. He also believes he was hired so Snap would receive confidential information about Facebook, which he refused to give, he said. The incident has prevented him from finding employment elsewhere, he says.

In response to Pompliano's suit, Snap said in a statement early this year that the claims lack merit. "We’ve reviewed the complaint,” Mary Ritti, a spokeswoman, said in an e-mail to Bloomberg. “It has no merit. It is totally made up by a disgruntled former employee."

Snap, Inc. is currently facing another lawsuit, as well, following its September 2016 name change. According to that suit, which was filed by Snap Interactive Inc., an online dating services company, Snap Inc, the newly named parent company of U.S. messaging and photo-sharing app Snapchat "stole the trade name and reputation of" Snap Interactive.

The dating service alleged in its suit that Snap's new name is likely cause confusion among consumers and its suffering is likely to be heightened by Snap's plans to go public. (That case is Snap Interactive Inc v. Snap Inc, U.S. District Court, Southern District of New York, No. 1:16-cv-08313). 

UPDATED (5/17/2017): Pompliano has escalated his lawsuit to federal court in the United States District Court for the Central District of California. He is now seeking the status of a whistleblower and at least $10 million in damages, according to a new complaint that was filed on Tuesday.

His new complaint seeks to establish whistleblower status - and the protection afforded by it by way of the Dodd-Frank Wall Street Reform and Consumer Protection Act. According to the complaint, Pompliano alleges that he risked his reputation by coming forward with incriminating information about the Snapchat maker and as a result, is eligible to take advantage of both the whistleblower and bounty provisions set forth in the 2010 Act.