Fired Exec Says Snapchat Is Deceiving Investors

LOS ANGELES (CN) — An executive claims that Snapchat fraudulently induced him to leave Facebook through an “institutional pandemic” of misrepresentations, then fired him when he complained that it was lying to investors as it prepares for a multibillion-dollar initial public offering.

Fortune magazine has predicted that Snapchat, now called Snap, could raise as much as $25 billion in its IPO, which may come as early as March.

But in a heavily redacted complaint in Los Angeles Superior Court, Anthony Pompliano claims that top executives at Snap are misrepresenting the state of the company to investors, in the same way they lured him away from Facebook.

Snap hired him in August 2015 to run its user growth and engagement team by lying about its growth, and his “refusal to participate in Snapchat’s institutional pandemic of [redacted] to its investors and trading partners led to his unlawful termination,” Pompliano says in the Jan. 4 lawsuit.

He says he was fired after three weeks on the job because he refused to disclose confidential information about Facebook, and because his new bosses “accurately perceived that Mr. Pompliano would ‘blow the whistle’ should Snapchat continue to misrepresent its [redacted] to the public, advertisers, prospective employees, private investors, or in connection with its planned IPO.”

The misrepresentations included ones made to Chinese e-commerce giant Alibaba Group, from whom Snap sought a $200 million investment, according to the complaint.

To cap it off, he says, after firing him in September 2015, Snapchat and its bosses have “sought to destroy his career and reputation by waging a smear campaign against Mr. Pompliano, by makes false representations concerning the circumstances of his termination.”

“In reality,” he says, he was fired “because he refused to participate in a scheme to deceive the public and artificially inflate Snapchat’s valuation in anticipation of its IPO.”

“Snapchat will not let anything stand in its way of an IPO, including obligations to represent material facts accurately,” he adds.

Snap spokeswoman Mary Ritti called the lawsuit meritless.

“It is totally made up by a disgruntled former employee,” she said in a statement.

Pompliano’s attorney David Michaels, with Kilometer Partners in Los Angeles, could not be reached for comment late Thursday.

More than one-third of the Superior Court complaint is redacted to protect information —apparently company growth metrics — that may be covered by a confidentiality agreement. The redacted portions include one 7½-page section that is entirely blacked out and a 4-page appendix that is blank.

Pompliano says he is a military veteran of the Iraq war in 2008-09.

He says Facebook recruited him in 2014 to lead growth and engagement initiatives for Facebook Pages. Snapchat then “aggressively recruited” him in July and August last year, offering him “a compensation package that he was told was ‘massive’ and ‘unprecedented,’” according to the complaint.

“When Mr. Pompliano joined Snapchat on Aug. 31, 2015, however, everything changed. Behind the curtain was a very different company than the mature organization committed to building a growth team that he was sold by Snapchat’s senior executives during the recruiting process.”

Exactly what changed and how is redacted from the lawsuit. But he does say that he complained to three top executives that the company was presenting false data to advertisers and others.

“These efforts, which should have been rewarded, wound up costing Mr. Pompliano his job,” he says.

Pompliano seeks an injunction ordering Snap to stop misrepresenting his firing, and punitive damages for misrepresentation preventing him from obtaining employment.

Separately, Pompliano has brought an arbitration proceeding seeking lost wages and punitive damages for wrongful conduct and defamation, according to the lawsuit.

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